A tax treaty was signed by Israel and United Arab Emirates on Monday. This was done to increase the business development between the two countries as they had normalised their relationships last year.
It was announced in the month of October by the United Arab Emirates Finance ministry that they have come to an agreement with Israel on avoiding double taxation.
Once it is ratified by the ministers and the parliament it will be Israel's 59th tax convention and it would be in effect from January 1st of 2022.
Normalising relationships with the United Arab Emirates and Bahrain the previous year was Israel’s first issuance of a tax treaty. Israel has since improved its ties with Sudan and Morocco.
The Israeli finance minister Israel Katz said that the treaty is based on the OECD model and he also said that such a decision would provide the country with certainty and favourable conditions for the conduction of business activities and will also strengthen its economic ties with the United Arab Emirates.
The tax dividends, royalties and royalties would be capped under such an agreement.
“The treaty will enable the significant promotion of investment and trade that will help both countries' economies,” said the Israeli Foreign Minister Gabi Ashkenazi.
Israeli and Emirati banks and multiple other companies have signed cooperation deals ever since the normalisation deal was signed last September. They have also established direct flights between the countries.