(April 28, 2015) 

Based on the overview of Double Taxation Agreements as published on the website of the Polish Ministry of Finance a Protocol Amending the Agreement between the Government of the Republic of Poland and the Government of the United Arab Emirates for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital and Protocol, which were both signed in Abu Dhabi on January 31, 1993 will enter into force on May 1, 2015.

 

Based on Article 14 of the Protocol the aforementioned means that the amendments of the Protocol shall have effect in both Contracting States:

(a)   in respect of the taxes withheld at source, to amounts of income derived on or after January 1, 2016.

(b)   in respect of other taxes on income, to such taxes chargeable for any taxable year beginning on or after January 1, 2016.

 

Amendments made by the Protocol include a.o.: 

Paragraph 1 of Article 4 of the DTA (“RESIDENT”) shall be deleted and replaced by the following:

For the purposes of this Agreement, the term "resident of a Contracting State" means:

a)     in the case of Poland, a person who, under the laws of Poland, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, and also includes Poland and any political subdivision or local authority thereof;

b)     in the case of the United Arab Emirates:

(i)     an individual who has his domicile in the United Arab Emirates and is a national of the United Arab Emirates, and

(ii)    a company which is incorporated in the United Arab Emirates and has its place of effective management there, provided that the company can give evidence that its capital is beneficially owned exclusively by the United Arab Emirates and/or by a government institution of the United Arab Emirates and/or federal or local governments and/or by individuals being residents of the United Arab Emirates and the company is controlled by the aforementioned residents.

 

Paragraph 3 of Article 12 of the DTA (“ROYALTIES”) shall be deleted and replaced by the following:

The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright, patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use any industrial, commercial, or scientific equipment or for information (know-how) concerning industrial, commercial or scientific experience; this term also means payments of any kind received as a consideration for the use of, or the right to use, any copyright on cinematograph films, and films or tapes for radio or television broadcasting.

 

The existing Paragraph 4 of Article 13 of the DTA (“GAINS FROM THE ALIENATION OF PROPERTY”) shall be deleted and is replace by the following: 

Gains derived by a resident of a Contracting State from the alienation of shares deriving more than 50 per cent of their value directly or indirectly of immovable property situated in the other Contracting State may be taxed in that other State.

 

Subsequently the following new paragraph 5 shall be added to Article 13 of the DTA (“GAINS FROM THE ALIENATION OF PROPERTY”): 

Gains from the alienation of any property other than that referred to in paragraphs l, 2, 3 and 4 shall be taxable only in the Contracting State of which the alienator is a resident.

 

Furthermore the 183 day rule as included in Article 15 of the DTA (“DEPENDENT PERSONAL SERVICES”) is amended in such way that it will read as follows: 

the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned; and"

 

Furthermore Article 19 of the DTA (“DIRECTORS’ FEES”) shall be deleted and replaced by the following:

Directors' fees and other similar payments derived by a resident of a Contracting State in the capacity as a member of the board of directors or of the supervisory board or of any other similar organ of a company which is a resident of the other Contracting State shall be taxed only in that first-mentioned State.

 

Furthermore a new Article 23A (“LIMITATION OF BENEFITS”) shall be added. The new Article 23A will read as follows: 

Benefits provided for by this Agreement shall not be available where it might be considered that the main purpose or one of the main purposes for entering into arrangements has been to obtain these benefits that would not be otherwise available. The cases of legal entities not having bonafide business activities shall be covered by this Article.

 

Furthermore the existing Article 27 of the DTA (“EXCHANGE OF INFORMATION”) will be replace by a new Article 27 (“EXCHANGE OF INFORMATION”).

 

Above we discussed only a few of the amendments to be made by the Protocol that will come into force on May 1, 2015. Please note however that the Protocol contains more amendments than the ones discussed above.

 

Click on the language of your choice to be forwarded to the text of the Protocol as published on the website of the Polish Ministry of Finance, which will open in a new window. (English, Polish or Arabic)

 

Click on the language of your choice to be forwarded to the text of the 1993 DTA as published on the website of the Polish Ministry of Finance, which will open in a new window (This is the text of the DTA that will be amended when the Protocol enters into force on May 1, 2015). (English, Polish or Arabic)

 

 

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