Mongolia - United Arab Emirates Tax Treaty

AGREEMENT

BETWEEN THE UNITED ARAB EMIRATES

AND MONGOLIA

FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

The State of United Arab Emirates and Mongolia

Desiring to promote their mutual economic relations through the

conclusion between them of an agreement for the avoidance of double

taxation and the prevention of ﬁscal evasion with respect to taxes on

income

Have agreed as follows:

Article 1 Personal Scope

This Agreement shall apply to persons who are residents of one or both of the Contractin g State

Article 2 Taxes Covered

This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions or local authoﬁties, irrespective of the manner in which they are levied.
There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on . the total amounts of wages or salaries paid by enterpn'ses.
The existing taxes to which this Agreement shall apply are, 'm

patticular:

a) In the case of UAE : (1) the income tax;

(2) the corporate tax (hereinafter referred to as “UAE tax”);

b) In the case of Mongolia:

(1) the individual income tax; (2) the corporate income tax; ( hereinafter referred to as Mongolia Tax):

This Agreement shall apply also to any identical or substantially similar taxes which are imposed under the laws of a Contracting State after the date of signature of this Agreement in addition to , or in place of , the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws.

Article 3 General deﬁnition

For the purposes of this Agreement, unless the context otherwise requires:

a) The terms “ a Contracting State” and “ the other Contracting State” mean United Arab Emirates or Mongolia, as the context requires;

b) The term “ United Arab Emirates” means the United Arab Emirates and when used in a geographical sense , means the area in which the territory is under sovereignty as well as the territorial sea, airspace and submarine areas over which the United Arab sovereign rights, including the mainland and islands under its jurisdiction in respect of any activity carried on in connection with the exploration for or the exploitation of natural resources;

c) The term “ Mongolia” means, when used in a geographical sense, the territory of Mongolia and any area in which the tax law of Mongolia is in force insofar as Mongolia exercises in such area, in confonnjty with international law, sovereign rights to exploit its natural resources;

d) The term “person” includes any individual or company and any other body of persons;

e) The term “national” means:

(1)any individual possessing the nationality of a contracting State:

(2) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;

f)The term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;

g) The terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

h) The team “intemational trafﬁc” means any transport by a ship or aircraft operated by an enterprise of a contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

i) the term “tax” means UAE tax or Mongolian tax, as the context requires;

j) the term “competent authority” means:

(1)in the case of the UAE: the Minister of Finance and Industry or an authorized representative of the

Minister of Finance and Industry ;

(2) in the case of Mongolia: the Minister of Finance and Economy or an authorized representative of the Minister of Finance and Economy ;

As regards the application of the Agreement at any time by a Contracting State, any term not deﬁned therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that Contracting State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

Article 4

Resident

For the purposes of this Agreement , the term “resident of a Contracting State” means:

a) in the case of the UAE : an individual who has his domicile in United Arab Emirates and the UAE national , and a company which is incorporated in UAE;

b) in the case of Mongolia: any person who, under the tax laws of Mongolia, is liable to tax therein by reason of his domicile, residence, place of incorporation, place of management or any other criterion of a similar nature.

For the purposes of paragraph 1, a resident of a Contracting State shall include:

a) the Government of that Contracting State and any political subdivision or local Government authority thereof;

b) any governmental institution created in that contracting State under public law such as a corporation, Central Bank, Fund in case UAE, UAE Central Bank , Abu Dhabi Investment Authority, Abu Dhabi Investment Company , Dubai Tourism Department . foundation, agency or other similar entity;

c) any entity established in that Contracting State by the Government of that Contracting State or any political subdivision or local Government authority thereof or any governmental institution as deﬁned in subparagraph b of this Article) together with similar bodies of third states.

Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

(a) he shall be deemed to be a resident only of the contracting State in which he has a permanent home available to him; if he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident only of the contracting State with which his personal and economic relations are closer (center of vital interests);

(b) if the Contracting State in which he has his center of vital interests cannot be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident only of the Contracting State in which he has an habitual abode;

(c) if he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident only of the contracting State of which he is a national;

(d) if his status cannot be determined under the provisions of subparagraph 0), the competent authorities of the Contracting States shall settle the question by mutual agreement.

Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the Contracting State where it was incorporated

Article 5 Permanent Establishment

For the purposes of this Agreement, the term “permanent establishment” means a ﬁxed place of business through which the business of an enterprise is wholly or partly carried on.
The tenn “ permanent establishment’ includes especially:

a) aplace of management;

b) abraneh;

c) an ofﬁce;

d) a factory;

e) aworkshop',

f) a mine, an oil or gas well, a quarry or any other place relating to the exploration for or exploitation of natural resources.

a building site, a construction, assemble or installation project or supervisory activities in connection therewith carried out in a Contracting State, constitutes a permanent establishment only if such site, project or activities continue for a period of more than 18 months.
the furnishing of services, including consultancy or managerial services, by an enterprise of a Contracting State through employees or other personnel engaged by the enterprise for such purpose, in the other Contracting State constitutes a permanent establishment only if activities of that nature continue for a period or periods aggregating more than 18 months.
an enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State if substantial , mechanical or scientiﬁc equipment or machinery is used for more than eighteen months or installed, in that other contracting State by , for or under contract with the enterprise.
Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

d) the maintenance of a ﬁxed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;

e) the maintenance of a ﬁxed place of business solely for the purpose of carrying on, for the enterprise any other activity of a preparatory or auxiliary Character;

f) the maintenance of a ﬁxed place of business solely for any combination of activities mentioned in subparagraphs a) to e), provided that the overall activity of the ﬁxed place of business resulting from this combination is of a preparatory or auxiliary character.

Notwithstanding the provisions of paragraphs 1 and 2 , where a person-otber than an agent of an independent status to whom paragraph 9 applies — is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the ﬁrst-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:

a) Has, and habitually exercises in the ﬁrst-mentioned Contracting State, an authority to conclude contracts in the name of such enterprise, unless the activities of such person are limited to those mentioned in paragraph 6 which, if exercised through a ﬁxed place of business, would not make this ﬁxed place of business a permanent establishment under the provisions of that paragraph;

b) Has no such authority, but habitually maintains in the ﬁrst- mentioned Contracting State a stock of goods or merchandise belonging to such enterprise from which he regularly delivers goods or merchandise on behalf of such enterprise;

c) Habitually secures orders in the ﬁrst-mentioned Contracting State, exclusively or almost exclusively for the enterprise itself or for such enterprise and other enterprises which are controlled by it or have a controlling interest in it.

d) In so acting, he manufactures or processes in that Contracting State for the enterprise goods or merchandise belonging to the enterprise.

Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 9 applies.
An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other Contracting State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise and other enterprises, which are controlled by it or have a controlling interest in it , he will not be considered an agent of an independent status within the meaning of this paragraph.
Notwithstanding the provision of paragraph 9 of this Article insurance companies that owned or controlled by a contracting State or its Local Governments or local authorities. shall be treated differently for tax purposes and shall be subject to tax only in the state of residence .

11.The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other Contracting State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

Article 6 Income from Immovable Property

Income derived by a resident of a Contracting State from immovable property (including income from agriculture of forestry) situated in the other Contracting State may be taxed in that other Contracting State, but the tax so charged shall be reduced by an amount equal to 50% (ﬁfty percent) of such tax.
The term “immovable property” shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or ﬁxed payments as consideration for _the working of, or the right to work, mineral deposits, sources and other natural resources; ships and aircraft shall not be regarded as immovable property.
The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.
The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.
The provisions of Paragraphs 1,3 and 4 shall not apply if the beneﬁciary owner of the income derived from immovable property is the State itself or local, political subdivision local Govemrnent or local ﬁnancial institutions. Such income shall be taxable only in the state of residence.

Article 7 Business Proﬁts

The proﬁts of an enterprise of a Contracting State shall be taxable only in that Contracting State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated in that other Contracting State. If the enterprise carries on or has carried on business in that manner, the proﬁts of the enterprise may be taxed in the other Contracting State but only so much of them as is attributable to

a) That permanent establishment ;or

b) sales in that other State of goods or merchandise of the same and similar kind as those sold through that permanent establishment.

Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the proﬁts which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
In determining the proﬁts of a permanent establishment, there shall be allowed as deductions those deductible expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred , whether in the Contracting State in which the permanent establishment is situated or elsewhere, taking into consideration any applicable law or regulations in the concerned Contracting State. However , no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for speciﬁc services performed or for management, or , except in the case of a banking enterprise, by way of interest on moneys lent to the head ofﬁce of the enterprise or any or its other ofﬁces.
No proﬁts shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
Insofar as it has been customary in a Contracting State to determine the proﬁts to be attributed to a permanent establishment on the basis of an apportionment of the total proﬁts of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the proﬁts to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
If the information available to the competent authority of a Contracting State is inadequate to determine the proﬁts to be attributed to the permanent establishment of a person, nothing in this Article shall affect the application of any laws or regulations of that Contracting State relating to the determination of the tax liability of that permanent establishment by making of an estimate by the competent authority of that Contracting State of the proﬁts to be subject to tax of that permanent establishment, provided that such laws or regulations shall be applied consistently with the principles of this Article, taking into account the information available to the competent authority.
For the purposes of the preceding paragraphs, the proﬁts to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufﬁcient reason to the contrary.
Where proﬁts include items of income or gains which are dealt

with separately in other Articles of this Agreement, then the

provisions of those Articles shall not be affected by the provisions of this Article.

The provisions of paragraph 1,2 and 3 shall not apply if the beneﬁciary owner of the proﬁt is the State itself political subdivision, local governments , local authority or their ﬁnancial institutions, such income shall be taxable only at the state of residence.

Article 8 Shipging and Air Transport

Notwithstanding the provisions of Article 7 of this Agreement :

Proﬁts of an enterprise of a Contracting State from the operation of ships or aircraft in international trafﬁc shall be taxable only in that Contracting State.
For the purposes of this Article proﬁts from the operation of ships or aircraft in international trafﬁc include:

a) proﬁts from the rental on a bareboat basis of ships or aircraft;

b) proﬁts from the use, maintenance or rental of containers, including trailers and related equipment for the transport of containers, used for the transport of goods or merchandise;

The provisions of paragraph 1 shall also apply to proﬁts derived from:
the participation in a pool , a joint business or an international operatin g agency.
selling of tickets on behalf of another enterprise
income from training schemes
income ﬁom selling of technical engineering to a third party
income arising ﬁom contract building in case of tender for contracting airport facilities
income deriving from deposits at the Bank technical equipments including vehicles, computers and ofﬁce ﬁnniture shall be exempt from custom duties.

Article 9 Associated Enterprises

1 . Where

a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State,

b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or ﬁnancial relations which differ from those which would be made between independent enterprises, then any proﬁts which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions: have not so accrued, may be included in the proﬁts of that enterprise and taxed accordingly.

Where a Contracting State includes in the proﬁts of an enterprise of that Contracting State -and taxes accordingly -proﬁts on which an enterprise of the other Contracting State has been charged to tax in that other Contracting State and the proﬁts so included are proﬁts which would have accrued to the enterprise of the ﬁrst—mentioned Contracting State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other Contracting State shall make an appmpriate adjustment to the amount of the proﬁts subjected to tax. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall, if necessary , consult each other.

Article 10 Dividends

Dividends paid by a company which is a resident of a Contracting State, to a resident of the other Contracting State shall be taxable only in that other Contracting State.
The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the taxation laws of the Contracting State of which the company making the distribution is a resident.
The provisions of paragraph 1 shall not apply if the beneﬁcial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated in that other Contracting State, or performs in that other Contracting State independent personal services from

a ﬁxed base situated in that other Contracting State, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or ﬁxed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

Where a company which is a resident of a Contracting State derives proﬁts or income from the other Contracting State, that other Contracting State may not impose any tax on the dividends paid by the company , except insofar as such dividends are paid to a resident of that other Contracting State who is the beneﬁcial owner of the dividends or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a ﬁxed base situated in that other Contracting State, nor subject the company’s undistributed proﬁts to a tax on the company’s undistribnted proﬁts, even if the dividends paid or the undistributed proﬁts consist wholly or partly of proﬁts or income arising in such other contracting State.
The provision of paragraphs 3 and 4 shall not apply if the beneﬁcial owner of the dividends is the state itself, local government , local authority or their ﬁnancial institutions. Such income shall be subject to tax at the state of residence.

Article 11 Interest

Interest arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in that other Contracting State, including loans guaranteed by the government of the other Contracting State or any governmental institution or other entity thereof, as deﬁned in paragraph 2 of Article 4.
The term “interest” as used in this Article means income from debt—claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s proﬁts, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities , bonds or debentures, as well as income which is subjected to the same taxation treatment as income from money lent by the taxation laws of the Contracting State in which the income arises.
The provisions of paragraph 1 shall not apply if the beneﬁcial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated in that other Contracting State, or performs in that other Contracting State independent personal services from a ﬁxed base situated in that other Contracting State, and the debt-clairn in respect of which the interest is paid is effectively connected with such permanent establishment or ﬁxed base. In such case the provisions of Article 7 or Article 14, as the case may be , shall apply.
Interest shall be deemed to arise in a Contracting State when the payer is a resident of that Contracting State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a ﬁxed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or ﬁxed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or ﬁxed base is situated.
Where, by reason of a special relationship between the payer and the beneﬁcial owner of the interest, or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneﬁcial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-rnentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
The provisions of paragraph 3,4 and 5 shall not be applied if the beneﬁcial owner of the interest being the state itself, political subdivision, local Government or local authority or their ﬁnancial institutions. Such income shall be taxable only at the state of residence.

Article 12 Royalties

Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State.
However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that Contracting State , but if the beneﬁcial owner of the royalties is a resident of the other Contracting State the tax so charged shall not exceed 10% (ten percent) of the gross amount of such royalties.
The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of , or the right to use, any copyright of literary, artistic or scientific work including cinematograph ﬁlms and works on ﬁlms , tapes or other means of reproduction for use in connection with television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information (know-how) concerning industrial, commercial or scientiﬁc experience.
The provisions of paragraphs 1 and 2 shall not apply if the beneﬁcial owner of the royalties, being a resident of a Contracting State , carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated in that other Contracting State, or performs in that other Contracting State independent personal services from a ﬁxed base situated in that Contracting State and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or ﬁxed base . in such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that Contracting State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not , has in a Contracting State a permanent establislnnent or a ﬁxed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or ﬁxed base, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment or ﬁxed base is situated.
Where, by reason of a special relationship between the payer and the beneﬁcial owner of the royalties or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount

which would have been agreed upon by the payer and the beneﬁcial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State , due regard being had to the other provisions of this Agreement.

Article 13 Capital Gains

Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other Contracting State, but the tax so charged shall be reduced by an amount equal to 50% (ﬁfty percent) of such tax.
Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a ﬁxed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such ﬁxed base, may be taxed in that other Contracting State, but the tax so charged shall be reduced by an amount equal to 50% (ﬁﬁy percent) of such tax.
Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international trafﬁc or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that Contracting State.
Gains from the alienation of any property other than that referred to in paragraphs 1,2 and 3 shall be taxable only in the Contracting State of which the alienator is a resident.

Article 14 Indegendent personal services

Income derived by an individual who is a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that Contracting State except in any of the following circumstances, when such income may also be taxed in the other Contracting State:

a) If he has a ﬁxed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case only so much of the income as is attributable to that ﬁxed base may be taxed in that other Contracting State;

b) If his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in 12 month period commencmg or ending in the ﬁscal year concerned; in that case only so much of the income as is derived in that other Contracting State during the aforesaid period or periods may be taxed in that other Contracting State.

The term “professional services” includes especially independent scientiﬁc, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

Article 15 Denendent Personal Services

Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that Contracting State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other Contracting State.
Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State shall be taxable only in the ﬁrst- mentioned Contracting State if all the following conditions are met:

a) The recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183days in 12 month period commencing or ending in the ﬁscal year concerned;

b) The remuneration is paid by, or on behalf of , an employer who is not a resident of the other Contracting State.

c) The remuneration is not borne by a permanent establishment or a ﬁxed base which the employer has in the other Contracting State.

Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international trafﬁc by an enterprise of a Contracting State shall be taxable only in that Contracting State.
An individual who is both a national of a Contracting State and an employee of an enterprise of that Contracting State the principal business of which consists of the operation of aircraft 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 Contracting State on remuneration derived from his employment with that enterprise.

Article 16 Directors’ Fees

Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or other similar organ of a company which is a resident of the other Contracting State shall be taxable only in the ﬁrst-mentioned Contracting State.

Article 17 Artists and Sgortsmen

Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Contracting State , may be taxed in that other Contracting State.
Where income in respect of personal. activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7,14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised.
The provisions of paragraphs l and 2 shall not apply to income derived by entertainers or sportsmen who are residents of a Contracting State Jfrom personal activities as such exercised in the other Contracting State if their Visit to that other Contracting State is substantially supported ﬁorn the public funds of the ﬁrst-mentioned Contracting State, including those of any political subdivision, a local authority or statutory body thereof, nor to income derived by a non- proﬁt making organization in respect of such activities provided no part of its income is payable to , or is otherwise available for the personal beneﬁt of its proprietors, founders or members.

Article 18 Pensions and Annuities

Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration and annuities paid to an individual who is a resident of a Contracting State in consideration of past employment shall be taxable only in that Contracting State.
As used in this Article:

a) The terms “pensions and other similar remuneration” mean periodic payments made after retirement in consideration of past employment or by way of compensations for injuries received in connection with past employment;

b) The term “annuity” means a stated sum payable to an individual periodically at stated times during life, or during a speciﬁed or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.

wages and other similar remuneration and to pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof

Article 20 Teachers and Researchers

An individual who is or was immediately before Visiting a Contracting State a resident of the other Contracting State and who at the invitation of the Government of the ﬁrst-rnentioned Contracting State or of a university college, school, museum or other cultural institution in that ﬁrst-mentioned Contracting State or under an official programme of cultural exchange is present in that Contracting State for a period not exceeding two consecutive years solely for .the purpose of teaching giving lectures or carrying out research at such institution shall be exempt from tax in that Contracting State on his remuneration for such activity.

Article 21 Students and Trainees

Payments which a student or business trainee who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the ﬁrst—mentioned Contracting State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training Shall not be taxed in that Contracting State, provided that such payments arise from sources outside that Contracting State.
In respect of grants, scholarships and remuneration from employment not covered by paragraph 1, a student or business trainee described in paragraph I shall , in addition, be entitled during

such education or training to the same exemptions, reliefs or reductions in respect of taxes available to residents of the Contracting State which he is visiting.

Article 22 Other Income

Items of income of a resident of a Contracting State , wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that Contracting State.

Article 23 Special provisions

Without prejudice to the exemptions being given to the government as deﬁned in Article 4 paragraph 2 , any other income, and proﬁts derived by a Contracting State, its political subdivisions and local governments or their ﬁnancial institutions arising in the other Contracting State, including gains from the alienation of movable and immovable property situated in that other State, and income and proﬁt from industrial, or commercial activities or income of investments from tourism or hotels owned by the government as deﬁned in Article 4 paragraph 2 of this Agreement , all such items of income shall be taxable only in the State of residence.

Article 24 Enforcement of commitment

Each contracting State shall honor in good faith all its commitments arising from the application of this Agreement and shall observe any commitment or undertaking that arising from this Agreement and shall enforce irrevocably pursuant to the provisions of this Agreement all the beneﬁts and exemptions to the other Contracting State.

Article 19 Government Service

a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that Connecting State or subdivision or authority shall be taxable only in that Contracting State.

b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that Contracting State and the individual is a resident of that Contracting State and has fulﬁlled one of the following conditions:

(1) is a national of that Contracting State;

(2) did not become a resident of that Contracting State solely for the purpose of rendering the services. 2. a) any pension paid by , or out of funds created by , a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that Contracting State or subdivision or authority shall be taxable only in that Contracting State.

b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of , and a national of , that Contracting State.

The provisions of Articles 15,16,17 and 18 shall apply to salaries,

Article 25 Elimination of Double Taxation

The laws in force in either of the Contracting State shall continue to govern the taxation in the respective Contracting State except where provisions to the contrary are made in this Agreement.
It is agreed that double taxation shall be avoided in accordance with the following provisions:

a) In the case of UAE :

Where a resident of United Arab Emirates derives income or owns capital which, in accordance with the provisions of this Agreement, may be taxed in both Mongolia and United Arab Emirates, UAE shall allow as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in Mongolia.

Such deduction shall not, however, exceed that part of the tax on income, as computed before the deduction is given, which is attributable to the income which may be taxed in Mongolia.

b) In the case of Mongolia:

Where a resident of Mongolia derives income or owns capital which , in accordance with the provisions of this Agreement, may be taxed in both United Arab Emirates and Mongolia, Mongolia shall allow as a deduction ﬁom the tax on the income of that resident , an amount equal to the income tax paid in UAE.

Such deduction shall not, however, exceed that part of the tax on income , as computed before the deduction is given, which is attributable to the income which may be taxed in UAE.

For the purposes of allowance as a credit in a Contracting State, the tax paid in the other Contracting State shall include the tax which is otherwise payable in that other contractingr State, but has been waived or reduced in accordance with the special investment incentive law or measures designed to promote economic development in that other Contracting State.

Article 26 Non-Discrimination

Individuals possessing the nationality of a Contracting State shall not be subjected in the other Contracting State to any taxation or any obligations connected therewith, which is other or more burdensome than the taxation and connected obligations to which individuals possessing the nationality of that other Contracting State in the same circumstances, in particular with respect to residence , are or may be subjected.
The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favorably levied in that other Contracting State than the taxation levied on enterprises of third states, carrying on the same activities in the same circumstances. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
Enterprises of a Contracting State, the capital of which is wholly or partly owned or which is controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the ﬁrst-mentioned Contracting State to any taxation or any obligations connected therewith which is other or more burdensome than the taxation and connected obligations to which other similar enterprises the capital of which is wholly or partly owned or which is controlled directly or indirectly by one or more residents of any third state are or may be subjected.
Nothing in this Article shall be interpreted as imposing a legal obligation on a Contracting State to extend to the residents of the other Contracting State, the beneﬁt of any treatment, preference or privilege which may be accorded to any third state or its residents by virtue of the formation of a customs union, economic union, a free trade area or any regional or sub-regional arrangement relating wholly or mainly to taxation or movement of capital to which such the ﬁrst—mentioned Contracting State may be a party.
In this Article, the term “taxation” means taxes which are the subject of this Agreement.

Article 27 Mutual Agreement Procedure

Where a person considers that the actions of one or both of the Contracting State result or will result for him in taxation not in accordance with the provisions of this Agreement, he may , irrespective of the remedies provided by the domestic law of those Contracting State, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the Contracting State of which he is a national. The case must be presented within three years from the

ﬁrst notiﬁcation of the action resulting in taxation not in accordance with the provision of this Agreement.

The competent authority shall endeavour, if the objection appeaIs to it to be justiﬁed and if it is not itself able to anive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a View to the avoidance of taxation which is not in accordance with Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting State.
The competent authonties of the Contracting State shall endeavour to resolve by mutual agreement any difﬁculties or doubts alising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.
The competent authorities of the Contracting State may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

Article 28 Exchange of Information

The competent authorities of the Contracting State shall exchange such information as is necessary for canying out the provisions of this Agreement or of the domestic laws of the Contracting State concerning taxes covered by this Agreement insofar as the taxation thereunder is not contrary to this Agreement . Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that Contracting State and shall be disclosed only to persons or authorities

(including courts and administrative bodies) involved in the assessment or collection of , the enforcement or prosecution in respect of, or the determination of appeals in relation to , the taxes covered by this Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:

a) to cany out administrative measures at variance With the laws and administrative practice of that or of the other Contracting State;

b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

c) to supply information which would disclose any trade, business, industrial , commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (order public )

Article 29 Miscellaneous Rules

The provisions of this Agreement shall not be construed to restrict in any manner any exclusion, exemption, deduction, credit, or other allowance now or hereafter accorded:

a) by the laws of a Contracting State in the determination of the tax imposed by that Contracting State;

b) by any other special arrangement on taxation between the Contracting States or between one of the Contracting States and residents of the other Contracting State.

The Competent authorities of each Contracting State may prescribe reguiations in order to carry out the provisions of this Agreement.

Article 30 Members of Diplomatic Missions and Consular Posts

Nothing in this Agreement shall aﬁect the ﬁscal privileges of members of diplomatic missions or consular posts or employees of international organizations under the general rules of international law or under the provisions of special agreements.

Article 31 Entry into Force

Each of the Contracting States shall notify to the other in writing the completion of its constitutional procedures for the entry into force of this Agreement. This agreement shall enter into force on the date of receipt of the latter of these notiﬁcations and its provisions shall thereupon have effect in both Contracting States:

a) in respect of taxes withheld at source, for amounts paid or credited on or aﬁer the ﬁrst day of J anuary of the year in which this Agreement is signed;

b) in respect of other taxes, for taxable periods beginning on or after the ﬁrst day of Januaiy of the year in which this Agreement is signed.

Article 32 Duration and Termination

The Agreement shall remain in force for a period of ﬁve years and shall continue in force thereafter for a similar period or periods unless either Contracting State notiﬁes the other in writhing, at least six months before the expiry of the initial or any subsequent period, of its intention to terminate this Agreement. In such event, this Agreement shall cease to have effect in both Contracting States:

a) in respect of taxes withheld at source, for amounts paid or credited on or after the ﬁrst day of January of the year next following that in which the notice of tennination is given;

b) in respect of other taxes, for taxable periods beginning on or after the ﬁrst day of January of the year next following that in which the notice of termination is given.

IN WITNESS WHEREOF, the undersigned, duly authorized thereto by their respective Governments, have signed this Agreement.

Done at Dubai on Wednesday 21th of February,2001. corresponding to 25th Dhul-qa’da 1421H, in two originals in the English language.

For the United Arab Emirates For Mongolia

Hamdan Bin Rashid Al-Maktoum Luv Er enechuluun Deputy Ruler of Dubai Minister for Foreign Affairs Minister of Finance & Industry Government of Mongolia

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