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### Protocol
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- At the signing of the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Kingdom of Saudi Arabia for the Avoidance of Double Taxation and the Prevention of Tax Evasion with respect to Taxes on Income and on Capital, the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Kingdom of Saudi Arabia have agreed that the following provisions shall form an integral part of the Convention.
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- 1. With reference to Article 3 (General Definitions):
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- It is understood that
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- (a) with respect to sub-paragraph (d) of paragraph (1) of Article 3, the term ‘person’ also includes the State, its political subdivisions or local authorities;
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- (b) the term ‘pension scheme’ means any plan, scheme, fund, trust or other arrangement established in a Contracting State which:
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- (i) is generally exempt from income taxation in that State; and
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- (ii) operates principally to administer or provide pension or retirement benefits or to earn income for the benefit of one or more such arrangements.
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- 2. With reference to Article 4 (Residence):
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- it is understood that the term ‘resident of a Contracting State’ includes
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- (a) a pension scheme established in that State; and
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- (b) an organisation that is established and is operated exclusively for religious, charitable, scientific, cultural, or educational purposes (or for more than one of those purposes) and that is a resident of that State according to its laws, notwithstanding that all or part of its income or gains may be exempt from tax in that State.
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- 3. With reference to Article 7 (Business Profits):
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- it is understood that
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- (a) in the case of contracts for survey, construction, supply or installation, the profits of a permanent establishment shall not be determined on the total amount of the contract, but shall be determined only on the basis of that part of the contract which is effectively carried out by the permanent establishment in the state where the permanent establishment is situated. Any portion of the contract executed outside the Contracting State in which the permanent establishment is situated shall not be taken into consideration in determining the profits of that permanent establishment;
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- (b) the term ‘business profits’ includes, but is not limited to, income derived from manufacturing, mercantile, banking, insurance, the operation of inland transportation, the furnishing of services and the rental of tangible personal movable property. Such a term does not include the performance of personal services by an individual either as an employee or in an independent capacity.
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- 4. With reference to Article 10 (Dividends):
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- it is agreed that dividends shall be exempt from tax in the Contracting State of which the company paying the dividends is a resident if the beneficial owner of the dividends is a pension scheme which is a resident of the other Contracting State;
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- 5. With reference to paragraph 2(a) of Article 10 (Dividends):
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- (a) the term ‘property investment vehicle’ means a widely held investment vehicle that distributes most of its income - from immovable property within the meaning of Article 6 - on which it is exempt from tax;
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- (b) the term ‘qualifying dividend’ means a distribution by a property investment vehicle as referred to in sub-paragraph (a).
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- 6. With reference to Article 11 (Income from Debt Claims):
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- it is understood that the term ‘ income from debt-claims’ does not include any item which is treated as a dividend under the provisions of Article 10 of this Convention.
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- 7. With reference to Article 13 (Capital Gains):
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- (a) shares in which there is substantial and regular trading on a stock exchange are not within the scope of paragraph 4;
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- (b) it is understood that the provisions of paragraph 6 of Article 13 shall not affect the right of a Contracting State to levy according to its law a tax chargeable in respect of gains from the alienation of any property on a person who is, and has been at any time during the previous six fiscal years, a resident of that Contracting State or on a person who is a resident of that Contracting State at any time during the fiscal year in which the property is alienated.
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- 8. With reference to Article 24 (Elimination of Double Taxation):
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- (a) where gains may be taxed by the United Kingdom in accordance with paragraph 7(b) of this Protocol, the United Kingdom and not the Kingdom of Saudi Arabia shall eliminate double taxation in accordance with the methods set out in paragraph 1 of Article 24 as if the gains arose from sources in the Kingdom of Saudi Arabia. However, where gains may be taxed by the United Kingdom in accordance with paragraphs 1, 2 or 3 of Article 13, the Kingdom of Saudi Arabia and not the United Kingdom shall eliminate double taxation in accordance with the methods set out in paragraph 2 of Article 24
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- (b) For the purpose of the United Kingdom providing relief for Saudi Arabia tax, it is understood that Saudi Arabian nationals resident in the United Kingdom are subject to income tax in the Kingdom of Saudi Arabia on their income from sources therein, therefore such persons will be entitled to credit in the United Kingdom only for income tax payable to the Kingdom of Saudi Arabia on their income from sources therein.
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- 9. With reference to Article 26 (Exchange of Information):
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- it is understood that as long as the domestic laws of both Contracting States so allow, both Contracting States shall exchange information held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or information relating to ownership interests in a person.
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- 10. With reference to the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Kingdom of Saudi Arabia for the Avoidance on a Reciprocal Basis of Double Taxation on Revenues Arising from the Business of International Air Transport and on the Remuneration of Employees of Enterprises Engaged in such Business, signed at Riyadh on 10 March 1993, it is understood that nothing in this Convention shall affect the provisions of that Agreement to the extent that they have effect as regards taxes to which this Convention applies. However, where any greater relief for such taxes is afforded by any provision of this Convention, that provision shall apply.
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In witness whereof the undersigned, duly authorised thereto, have signed this Protocol.
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Done in duplicate at London this 31st day of October 2007 in the English and Arabic languages, both texts being equally authoritative.
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For the Government of the United Kingdom of Great Britain and Northern Ireland: Alistair Darling.
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For the Government of the Kingdom of Saudi Arabia: Ibrahim A. Al-Assaf.