Israel on Monday signed a tax treaty with the United Arab Emirates aimed at bolstering economic ties between the two countries as they pursue normalization, the finance minister said.
“This is a historic agreement that will stimulate the development of economic ties between the countries,” Finance Minister Israel Katz said in a tweet announcing the deal.
He said the agreement would “provide certainty and favorable conditions for extensive business activity.”
The deal, which must still be ratified by the Knesset, is the latest move following the normalization of ties between the two countries last year.
With their economies hit hard by the coronavirus pandemic, the UAE and Israel are hoping for rapid dividends from the US-brokered normalization deal signed in September known as the Abraham Accords.
They have already signed several treaties, including on direct flights and visa-free travel, investment protection, science, and technology.
The Finance Ministry said the latest treaty stipulates lower taxes to encourage investment.
The UAE was only the third Arab country to normalize ties with Israel, following Egypt in 1979 and Jordan in 1994. Bahrain, Sudan, and Morocco have since followed suit.
The agreements broke with the long-standing Arab notion that there should be no normalization with Israel until it reaches a comprehensive peace deal with the Palestinians. Palestinian leaders have condemned the agreements as “a stab in the back” and “treason.”
Regional heavyweight Saudi Arabia has so far refrained from formalizing ties with Israel but has given the green light to overflights from the Jewish state, in an implicit sign of approval.