Switzerland to prevent double taxation with Saudi Arabia
Saturday, 09 26 2020, Category: Economy, Country: Saudi Arabia
After negotiations that lasted about ten years, and the signing of their initials 31 months ago, the way is now open for Saudi Arabia and Switzerland to sign an agreement preventing double taxation between the two countries.
Yesterday, the Swiss Senate approved the agreement by 24 votes to 2, and 10 abstentions. The House of Representatives had voted last March in favor of the document by 111 votes to 78, with five abstentions.
Finance Minister Mohamed Al-Jadaan and his Swiss counterpart, Ueli Maurer, signed the initials of the agreement during the latter’s visit to Riyadh in February 2018.
Al-Eqtisadiah learned that, during extensive discussions in the Senate on some of the legal aspects of the text, the concerned committee expressed, in particular, its reservations on the provisions of the agreement relating to permanent establishments for service companies in each country. “However, it saw that the benefits outweigh the disadvantages,” according to a source in the Finance Ministry.
“The agreement creates legal security and clarity for companies in both countries,” the Finance Minister said. He said he is confident that “the two countries will be able to solve any problems that may arise in the future. Perhaps the issue of permanent institutions in general should be addressed through innovations in the field of digital taxes.”
For his part, Christian Luscher, on behalf of the committee concerned with discussing the agreement in the House of Representatives, said, “The signing of the agreement will maintain or even strengthen the link between Switzerland and Saudi Arabia.”
This agreement, which puts the two countries under one roof of tax rights and obligations, is the first to be concluded by Switzerland and Saudi Arabia to avoid double taxation on income and wealth taxes. It includes “beneficial systems” for imposing international taxes on corporate profits, as well as other revenues. According to the Swiss Ministry of Finance.
The text fulfills several provisions from the OECD and G20 project on combating base erosion and profit shifting. It includes the condition of administrative and legal assistance in accordance with the international standard for information exchange between the two countries at the request of one of them.
Saudi Arabia has already signed similar agreements with countries such as France, Italy and Austria.