Work is underway on a tax treaty that would strengthen investment relations between Israel and the UAE and could be completed within the coming weeks.
The treaty is expected to help facilitate more than $ 2 billion in annual bilateral trade in the coming years between Israel and the UAE. It could grow to as much as $ 6.5 billion a year over the next decade. This would make the UAE one of Israel’s most important trading partners.
Tax treaties help ensure that individuals and companies do not pay the same taxes twice to different countries, and they also help encourage bilateral trade. The basic terms of the Israel-UAE treaty were agreed upon by both sides, leaving only a few clauses on the agreement’s scope to be finalized.
However, regardless of the actual time of signing and ratification of the treaty by both countries, it will not enter into force until January 1 next year.
Since the two countries agreed to normalize relations in mid-August, the business and economic community in Israel and the UAE have forged several cooperative efforts and partnerships to facilitate trade. While informal trade between the two countries existed before the entry into force of the Abraham Agreements, even those familiar with events have been surprised at how warm economic ties have been since the agreements were formally signed last September.
Israel and the UAE
Israel signed normalization agreements with several Arab countries last year, including Bahrain, Sudan, and Morocco. The United Arab Emirates is the only country with which it is currently drafting a tax agreement.
Both Israel and the UAE can achieve a lot of increased trade relations. Israel sees the UAE as a global trading hub that would give it greater access to Asian markets. While the United Arab Emirates considers Israel a link with the West, Emirati investors are hungry for lucrative investments in Israeli companies and Israeli startups, especially in the technology sector.
Existing flights between Israel and the UAE resumed this month after Israel ended the airports’ closure caused by the spread of the epidemic. Business and leisure travelers want to explore markets that were off-limits until recently.
Israeli airlines El Al, Israir, and Arkia and UAE-owned flydubai have launched regular flights between Tel Aviv and Dubai. Etihad Airways also launched its first regular commercial flight to Israel from Abu Dhabi last week.