Tax Treaty between Albania and Saudi Arabia in Force

Tax Treaty between Albania and Saudi Arabia in Force

The income and capital tax treaty between Albania and Saudi Arabia entered into force on 1 December 2019. The treaty, signed 6 February 2019, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Albanian corporate profits tax, personal income tax, capital gains tax on the alienation of immovable property, the tax on small business activities, and property tax. It covers Saudi Zakat and income tax, including the natural gas investment tax.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services within a Contracting State through employees or other engaged personnel for a period or periods aggregating more than 6 months within any 12-month period.

Withholding Tax Rates

  • Dividends – 5%
  • Interest – 6%
  • Royalties – 5% on royalties paid for the use of, or the right to use, industrial, commercial, or scientific equipment; otherwise, 8%

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

  • Gains from the alienation of immovable property situated in the other State;
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State; and
  • Gains from the alienation of shares that constitute a share in a company resident in the other State.

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation.

Non-Discrimination

The treaty does not include a non-discrimination article.

Effective Date

The treaty applies from 1 January 2020.

The tax treaties in force until now are close to 42 Agreements, which have as reference the OECD tax treaties model.

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