Tanzania and the United Arab Emirates (UAE) have signed an agreement to remove double taxation hurdles in trade between the two countries.
The Agreement on Avoidance of Double Taxation and Prevention of Fiscal Evasion on Income Taxes was signed in Dubai by Finance ministers Mwigulu Nchemba of Tanzania and Mohamed Bin Hadi Al Hussain of the UAE on Wednesday.
It touches on areas including taxation of income from individual and institutional business activities, air and sea transportation operations, immovable properties, interest rates, dividends, natural resource use, workforce salaries, research payments, pension and social security payments, students’ bursaries and sports matters.
Speaking after the signing in Dubai, Mr Nchemba said one of the primary aims of the 31-clause agreement was to establish a more conducive platform for new foreign direct investment (FDI) engagements between Tanzania and the Middle East.
“This step will help to expand the (Tanzania) government’s tax base by boosting industrial activities and production designed for both domestic and export markets,” he said.
Mr Nchemba acknowledged that double taxation had long been a “point of frustration” for investors and other traders from both UAE and Tanzania, resulting in a lot of lost business opportunities for both countries that can now be better tapped.
Mr Had Al Hussain said the new pact was a positive move towards consolidating bilateral trade and business ties that already exist, especially in the area of tax harmonisation.
But he also urged Tanzanian authorities to ensure that investment capital protection protocols were adhered to.
The two finance ministers also discussed another pact in the pipeline between the two countries, to be called Agreement on Promotion and Protection of Investment, and directed technical experts on both sides to expedite negotiations regarding the details.
The new deals are a follow-up of President Samia Suluhu Hassan's visit to UAE in February, projected to shape the country’s international economic diplomacy.