At the signing of the Convention between the Government of Canada and the Government of the United Arab Emirates for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital (hereinafter referred to as “the Convention”), the undersigned have agreed upon the following provisions which form an integral part of the Convention.
1 With reference to Articles 6 and 13 of the Convention, in the case of Canada, income from the alienation of immovable property shall be subjected to taxation in accordance with the provisions of paragraph 1 of Article 6 of the Convention.
2 With reference to Article 8 of the Convention, it is understood that:
(a) the provisions of paragraph 1 of that Article apply notwithstanding the provisions of Article 7 of the Convention; and
(b) the provisions of that Article apply to the sale of passage tickets on behalf of other enterprises and to a hotel business, provided that the keeping of the hotel is for no other purpose than to provide transit passengers with night accommodation, the cost of such a service being included in the price of the passage ticket.
3 With reference to Article 10 of the Convention, it is understood that nothing contained therein affects the fiscal privileges available under the doctrine of sovereign immunity to the Government of a Contracting State or local Governments, and their agencies and institutions.
4 With reference to Article 12 of the Convention, it is understood that the term royalties does not include payments in respect of the operation of mines or quarries or the exploitation of natural resources.
5 With reference to Article 22 of the Convention, it is understood that nothing contained therein affects the rights of the United Arab Emirates to tax income related to oil and natural resources situated in the United Arab Emirates in accordance with its tax laws.
6 A company which is a resident of a Contracting State and which has earnings in that State which may be taxed in a Contracting State in accordance with the provisions of Articles 6, 7 or 13 of the Convention, remains subject to the branch tax on such earnings but the rate of such tax shall not exceed 5 per cent.
7 For the purpose of paragraph 6, the term earnings means the profits in a year and previous years after deducting therefrom:
(a) business losses attributable to such permanent establishments (including losses from the alienation of property forming part of the business property of such permanent establishments) in such year and previous years,
(b) all taxes chargeable in that Contracting State on such profits, other than the additional tax referred to herein,
(c) the profits reinvested in that Contracting State, provided that where that Contracting State is Canada, the amount of such deduction shall be determined in accordance with the existing provisions of the law of Canada regarding the computation of the allowance in respect of investment in property in Canada, and any subsequent modification of those provisions which shall not affect the general principle hereof, and
(d) five hundred thousand Canadian dollars ($500,000) or its equivalent in United Arab Emirates currency, less any amount deducted
(i) by the company, or
(ii) by a person related thereto from the same or a similar business as that carried on by the company under this subparagraph (d);
for the purposes of this subparagraph (d) a company is related to another company if one company directly or indirectly controls the other, or both companies are directly or indirectly controlled by the same person or persons, or if the two companies deal with each other not at arm’s length.
8 Where at any time an individual is treated for the purposes of taxation in Canada as having alienated a property and is taxed in Canada by reason thereof, that individual may elect in the individual’s annual return of income for the year of such alienation to be liable to tax in the United Arab Emirates in that year as if the individual had, immediately before that time, sold and repurchased such property for an amount equal to its fair market value at that time.
IN WITNESS WHEREOF the undersigned, duly authorized to that effect, have signed this Protocol.
DONE in duplicate at Abu Dhabi, this 9th day of June 2002, in the English, French and Arabic languages, each version being equally authentic.
|FOR THE GOVERNMENT OF CANADA||FOR THE GOVERNMENT OF THE UNITED ARAB EMIRATES|
|Christopher J.M. Thomson||Dr. Mohammed Khalfan Bin Khirbash|
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