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The Council of Saudi Chambers (CSC) plays a leading and distinguished role in supporting economic ties with several countries in the world through the facilitation by its departments, the “joint Saudi-Foreign business councils”, of connections between the private sector and other countries. The 32 business councils are communities constituted by the membership representatives of the business sector in the Kingdom and their counterparts from the other country which aim

1  Banca D’Italia, Economic Bulletin, No. 67, January 2013.

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to activate economic relations (especially commercial, industrial and investment relations, technology transfer and the promotion of feasible opportunities) through a systematic and objective framework. Business councils act in the framework of the CSC to promote increased trade through communication and exchange of information about the needs of both sides for goods and services, and communicate with the relevant government agencies of the two countries in order to improve the climate for cooperation and overcome obstacles that might hinder the growth of these exchanges.

The councils have given special attention to the Saudi-Italian economic relationship because this is of strategic importance to the Kingdom. In order to achieve the goal of consolidating this special economic relationship at the economic level, as well as to activate the bilateral trade exchange between the two countries and to strengthen and develop economic relations between them, the CSC and the Union of Italian Chambers of Commerce (Unioncamere) created the Saudi-Italian Joint Business Council in 2005 with the help of some Saudi and Italian businessmen. A further goal is to foster the investment climate in both countries and to encourage businessmen to establish joint investment projects.

The CSC also works on arranging visits for business delegations from both countries and organizing economic events that support bilateral trade relations through economic forums. One of the recent events was the Saudi-Italian Economic Forum, organized by the CSC in February 2012, which was attended by a high-level Italian delegation headed by the Minister of Foreign Affairs and the Minister of Economic Development, in addition to the President of the Italian Trade Commission, the President of the Italian Organization for Manufacturing and Services, and the Chairman of the Federation of Italian Banks. The delegation included representatives of around 200 Italian companies.

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As part of the deep relations between the two countries, the following joint economic cooperation agreements and memorandums of understanding concluded by them have contributed to supporting and activating the bilateral trade and investment exchange between the Kingdom and the Republic of Italy over the past decades:

TOWARDS STRENGTHENING SAUDI-ITALIAN ECONOMIC COOPERATION

 Treaty of Friendship (10/2/1932).

 Economic, Industrial, Technical and Financial Cooperation Agreement (4/3/1975).

 Memorandum of understanding between the CSC and the Manufacturers Association of the Province of Florence (ASSINDUSTRIA) (1977).

 Agreement to Avoid Double Taxation on Income and Property in the Field of Aviation (24/11/1985).

 Joint Agreement for the Development and Protection of Investments (10/9/1996).

 Memorandum of understanding between the CSC and Unioncamere (2005).

 Agreement to Avoid Double Taxation (1/12/2009).

The following section provides details of some key objectives of these agreements:

 Memorandum of Understanding between the CSC and ASSINDUSTRIA: this agreement concerns small and medium-sized enterprises (SMEs) in Saudi Arabia. It helps to develop cooperation ties, technological support and the transfer of technical expertise between ASSINDUSTRIA and the European Union (ECIP programme), on the one hand, and Saudi institutions, on the other.

 Memorandum of understanding between the CSC and Unioncamere regarding founding a Saudi-Italian Joint Business Council: the Saudi-Italian Joint Business Council aims to promote and improve trade relations between the two countries, and to support activities in the ields of trade and industry in both of them via a regular exchange of information between the CSC and Unioncamere, as well as between businessmen and bodies of concern in both countries, especially as regards information related to market conditions, production, business opportunities and technological cooperation. In addition, it supports businessmen in starting joint ventures and preparing studies and making recommendations to

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be proposed to relevant bodies in order to strengthen economic ties between the two countries. Among the other key roles of this body is encouraging businessmen to participate in exhibitions in Saudi Arabia and in Italy and to cooperate in order to promote the exchange of business delegations, businessmen and technical experts between the two countries.

 Agreement to avoid double taxation between the governments of Saudi Arabia and Italy: this agreement aims to encourage bilateral investment between Saudi Arabia and Italy by providing full protection for citizens and residents of both countries from direct and indirect double taxation via granting a tax exemption in the state of residence (fully or partially), or by granting a deduction for tax paid in the state of origin for a limited period (a “tax credit”). These measures concern taxes on income and capital. The agreement also aims to ight tax evasion. It offers an opportunity to achieve many bene its for citizens of both countries as well as for companies, funds, private sector institutes, individuals, governmental bodies, national airlines and members of diplomatic missions.

As regards Saudi Arabia, the agreement ensures that there will be no tax levied on companies residing in Saudi Arabia (Saudi or non-Saudi companies) which have activities in Italy unless they have a permanent establishment in Italy, and vice versa. The agreement also ensures that there will be no tax at all, or a low rate of tax, levied on dividends distributed to shareholders residing in Saudi Arabia by companies residing in Italy. This agreement also allows Italian companies residing in Saudi Arabia to avoid paying double taxes by deducting the tax paid in Saudi Arabia from the tax owed in Italy. The agreement also keeps the tax liens obtained by members of diplomatic missions and the Saudi consulate in Italy in accordance with international law or special agreements.

It is worth noting that through the implementation of this agreement, the agreement to facilitate trade between the two countries will be inalized. This latter agreement is expected to lead to an increase in the number of Italian companies investing in the oil, gas and energy sectors and the petrochemical industries in Saudi Arabia, in addition to an increase in the size of joint investments between the two countries.

TOWARDS STRENGTHENING SAUDI-ITALIAN ECONOMIC COOPERATION