On 30 October 2016, the United Arab Emirates Cabinet approved the pending income tax treaty with Slovakia. The treaty, signed 21 December 2015, is the first of its kind between the two countries.
The treaty covers Slovak tax on income of individuals and tax on income of legal persons. It covers U.A.E. income tax and corporate tax.
Article 5 (Income from Hydrocarbons) includes the provision that the treaty will not affect the right of either one of the Contracting States to apply their domestic laws and regulations related to the taxation of income and profits derived from hydrocarbons and its associated activities situated in the territory of the respective Contracting State.
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services through employees or other personnel in a Contracting State, provided that the activities continue for the same or connected project for a period or periods aggregating more than 183 days within any 12-month period.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries apply the credit method for the elimination of double taxation.
Article 27 (Limitation on Benefits) includes the provision that the relief from taxation provided for by the treaty will only apply for specified persons, including an individual, a Contracting State, a person engaged in the active conduct of a trade or business, a company whose share are listed on a recognized stock exchange, etc. However, persons that are not specified may still be granted the benefits of the treaty if so determined by the competent authority of the State in which the income arises.
The treaty will enter into force on the first day of the third month following the exchange of the ratification instruments, and will apply from 1 January of the year following its entry into force.
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