Treaty-smart dealmaking and investments

As global trade and investment flows become increasingly complex, treaty-based frameworks are playing a pivotal role in shaping how businesses engage across borders.

For the United Arab Emirates (UAE), a strategic combination of Bilateral Investment Treaties (BITs), Comprehensive Economic Partnership Agreements (CEPAs), and Double Taxation Treaties (DTTs) is driving a new era of treaty-smart dealmaking. These instruments not only offer legal protections and economic incentives but also create predictable environments for cross-border transactions, enabling UAE-based companies to expand confidently into high-growth markets across Africa, Asia, and beyond. Having noticed in conversations with clients that there is an interest in how to benefit from treaties, but often no clear understanding of the differences of treaty instruments, who may benefit and how, in this article we explores how these treaties work together to support investment, trade, and fiscal efficiency - and what that means for businesses navigating today’s global landscape.

Bilateral Investment Treaties

Modern BITs, which are agreements between two countries that establish the terms and conditions for private investment by nationals and companies of one country in the other, are quietly reshaping dealmaking in high-growth markets. They promote foreign investment and facilitate investor protection, with states using their power to regulate and define key standards around measures such as fair and equitable treatment, protection from expropriation without compensation, free transfer of funds, and access to dispute resolution mechanisms like international arbitration. The stable and predictable investment climate created with BITs, encourages cross-border economic cooperation and development, with M&A and project finance deals become easier to execute and exit. The UAE currently is party to approximately 45 BITs that are in force, including intern alia with Egypt, Kenya, India, China and the UK, with even more having been signed but awaiting ratification or pending entry into force.

These treaties have played a key role in facilitating strong economic relationships between the UAE and some of its largest investors - India, China and the UK, as well as with countries where the UAE has significant investments, including Egypt. Looking at the UAE’s increasing investment across Africa and Asia it is no surprise that over 35 BITs are made with countries in these regions, including for example Tanzania, Singapore and Thailand; the evolving regime showing how BITs support building economic growth corridors. 

The India-UAE 2024 BIT as a practical benchmark

India’s 2024 treaty with the UAE gives a clearer and more predictable basis for planning cross-border investments. It defines protections more precisely. For example, “full protection and security” refers to the physical security of assets, not general legal or commercial stability. It also sets a clear procedure. Third-party funding of treaty claims is not allowed, and an investor must first pursue local courts and regulators for up to three years before starting arbitration. The treaty references well-known arbitration rules and the New York Convention, supporting recognition and enforcement of awards.

The text also sets out coverage in practical terms. A corporate investor must show real activity in its home state, such as an office, personnel, management and revenue, meaning shell companies do not qualify. Benefits under the BIT can be refused if a non-treaty-party has a meaningful ownership stake in the chain. Scope limits are explicit: tax measures and actions by local municipal bodies fall outside the treaty and are handled under domestic law. Transfers of funds are protected, subject to ordinary rules on insolvency, reporting and similar controls. A short window for legacy claims has now closed, so the 2024 text is the operative standard for new planning.

Africa’s fast-moving BIT landscape

The African Union’s African Continental Free Trade Area (AfCFTA) Protocol on Investment (AfCFTA Protocol) is moving from text to implementation, with practical tools such as investor contact points, transparency requirements, and publication of laws. Under the AfCFTA Protocol the BITs concluded between African countries will be terminated within 5 years of the AfCFTA Protocol coming into force. However, the numerous BITs concluded between states in Africa and countries outside of the AfCFTA will remain unaffected.  An example of how BITs benefit businesses are DP World’s expansions projects for port capacity in Senegal, the Democratic Republic of Congo. The BITs made between the UAE and Senegal and the Democratic Republic of Congo (respectively) reduce political and regulatory risk, making it safer for DP World to commit large-scale capital investments relying on BIT-backed protections that can shield DP World from sudden legal or policy change.

Comprehensive Economic Partnership Agreements

CEPAs are trade agreements that allow for the strengthening of international relationships with respect to global trade. Unlike traditional free trade agreements, CEPAs are broader in scope. They may cover goods, services, investment, digital trade, intellectual property, and dispute resolution mechanisms. As of July 2025, the UAE is signatory to 27 CEPAs.

The UAE is using CEPAs to significantly stimulate long-term, sustainable economic growth. To that end, the UAE Ministry of Economy (MOE) expects CEPAs to contribute USD 9 billion to the UAE’s GDP by 2030.

UAE-India CEPA: strong foundations

The UAE-India CEPA, signed in 2022, was the first CEPA the UAE entered into. This is no surprise, given that India is one of the UAE’s biggest trading partners for non-oil exports. According to the UAE MOE, the total value of the UAE’s non-oil trade with India in 2021 amounted to over USD 45 billion, reflecting a 60 percent growth compared to 2020.  

What does this mean for UAE businesses in practice? The UAE-India CEPA introduced benefits including (but not limited to):

• an open and non-discriminatory environment for cross-border trade with India – UAE business may now complete for certain Indian government purchases;
• support for UAE companies through a 10 per cent price preference in UAE government procurement tenders;
• reduced barriers to trade in goods – by way of streamlined customs and lower/zero tariffs; and
• enhanced market access for UAE’s service providers across 11 sectors and more than 100 sub-sectors (including financial, environmental and transport services).

Where to next?

The UAE is showing no signs of slowing down – just in 2025, 5 new CEPAs have been signed. At present, the UAE is negotiating CEPAs with several major economies (e.g. Japan). Whilst each CEPA includes specific mechanisms that are tailored to each international relationship, the UAEs CEPAs have common benefits (according to Etihad Credit Insurance), such as:

• elimination or reduction of customs duties and tariffs;
• removal of technical trade barriers;
• improved market access for UAE exporters; and
• accelerated investment into priority sectors.

While BITs offer legal protections for cross-border investments, CEPAs provide economic incentives and deal with operational frameworks Given these unignorable benefits, it is no wonder that CEPAs are being signed at such an incredible pace, and in some cases countries with strong relationships maximise benefits of treaties through conclusion of a BIT and a CEPA, e.g. the UAE with Kenya and India respectively.    

Double taxation treaties

Complementing the trade facilitation provided by CEPAs and the investor protections under BITs, the UAE's network of DTTs plays a pivotal role in removing fiscal barriers to bilateral commerce. With over 130 DTTs signed as of 2025, the UAE has built one of the most extensive treaty networks globally, and it continues to expand strategically to support inbound and outbound investment. For UAE-based companies eyeing expansion into high-growth markets like India and Africa, DTTs offer a layer of tax predictability that directly supports efficient capital flows, joint ventures, and structuring.

At their core, DTTs allocate taxing rights between countries to prevent overlaps, often limiting taxation to the source country only under specific conditions, such as the presence of a permanent establishment. They typically cap withholding taxes on dividends, interest, and royalties, making cross-border payments more cost-effective.

DTTs also offer a structured and collaborative approach to resolving cross-border tax disputes through mutual agreement procedures (MAP), which is a formal mechanism for taxpayers to request assistance from competent authorities when they face tax treatment that is not aligned with the DTT. MAP enables the relevant tax authorities of the contracting states to negotiate and resolve disputes amicably, thereby preventing double taxation and ensuring fair application of the DTT’s provisions.

This framework not only minimises tax leakage but also encourages investment by providing a stable fiscal framework. UAE businesses are increasingly leveraging these treaties to optimise holding structures and repatriate profits efficiently, turning potential tax hurdles into strategic advantages.

A prime example is the UAE-India DTT, in force since 1992, which has underpinned the robust economic ties between the two nations for over three decades. This treaty allocates taxing rights on business profits primarily to the resident state unless a permanent establishment exists in the other state, caps withholding tax on dividends and royalties at 10%, limits interest withholding tax, provides that capital gains are generally taxable only in the country where the seller is resident (except for gains from immovable property, certain movable property linked to a permanent establishment, or shares in property-rich companies, which may be taxed in the source country), and includes provisions for MAP to address any taxation disagreements.

A more recent example in the UAE’s extensive treaty network is the UAE-UK DTT, in force since December 2016. Like the UAE-India DTT, this treaty allocates taxing rights on business profits primarily to the resident state unless a permanent establishment exists in the other state and includes provisions for MAP. However, the UAE-UK DTT offers potentially more favourable treatment of the taxation of dividends, royalties and interest in the state of source. Dividends are generally exempt from withholding tax in the state of source, subject to certain exceptions (where a 15% cap may apply). Interest and royalties are often exempt as well. 

By enhancing taxpayer certainty, these DTTs facilitate bilateral investments, particularly in sectors like logistics, technology, and energy.

The UAE's DTT network is growing and evolving to match its ambitious trade agenda. This growth mirrors the UAE's role as a hub for multinational operations, where tax efficiency directly boosts attractiveness for foreign direct investment.

Making the most out of the UAE’s treaty network

In summary the UAE’s strategic deployment of BITs, CEPAs, and DTTs reflects a sophisticated, multi-layered approach to international economic engagement. These instruments work in tandem to provide legal certainty, operational efficiency, and fiscal predictability that international and local businesses can benefit from. As the UAE continues to expand its treaty network and deepen ties with high-growth markets, businesses operating within and beyond its borders are increasingly empowered to pursue global opportunities with confidence. The convergence of legal protections, trade facilitation, and tax optimisation positions the UAE not only as a regional powerhouse but as a global hub for investment and commerce. If you are interested in exploring how these treaties apply to your operations or future plans, contact Janet Gooi, Ben Smith, Julia Ofer, or Liam Thomas in the UAE.