Extension of the list of Double Tax Treaties (DTTs) concluded between the Gulf countries (#GCC: #Bahrain, #Qatar, #Kuwait, #UAE, #Oman, #KSA)

Over the past few years, the Gulf countries have significantly expanded the list of DTTs with various jurisdictions, however, until 2018 there was not a single DTT signed between the GCC states, which left its mark on the holding, financing and IP structuring within the region. However, both international and regional political and tax agendas have contributed to changes in this respect.

1️⃣🇦🇪🇸🇦 The first DTT signed between the Gulf countries was between Saudi Arabia and the UAE in May 2018; the text was published in March 2019; the DTT is applicable from January 1, 2020. For more details see the EY’s overview.

2️⃣🇴🇲🇶🇦 The second DTT between the Gulf countries was signed by Oman and Qatar in November 2021; it is applicable as of January 1, 2023. For more details see the PwC’s overview.

3️⃣🇦🇪🇰🇼 On August 30, 2022 preliminary agreements about the conclusion of the UAE-Kuwait DTT were reported. However, it was only yesterday, February 11, 2024, that the Kuwait News Agency (KUNA) reported the signing of the final version of the UAE-Kuwait DTT at a fiscal forum in Dubai as part of broader financial cooperation between the two states (an additional agreement to the Treaty Protocol between the UAE and Egypt was also signed at the forum).

The forum was proceeded by the World Government Summit. The report of the IMF Managing Director on tax transformation in the region mostly repeated the postulates of previous years. However, it is important that the first deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance of the UAE confirmed that rapid global changes require the development of fiscal policies that meet the needs of national economies, and reiterated that this is at the core of the UAE's priorities.

4️⃣🇸🇦🇶🇦 On October 31, 2023, according to information published by the Saudi Arabian government, the Council of Ministers initiated negotiations and the signing of a DTT with Qatar. (*)

5️⃣🇶🇦🇰🇼 On November 29, 2023, the Kuwait News Agency (KUNA) reported that Qatar has approved a preliminary version of the Treaty with Kuwait.

6️⃣🇸🇦🇰🇼 On January 31, 2024, according to a report by the Saudi Press Agency, officials from Saudi Arabia and Kuwait met to discuss, among other things, their willingness to sign a DTT.(*)

7️⃣🇦🇪🇧🇭 On 5 February 2024, the UAE Cabinet of Ministers authorised the signing of a DTT with Bahrain, as well as an Agreement for investment cooperation and protection. On 19 January 2025, the Bahraini Shura Council has approved the DTT between Bahrain and the UAE. The Emirati Cabinet approved the DTT on 2 January 2025.

8️⃣🇦🇪🇴🇲 The UAE-Oman DTT is under discussion.

9️⃣🇸🇦🇴🇲 The KSA-Oman DTT is under discussion.

(*) #KSA Saudi Arabia's initiation of DTT negotiations with Qatar and Kuwait is also interesting in light of recent proposals to adopt a blacklist of jurisdictions into the KSA’s Income Tax Law, which were announced in October 2023 and are currently under consideration. It is proposed that any transaction involving a resident or permanent establishment in a jurisdiction that has preferential tax regime will be subject to special provisions (including in relation to expense recognition, depreciation, withholding tax rates and transfer pricing rules). It is proposed that the tax regime will be considered preferential if it meets one of the conditions: a profit tax rate of less than 15%; no exchange of information agreement or lack of economic substance requirements (although some sources mention the application of these criteria on a cumulative basis; it will be interesting to see what the final provisions will look like). In the GCC region, these provisions could potentially affect the UAE, Bahrain, Qatar and Kuwait: i.e., if the income tax is below 15%, or there is an exemption for companies by GCC nationals.

1️⃣0️⃣ 🇦🇪 🇶🇦 On 30 May 2024, the UAE-Qatar DTT was signed.

1️⃣1️⃣🇴🇲 🇧🇭 On 15 January 2025, the Oman-Bahrain DTT was signed in Muscat.

It's officially winter holiday season, and I'm still seeing so many posts on LinkedIn debating whether transfer pricing (TP) is an art or a science, or if it just requires basic business sense. The complexities of TP can be mind-blowing, and it's human nature to try to define it: call it art, science, magic, or drama. However, taxpayers definitely need more simplification and clarity regarding these rules. Ultimately, it won't just be about simple TP - formulary apportionment (FA) is just around the corner.

Since it's the holiday season, remember that the best principle is not to apply the arm's-length approach with your nearest and dearest. Spend important moments together and try to avoid comparing your holiday experiences to the seemingly perfect pictures on social media. Instead, share the ups and downs of the year, discuss what you learned, ask questions, share family stories.

The quote in the attached picture comes from an amazing actress but I believe her words are relatable in a sense that it is in our hands to turn our lives for the better: sometimes, we just need a little bit of faith, kind words, and hope; but it is bound to be a masterpiece no matter what regardless of any external 'standard' benchmarks.

Paraphrasing Einstein’s saying, there are only two ways to live your life: one is as though nothing is #art, the other is as though everything is.

Take care and stay safe. 🫶