Provisions to Poland-U.A.E. Tax Treaty Take Effect
The new protocol to the 1993 Poland-United Arab Emirates tax treaty, which was signed in Abu Dhabi on December 11, 2013, and entered into force on May 1, 2015, became effective on January 1. The new protocol introduces significant changes to the decades-old treaty. (Arabic protocol text ; Polish text; Arabic treaty text ; Polish text.)
The first important change relates to the definition of the term ‘‘resident of a contracting state.’’ In the case of Poland, this refers to a person who, under Polish law, is subject to tax in Poland by reason of his domicile, residence, place of management, or any other criterion of a similar nature. The scope of that definition includes Poland and any political subdivision or local authority thereof.
In the case of the United Arab Emirates, however, the definition has been significantly narrowed. It includes an individual who is a national of, and has his domicile in, the U.A.E., and a company that is incorporated in the U.A.E. and has its place of effective management there, provided that the company can show that its capital is beneficially owned exclusively by the U.A.E., a government institution or federal or local government thereof, or individuals resident in the U.A.E. (who must also control the company (new article 4.1)).
This provision, in a much shorter version, resembles limitations under the limitation on benefits provisions in the 2013 Poland-United States tax treaty . (Polish text.)
Another change replaced the previous definition of royalties with standard wording from the OECD model
tax treaty, which states that the term ‘‘royalties’’ means payments of any kind received as consideration for the use of, or right to use, any copyright, patent, trademark, design or model, plan, or secret formula or process, any industrial, commercial, or scientific equipment, and information (know-how) concerning industrial, commercial, or scientific experience.
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