Bahrain, UK double tax agreement strengthens business ties
A Bahrain–United Kingdom (UK) Double Taxation Agreement (BAH-UK-DTA), signed on March 10th, will further enhance financial and economic cooperation between the two countries encouraging greater trade and joint investment, said Shaikh Mohammed bin Essa Al Khalifa, Chief Executive of the Bahrain Economic Development Board (EDB).
The BAH-UK-DTA ensures the elimination of double taxation on income and capital gains for enterprises operating in both countries. Signed by H.E. Shaikh Ahmed bin Mohammed Al Khalifa, Bahrain’s Minister of Finance, and H.E. Jamie Bowden OBE, British Ambassador to the Kingdom of Bahrain, the agreement is part of continued efforts by the two countries to extend their economic treaty network. It adds to the already signed Treaty of Friendship, Agreement for the Promotion and Protection of Investments, and Memorandum of Understanding on Economic and Technical Cooperation.
Shaikh Mohammed said: “This agreement is testament to Bahrain’s open, transparent approach to good governance, business and investment and to our commitment to bolstering cooperation in exchanging information with other countries including the United Kingdom. Bahrain has historic links with the UK; we are both well established financial centres and this agreement reflects the keenness of our two countries to further strengthen business ties”.
“It will help to create a platform for foreign investment in the Bahrain economy and for Bahrain companies to benefit from the opportunity to expand into overseas markets. It is another step in creating the framework that will allow for a dynamic private sector in Bahrain, one that will be the engine of future economic growth to help achieve the ambitions of Vision 2030 and the National Economic Strategy.”
Bahrain’s Vision 2030 and National Economic Strategy are designed to drive the private sector as an engine of growth, support further diversification of the economy and ultimately elevate national living standards by creating greater opportunities for all Bahrainis.
The BAH-UK-DTA joins 27 existing signed Agreements on the Avoidance of Double Taxation; this number could soon be bolstered by a further 11 other such agreements which have been concluded by the Ministry of Finance and are awaiting signature. It is one of 16 DTAs signed by Bahrain which comply with the standard on Exchange of Tax Information, set by the Organisation for Economic Co-operation and Development (OECD) and endorsed by the G20 at its summit in London, April 2009. These are with key trading partners across the MENA region such as Jordan, Morocco and Syria, and internationally with the likes of China, France and Singapore.
The strong progress made by Bahrain in the past year on the issue of transparency and exchange of tax information has been recognised by the Global Forum on Transparency and Exchange of Information for Tax Purposes (GFTEI) In its international ranking of the progress made in implementing the internationally agreed standard on exchange of tax information, the GFTEI last year promoted Bahrain to rank alongside leading financial centres such as the UK and United States.
On signing the BAH-UK-DTA, H.E. Shaikh Ahmed bin Mohammed Al Khalifa said: “Bahrain is continuing to focus on strengthening cooperation with other countries across the globe in areas including finance, economy and investment. Through key talks, bilateral and multilateral agreements, as well as memoranda of understanding – which provides a legal framework for this cooperation – Bahrain is enhancing its competitiveness as a well-diversified and growing economy.”
Ambassador Bowden said; “This is the latest indication of the close ties between two key centres of international finance, the UK and Bahrain. The elimination of double taxation on income and capital gains in each other’s countries is a positive step towards facilitating investment.”
As well as the BAH-UK-DTA Bahrain’s tax treaty network includes agreements with several Asian countries including China and Malaysia, European countries such as France and the Netherlands, MENA countries such as Egypt and Jordan, OECD members such as Belgium and Turkey, and financial centres such as Luxembourg and Singapore. The tax treaty network with these countries is supported by bilateral investment treaties which promote and protect investments. The Kingdom has also signed bilateral investment treaties with other countries including India, Italy and the USA, and Free Trade Agreements (FTAs) with trading partners such as the USA and Singapore.