PROTOCOL TO THE AGREEMENT BETWEEN THE UNITED ARAB EMIRATES AND THE REPUBLIC OF ECUADOR FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
At the time of signing of this Agreement between the Republic of Ecuador and the United Arab Emirates for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (hereinafter referred to as the Agreement), the undersigned have agreed upon the following provisions which form an integral part of the Agreement.
(1) With respect to the entire Agreement, it is understood that the provisions of the Agreement shall not apply if the purpose or one of the main purposes of any person that applies such provisions were to take advantage of this Agreement, provided that before denying the benefits the Contracting States must communicate with each other.
(2) With respect to paragraph 1 of Article 5, it is understood that the term “resident” in the case of the United Arab Emirates is defined as follows:
- (a) any individual who under the laws of the United Arab Emirates or of any political subdivision or local government thereof is a national;
- (b) any person other than an individual (including pension funds, charities or religious, educational or cultural organizations) that is constituted under the laws of the United Arab Emirates or of any political subdivision or local government thereof.
(3) With respect to paragraph 4 of Article 6, it is understood that in subparagraphs a) and b), the term “delivery” shall not include the delivery intended for domestic trade but only for the use of the enterprise.
(4) Without prejudice to Article 3, with respect to paragraph 2 of Article 7, the term “rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources” includes shares (or other similar instruments) entitled, directly or indirectly, to those rights.
(5) With respect to paragraph 2 of Article 10, it is understood that the competent authorities of either Contracting State have to notify to the respective taxpayer as soon as possible of their intention to make a determination that could include a transfer pricing adjustment. The two competent authorities shall communicate with each other in writing or face to face to obtain detailed factual information, for that purpose they may apply Article 27.
The taxpayer should be given any reasonable opportunities to present relevant facts and arguments in writing or in oral form.
(6) Without prejudice to paragraph 4 of this Protocol, with respect to paragraph 4 of Article 14, it is understood that gains from the alienation of shares in a company or securities, bonds, debentures and the like, not dealt with in paragraphs 1 to 3, are taxable only in the State of which the alienator is a resident. It is further understood that capital gains from the sales of intangible assets shall be subject to tax only in the State of which the alienator is a resident.
(7) With respect to paragraph 3 of Article 16, an individual who is both a national of a Contracting State and an employee of an enterprise of that Contracting State whose principal business consists of the operation of aircrafts in international traffic and who derives remuneration in respect of duties performed in the other Contracting State, shall be exempt from tax in that other State on remuneration derived from his employment with that enterprise for a period of four years beginning the date on which he first performs duties in that other State.
(8) With respect to Article 22 of this Agreement:
Notwithstanding the provisions of paragraph 1 of Article 22, items of income derived by the Government or its financial institutions of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other Contracting State shall be taxable only in the State where the beneficial owner of the income is a resident.
For the purposes of this paragraph, the term “Government and its financial institutions” means:
- (1) In the case of the United Arab Emirates:
- (a) the federal or local Governments, a political subdivision or a local authority;
- (b) the following entities as long as they are wholly owned by the federal or local Governments of the United Arab Emirates:
- (i) The Central Bank of the United Arab Emirates,
- (ii) The Abu Dhabi Investment Authority,
- (iii) The Abu Dhabi Investment Council,
- (iv) Mubadala Development Company (Mubadala),
- (v) Dubai World,
- (vi) Investment Corporation of Dubai (ICD),
- (vii) Unit Arab Emirates Investment Authority,
- (viii) International Petroleum Investment Company (IPIC), and
- (ix) Any other governmental financial institutions as may be specified, according to the domestic legislation and notified to the competent authority of the other Contracting State.
- (2) In the case of Ecuador:
- (a) the Government, a political subdivision or a local authority;
- (b) the following entities as long as they are wholly owned by the Government of Ecuador:
- (i) The Central Bank of Ecuador, and
- (ii) Any other governmental financial institutions as may be specified, according to the domestic legislation and notified to the competent authority of the other Contracting State.
(9) With respect to subparagraph a) of paragraph 2 of Article 25, it is understood that the term “Governmental entity” entitled to the benefits of the Agreement refers to the entities described in paragraph 8 of this Protocol.
(10) With respect to Article 27:
- (a) The required State shall, as far as possible, submit its response within 90 calendar days counted from the receipt of the request of exchange the information. The competent authorities of the Contracting States may establish specific time limits for specific cases provided by the requesting State;
- (b) In case of impossibility of compliance with the deadline for response or difficulty in obtaining the required information, the competent authority of the requested State shall inform to the competent authority of the requesting State the presumed date in which may be sent the response and the nature of the difficulties to provide the requested information;
- (c) The right of the States to exchange information, under this Agreement, will continue regardless of the termination of this instrument, as long as there is existing investments in the territory of any or both Contracting States.
IN WITNESS WHEREOF, the undersigned, duly authorized thereto, have signed this Protocol.
Done at Dubai on the 09 day of November 2016, in duplicate in the Arabic, Spanish and English languages, all texts being equally authentic. In case of divergence in interpretation, the English text shall prevail.
FOR THE GOVERNMENT OF THE UNITED ARAB EMIRATES:
FOR THE GOVERNMENT OF THE REPUBLIC OF ECUADOR: