The new income tax treaty between Romania and the United Arab Emirates was signed 5 May 2015. Once in force and effective, the treaty will replace the 1993 tax treaty between the two countries, which is currently in force.
The treaty covers Romanian tax on income and tax on profit, and covers U.A.E. income tax and corporation tax.
If a company is considered resident in both Contracting States, the competent authorities will determine its residence for the purpose of the treaty through mutual agreement. If no agreement is reached, the company will not be entitled to claim any relief or exemption from tax provided for by the treaty.
The provisions of Articles 10 (Dividends), 11 (Interest) and 12 (Royalties) will not apply if the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares, debt-claims or other rights in respect of which the dividends, interest or royalties are paid was to take advantage of those Articles by means of that creation or assignment. The limitation is included in each of the Articles.
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 generally apply the credit method for the elimination of double taxation.
The treaty will enter into force once the ratification instruments are exchanged, and will apply from 1 January of the year following its entry into force.
The 1993 tax treaty between the two countries will terminate and cease to have effect from 1 January of the year following the new treaty's entry into force.
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