Double Taxation Agreements (DTAs) are bilateral agreements between countries designed to prevent double taxation of the same income. This means that businesses and individuals operating in multiple countries are not taxed by both countries on the same income. As such, these agreements serve as an important tool for promoting cross-border trade and investment, allowing businesses to operate more efficiently across borders.
Recently, Jordan and the United Arab Emirates (UAE) signed a DTA to avoid double taxation and encourage economic cooperation between the two countries. The agreement was signed by the Ministers of Finance of Jordan and UAE and is expected to facilitate trade and investment between the two nations.
Jordan is an important market for the UAE, with many UAE companies conducting business in the country. The DTA between the two nations will provide more clarity in terms of tax obligations for businesses operating in both countries. The agreement covers income tax, corporate tax, and other taxes, and it is designed to ensure that each country taxes only the income earned within its jurisdiction.
The DTA between Jordan and the UAE includes provisions on permanent establishment, which is key for businesses that operate in both countries. This provision ensures that a business is only taxed in the country where it has a permanent establishment. This means that a company that operates in both Jordan and the UAE will only pay taxes in one of the two countries, depending on where its permanent establishment is located.
Another key aspect of the DTA is the provision on dividends, interests, and royalties. The agreement sets out clear rules on the taxation of these types of income, ensuring that businesses are not subject to double taxation.
Overall, the DTA between Jordan and the UAE is a significant development that will benefit businesses operating in both countries. The agreement will provide more clarity and certainty in terms of tax obligations, which is essential for businesses that want to operate effectively across borders. The DTA is expected to encourage more investment and trade between the two countries, leading to mutual economic benefits.