November Special Edition 2021

25 individual who is present in the UAE for at least 183 days and can prove that they are a domicile of the UAE, and that their personal and economic relationships with the UAE are closer than with any other country in the world. A company incorporated in the UAE is also entitled to the benefits of the Treaty only to the extent it is actually held and controlled by a UAE resident and its place of effective management is the UAE. The Treaty limits the applicability of the benefits under the Treaty regarding Israeli taxation on business profits, international shipping and air transport, dividends, interest, royalties, capital gains and branch tax, to the federal and local governments of the UAE, qualified government entities, a pension plan and companies where at least 75% of their capital is owned by the UAE or a qualified government entity (with the remainder of the capital held by individuals residing in the UAE). Even so, individuals residing in the UAE and companies that are owned exclusively by the UAE or qualified government entities or by individuals residing in the UAE may claim benefits under the International Shipping and air transport, dividends, interest, and capital gains. The UAE has over 100 double tax treaties with other states, however, as well as multiple free zones and a sophisticated business infrastructure – all of which make it an ideal place for Israeli corporations to invest. Though the agreement still needs to be ratified in both countries, this is one of the first steps to effectively facilitating business between the UAE and Israel. It is expected to come into effect on 1 January 2022.