The Ministry of Finance has announced the release of a guidance document for taxpayers regarding the mutual agreement procedure aimed at providing essential information and instructions on how to potentially obtain relief from double taxation. This guidance aligns with the established agreements in this area. It outlines scenarios where double taxation may occur, such as tax assessments resulting in adjustments for cross-border transfer pricing or determining the existence of a permanent establishment abroad. Additionally, the document specifies the timelines within which taxpayers should submit requests for mutual agreements, typically within three years from when the taxpayer becomes aware of a potential double taxation issue.
The guidance emphasizes that, when submitting a request for a mutual agreement, the scope of relief that may be granted by the competent authority in the respective country could be influenced by rulings on tax matters issued by local courts or tax dispute resolution committees in the UAE.
Furthermore, the guidance includes necessary information for taxpayers who wish to initiate a mutual agreement request. It clarifies that the competent authority in the UAE will strive to resolve all mutual agreement cases as promptly as possible, adhering to best practices outlined by the OECD regarding the established timelines, provided that taxpayers submit all required information on time and that the competent authority in the corresponding contracting state is available.
This guidance is crucial for taxpayers seeking relief from double taxation, especially considering the numerous double taxation avoidance agreements established by the UAE. It enables them to assess their eligibility for filing a mutual agreement request before proceeding, as well as to identify the tax scope of the corresponding contracting state from which they need to obtain a request. The document provides taxpayers with directions on accessing the mutual agreement procedure, thereby facilitating their benefits from the double taxation avoidance agreements negotiated by the UAE and reducing instances of double taxation.