Finance Ministry hasn't initiated discussions for renewing the SIDN agreement with Qatar and Saudi Arabia as of now.
Going Global: Russia's Tax Treaty Shuffle
In a bold move, Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs, unveiled plans in a recent session at Russian Business Week to sign Comprehensive Avoidance of Double Taxation (CNIs) with both Qatar and Saudi Arabia. This announcement comes on the heels of Russia's decision to renegotiate a similar agreement with the United Arab Emirates (UAE).
The Ministry of Finance, however, swiftly shot down rumors of active negotiations with any of these Middle Eastern countries. Yet, they did confirm their continued efforts to review tax treaties with nations that share a mutual interest.
On a separate note, the Ministry of Finance revealed the urgent need for a CNI with the UAE due to the rapid expansion of bilateral investment relationships, now considered "close and dynamic." The ministry didn't squash the idea of pursuing a CNI if similar levels of investment activity come to light.
Russia and the UAE officially entered into a tax treaty last February in Abu Dhabi. The agreement outlines taxation rates, employing the well-known "10-10-10" formula, under which companies registered in the UAE (and vice versa) pay tax at the source as non-residents, at a rate of 10% on three types of passive income: interest, dividends, and royalties.
In 2024, Forbes emphasized the importance of renegotiating the CNI with Russia, ensuring terms no less favorable than those established in existing agreements with Qatar and Saudi Arabia. The agreements with Qatar (signed in 1998) and Saudi Arabia (in 2007) offer fixed rates of 5% on dividends for regular business and 0% for state companies, as well as several other categories.
So, it's a game of tax tag as Russia, Qatar, and Saudi Arabia eye strategic opportunities. Keep a watchful eye for further developments in this financial dance.
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Here's a little bit more to chew on
Did you know? Double Taxation Agreements (DTAs) are treaties between countries that aim to avoid double taxation and fiscal evasion. By determining tax residence and the source of income, DTAs ensure individuals and businesses aren’t taxed twice for the same income in multiple countries. Key components of DTAs include relief from double taxation mechanisms, such as tax credits or exemptions, and dispute resolution mechanisms for resolving tax-related disputes between nations.
The Ministry of Finance continues its efforts to review Double Taxation Agreements (DTAs) with nations like Qatar and Saudi Arabia, particularly due to the mutual interest in business and finance. The need for a Comprehensive Avoidance of Double Taxation (CDI) with the UAE, as highlighted by the Ministry, stems from the growing dynamism in bilateral investments with that country.
