The United Arab Emirates and Switzerland have signed their first agreement for the avoidance of double taxation in 1992. The agreement was renewed at the end of 2011 and enforced in 2012 by both countries. Dubai, a part of the United Arab Emirates, will enforce the new double tax treaty with Switzerland. The double taxation agreement covers the income tax in both countries and also contains provisions regarding the exchange of tax information. The double taxation treaty between the UAE and Switzerland is meant to enhance bilateral economic relations between the two states. Our company formation agents in Dubai can offer more information about trading relations between the UAE and Switzerland.
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Tax rates under the UAE-Switzerland double taxation treaty
The double taxation agreement between the UAE and Switzerland covers the following taxes:
- the income and corporate tax in the UAE,
- the personal income tax and the corporate tax in Switzerland.
The agreement also covers all similar taxes applied in both countries. Should any tax legislation change in one or both countries, the tax authorities are required to notify each other about the changes. One of the most important provisions of the new double tax treaty between the UAE and Switzerland establishes a residual tax of 5% for dividend payments made to companies holding at least 10% of the voting shares in the company paying the dividends. The tax rate in all other cases is 15%. Royalties and interests are subject to a 0% tax rate under the UAE-Switzerland double taxation agreement.
Other provisions contained by the UAE-Switzerland double tax treaty
The UAE-Switzerland double tax agreement also contains a rule on interpretation with respect to administrative assistance which was recommended by Swiss officials. With respect to taxation, it was established that the taxation of dividends would be enforced in 2013. While most taxes will be levied in the country where a Swiss or a UAE company conducts its business operations, capital gains and incomes derived from the sale of shares can be taxed in the country of residence of the company selling the shares. If the sold assets are represented by immovable property, the taxation will occur in the country where the property is located.
For complete information about the provisions of the UAE-Switzerland double tax treaty, please contact our agents in company incorporation in Dubai.