Expansion of Double Tax Treaties (DTT) among Gulf Countries

In recent years, Gulf countries have significantly broadened their DTT networks with various foreign jurisdictions. However, until 2018, there hadn’t been a single DTT signed between GCC states, impacting holding, financing, and IP structuring in the region. Yet, shifts in international and regional political and tax agendas have spurred changes.

  1. UAE-KSA: The first DTT between Gulf countries was inked by Saudi Arabia and the UAE in May 2018, with the text released in March 2019. Effective from January 1, 2020, this DTT has reshaped bilateral tax relations. (EY overview available for details)
  2. Oman-Qatar: Oman and Qatar signed the second DTT among Gulf countries in November 2021, taking effect from January 1, 2023. (PwC overview provides more insights)
  3. UAE-Kuwait: Initial agreements for the UAE-Kuwait DTT were reported on August 30, 2022. The final version was signed on February 11, 2024, at a fiscal forum in Dubai, marking a milestone in bilateral financial cooperation.

The forum, held during the World Government Summit, highlighted the importance of adapting fiscal policies to global changes, a priority for the UAE’s national economy.

  1. KSA-Qatar: Negotiations for a DTT between Saudi Arabia and Qatar commenced on October 31, 2023, as per information from the Saudi Arabian government.
  2. Kuwait-Qatar: Qatar approved a preliminary version of the DTT with Kuwait on November 29, 2023, according to the Kuwait News Agency (KUNA).
  3. KSA-Kuwait: Officials from Saudi Arabia and Kuwait discussed the signing of a DTT on January 31, 2024, as reported by the Saudi Press Agency.
  4. UAE-Bahrain: On February 5, 2024, the UAE Cabinet of Ministers authorized the signing of a DTT with Bahrain, alongside an Agreement for investment cooperation and protection.

KSA Saudi Arabia’s initiative to negotiate DTTs with Qatar and Kuwait aligns with recent proposals to introduce a blacklist of jurisdictions into KSA’s Income Tax Law. These proposals, announced in October 2023, aim to subject transactions involving residents or permanent establishments in jurisdictions with preferential tax regimes to special provisions. These provisions could impact the UAE, Bahrain, Qatar, and Kuwait if their income tax rates are below 15% or lack exchange of information agreements or economic substance requirements.

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