The income tax treaty between Ethiopia and the United Arab Emirates was signed on 12 April 2015. The treaty is the first of its kind between the two countries.
The treaty covers Ethiopian tax on income and profit, and tax on income from mining, petroleum and agricultural activities. It covers U.A.E. income tax and corporate tax.
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 project for a period or periods aggregating more than 6 months within any 12-month period.
Article 7 (Income from Hydrocarbons) includes the provision that the treaty will not affect the right of either Contracting Party 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 Party.
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.
The treaty will enter into force once the ratification instruments are exchanged, and will apply in Ethiopia from 8 July next following its entry into force and in the U.A.E. from 1 January of the year following its entry into force.
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