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Note: This Treaty may be impacted by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). MLI impact on Tax Treaties is available with the Orbitax International Tax Research & Compliance Expert.

ARTICLE 28

Entitlement to Benefits

(1) Notwithstanding the application of the other Articles of the Convention, with respect to taxation in Israel only the following residents of the United Arab Emirates may invoke Articles 7, 8 and 10 to 14:

  • (a) the Federal and the local governments of the United Arab Emirates;
  • (b) a qualified government entity of the United Arab Emirates.
  • (c) a company provided that such company can prove that at least 75 per cent of its capital is beneficially owned, directly or indirectly by the United Arab Emirates or by a qualified government entity and give substantial evidence that the remaining capital is beneficially owned by individuals being residents of the United Arab Emirates and that the company is controlled by the aforementioned residents.
  • (d) a pension plan.

(2) Notwithstanding the provisions of paragraph (1), also the following residents of the United Arab Emirates may invoke Articles 8, 10 11 and 13:

  • (a) an individual;
  • (b) a company provided that such company can give substantial evidence that its capital is beneficially owned exclusively by the United Arab Emirates or by a qualified government entity of the United Arab Emirates or by individuals being residents of the United Arab Emirates and the company is controlled by the aforementioned residents.

(3) Notwithstanding the application of the other Articles of the Convention an individual who was a resident of Israel in one or more of the preceding 5 years and became a resident of the United Arab Emirates will not be entitled to the benefits of this Convention.

(4) A further prerequisite for relief from Israeli taxes under paragraphs (1) and (2) is that the person has to prove that more than 50 per cent of its gross income is not used, directly or indirectly, to meet liabilities (including liabilities for interest or royalties) to persons not entitled to benefits of this Agreement.

(5)

  • (a) Where:
    • (i) an enterprise of a Contracting State derives income from the other Contracting State and the first-mentioned State treats such income as attributable to a permanent establishment of the enterprise situated in a third jurisdiction, and
    • (ii) the profits attributable to that permanent establishment are exempt from tax in the first-mentioned Contracting State,
  • the benefits of this Convention shall not apply to any item of income on which the tax in the third jurisdiction is less than 15 per cent of the amount of that item of income. In such a case any income to which the provisions of this paragraph apply shall remain taxable according to the domestic law of the other State, notwithstanding any other provisions of the Convention.
  • (b) The preceding provisions of this paragraph shall not apply if the income derived from the other State emanates from, or is incidental to, the active conduct of a business carried on through the permanent establishment (other than the business of making, managing or simply holding investments for the enterprise's own account, unless these activities are banking, insurance or securities activities carried on by a bank, insurance enterprise or registered securities dealer, respectively).
  • (c) If benefits under this Convention are denied pursuant to the preceding provisions of this paragraph with respect to an item of income derived by a resident of a Contracting State, the competent authority of the other Contracting State may, nevertheless, grant these benefits with respect to that item of income if, in response to a request by such resident, such competent authority determines that granting such benefits is justified in light of the reasons such resident did not satisfy the requirements of this paragraph (such as the existence of losses). The competent authority of the Contracting State to which a request has been made under the preceding sentence shall consult with the competent authority of the other Contracting State before either granting or denying the request.

(6)

  • (a) Notwithstanding any provisions of this Convention, a benefit under this Convention shall not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of the Convention.
  • (b) Nothing in this Convention shall affect the application of the domestic provisions to prevent fiscal evasion and tax avoidance concerning the limitation of expenses and any deductions arising from transaction between enterprises of a Contracting State and enterprises situated in the other Contracting State, if the main purpose or one of the main purposes of the creation of such enterprises or of the transactions undertaken between them, was to obtain the benefits under this Convention, that would not otherwise be available.