The UAE, the Arab world’s second-largest economy, is moving closer to finalising a double tax agreement (DTA) with Israel that will boost economic activity and make the two nations more attractive to international investors.
Shira Greenberg-Gelbwaser, chief economist and director of state revenue, research and international affairs at Israel’s Ministry of Finance said: “We are just in the final stage of negotiation and I believe we will finish the tax treaty with the UAE within the next weeks … I can assure the private sector that this tax treaty between the two countries will be very, very useful.”
A DTA and free trade agreement are among several frameworks being worked on by the UAE and Israel to increase trade and investments flows between the two nations after they normalised relations last year.
In the short term, Israel expects its trade with the UAE to reach $2.5 billion in the wake of last August’s Abraham Accords, but in the longer term, bilateral trade could grow to $6 billion. “These are huge numbers,” said Greenberg-Gelbwaser, adding that Israel’s bilateral trade with Bahrain, which was also a signatory of the accords, could reach $220 million.
Last month, the UAE announced the establishment of a $10 billion fund with Israel that will invest in sectors including energy, manufacturing, water, space, health care and agri-tech. The fund will support development initiatives to promote regional economic co-operation between the two countries.
Several other investment deals have been signed at the corporate level with banks exploring potential partnerships and airlines starting commercial operations to further facilitate trade and tourism. Reciprocal agreements have also taken place between stock markets and diamond centres in both countries.
Both Israel and the UAE have similar environments. While Israel has developed its innovation and technology sectors, the UAE has developed as a global logistics hub.