On 1 April 2016, the FYR Macedonian parliament ratified the tax
treaty signed with the United Arab Emirates (UAE) on 26 October
2015. The ratification law was published in the Official Gazette
No. 63 of 1 April 2016.
The treaty covers the personal income tax and profit tax in FYR
Macedonia and the income tax and corporate tax in the UAE. The
agreement will also be applicable to similar taxes that may be
imposed after its signing, provided that the authorities of the
signatory parties notify each other about the tax changes
As usual, the agreement is mostly harmonized with the OECD model
with the below specifics that are of interest.
Permanent establishments are deemed to arise when a
building/construction site or an installation project (including
any related site activity of supervisory nature) lasts for more
than six months. Additionally, a permanent establishment also
includes a place of management, a branch, an office, a factory, a
workshop or a mine or oil/gas well.
As far as withholding taxes are concerned, dividends are to be
taxed with 5%. The same rate of 5% withholding tax rate on interest
has been agreed upon, which is also applicable to royalties.
In regards to the provisions for the elimination of double
taxation, the treaty stipulates that both parties will allow
deduction from taxes in the amount of tax paid to the other state.
Both countries also reserve the right to take into account any
exempted income or capital for which tax has been paid in the other
country when calculating the amount of tax payable for the
Pending ratification of the treaty by the UAE and its subsequent
entry into force, the agreement provisions will be effective from
the calendar year following the year during which it enters into
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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