Tanzania, UAE sign deal on tackling double taxation

Dar es Salaam. Tanzania and the United Arab Emirates (UAE) have signed an agreement to tackle double taxation on businesses between the two countries -- a deal that would also check tax evasion challenges.

The agreement dubbed ‘Agreement on Avoidance of Double Taxation and Prevention of Fiscal Evasion on Income Taxes’ was signed by Finance ministers of the two countries--Dr Mwigulu Nchemba for Tanzania and Mr Mohamed Bin Hadi Al Hussain of the UAE.

In a statement issued by the Finance and Planning ministry said this signing came after the business community working between the two countries raised concerns of double taxation during the President Samia Suluhu Hassan’s visit to UAE in February this year.

“It is our hope that after this agreement, we will see growth of investments from Arab countries that have always had the means but were hindered by double taxation issues. Tanzanian business persons will also be able to do business more smoothly now than before and thus increase economic growth,” Dr Nchemba said in the statement.

The deal involves areas in trade, air and water transport, immovable property dealings, interest rates, dividends, exploitation of natural resources, workers and researchers, students, pension payments and social security funds and sports.

Dr Nchemba revealed further that the UAE had entered into similar agreements with 139 countries in the world, including some East African countries, and thus Tanzania has been missing several investment opportunities from UAE countries.

“This step will attract capital investment and the construction of industries for production and job creation for young Tanzanians—this will stimulate the economy growth by increasing the scope of taxes, increasing the supply of products to be sold both locally and abroad, and boosting foreign exchanges” said Dr Nchemba.

Along with signing the agreement, the two ministers also had a chance to discuss various areas of cooperation including the completion of the investment promotion treaty dubbed ‘Agreement on Promotion and Protection of Investment’ that is currently under discussion by experts from both nations.

For his part, the deputy permanent secretary in the Ministry of Finance and Planning, Mr Lawrence Mafuru, said from the signed agreement there were 31 elements that would allow a person or institution doing business between the two countries to be taxed on one side instead of the previous procedure where they were being taxed on each side and causing complaints from investors.

“Some people can interpret that this type of agreement as an exemption from tax, which is not true because this is an agreement that sets a rule to prevent the transfer of tax from one country to another based on where the investment comes from, it involves protecting the capital of the investors of the respective country,” he elaborated.

UAE’s Finance minister Mohamed Bin Had Al Hussain also agreed that the step reached by the two countries would boost investment and economic growth.