UAE signs Final Agreement to avoid double taxation on income with Hungary

WAM Abu Dhabi, May 1st, 2013 (WAM) Following the federal government’s strategy to enhance foreign investments as well as to promote economic partnerships at an international level, the UAE signed the final agreement for the avoidance of double taxation on income with the Republic of Hungary on Tuesday.

The agreement was signed by Obaid Humaid Al Tayer, Minister of State for Financial Affairs on behalf of the UAE and Peter Szijjarto, State Secretary for Foreign Affairs and External Economic Relations in the Prime Minister of the Republic of Hungary’s Office.

The agreement will contribute in strengthening economic relations between the UAE and the Republic of Hungary along with achieving an economic balance between the two countries.

The Republic of Hungary, member of the European Union, holds promising investment potential and a leading position in various sectors, particularly in agriculture, mining, automotive and heavy equipment manufacturing, as it maintains the transition process to a market economy and provides several advantages for foreign investments without imposing any restrictions on currency conversions.

The agreement will provide full protection for concerned parties from double taxation, whether direct or indirect. It will also help in avoiding the obstruction of free flow of trade and investments between the two countries, which will contribute to the promotion of their respective development goals, as well as in diversifying the sources of national income and increasing the volume of foreign investments for both states. In addition, the agreement takes into account tax matters and notable changes taking place in the international economic, financial and tax fields in terms of new financial instruments and pricing transfer mechanisms.

The agreement will also contribute to the removal of most forms of economic double taxation while reducing some taxes that could be imposed on foreign investors. Moreover, it will provide a package of normative acts to divide tax profits between countries. This agreement will help in facing tax evasion in addition to creating a framework for resolving tax disputes and will provide a stable environment for foreign investors, thereby increasing the international competitiveness of the local economy of both countries.

Commenting on the agreement, Al Tayer said: “This agreement will aid in achieving economical balance between the UAE and Hungary, as it is considered to be an important legal mechanism to push forward investments between both states. This is especially true since the agreement provides tax-related privileges for state-owned investments and for the private sector as well, in addition to providing tax exemption for air transport activities. The document also identified a number of entities that would receive tax exemptions, which include the Abu Dhabi Investment Authority, Investment Corporation of Dubai, and pension funds.” Al Tayer went on to indicate that the UAE has signed a total of 70 agreements with its trade partner states in different continents, in addition to enhancing its cooperative efforts with the Organisation for Economic Cooperation and Development (OECD), which has classified the UAE as a regional centre for training and producing qualified experts in the MENA region in the area of negotiation skills.