12 September 2016
The income tax treaty between Portugal and Saudi Arabia entered into force on 1 September 2016. The treaty, signed 8 April 2015, is the first of its kind between the two countries.
The treaty covers Portuguese personal income tax, corporate income tax, and surtaxes on corporate income tax. It covers Saudi Zakat and income tax, including the natural gas investment tax.
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services in a Contracting State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 6 months within any 12-month period.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries apply the credit method for the elimination of double taxation.
The treaty does not include a non-discrimination article.
Article 27 (Miscellaneous Provisions) includes that the provisions of the treaty will not apply if the main purpose or one of the main purposes of any person concerned with the creation or assignment of the property or right in respect of which the income is paid was to take advantage of the treaty by means of such creation or assignment. Article 27 also includes that the benefits of the treaty will not be granted to a resident of a Contracting State if it is not the beneficial owner of the income derived from the other State.
The treaty applies from 1 January 2017.
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