Guyana, UAE sign tax agreement to pave way for business and investments

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The Governments of Guyana and the United Arab Emirates (UAE) have agreed to facilitate greater economic cooperation, inking a new agreement to avoid double taxation but prevent tax evasion.

President Dr Irfaan Ali greets the Prime Minister of the United Arab Emirates, Sheikh Mohammed bin Rashid Al Maktoum in Dubai (Photo: March 24, 2022)

The agreement – Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital – was signed on Thursday as part of President Dr. Irfaan Ali’s ongoing visit to the Middle Eastern country.

In the case of the UAE, the existing taxes to which the agreement applies includes income tax and corporate tax. For Guyana, it applies to income tax (including withholding tax), corporation tax, capital gains tax and property tax.

And the News Room understands that this agreement is meant to promote mutual economic relations between the two countries.

Simply, what this agreement attempts to do is provide a framework to protect a taxable unit – be it contractors, companies, partnerships or even the State – from paying taxes for the same goods or services in both countries.

The agreement outlines that taxes should be paid in the contracting state. In other words, if a Guyanese-owned company is operating in the UAE, taxes should be paid to the UAE and vice versa. There are some exemptions, however, for specific sectors outlined in the agreement.

Simultaneously, by specifying how services provided will be taxed, the agreement seeks to curtail tax evasion – that is, the non-payment of taxes usually by making false declarations. In some instances, the agreement specifies the percentage tax that should be collected.

President Dr Irfaan Ali interacts with the Prime Minister of the United Arab Emirates, Sheikh Mohammed bin Rashid Al Maktoum in Dubai (Photo: March 24, 2022)

The agreement covers income from immovable property, shipping, air and transport; dividends, business profits, associated enterprises, government services, technical services, interest, royalties, capital gains, management fees, income for employment, sportsmen and entertainers; professors, teachers and researchers; students and trainees etc.

As part of this new agreement too, a specific carve-out was made for oil and gas.

It was noted that notwithstanding any other provision, the countries have the authority to apply domestic laws and regulations to tax the income and profits derived from hydrocarbons.

The agreement shall remain in force for a period of five years and shall continue in force thereafter for a similar period unless terminated by either party.

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