Recent Changes in Corporate Tax Regulations in the UAE

The "Corporate Tax Law," Federal Decree-Law No. (47) of 2022, was implemented in the UAE on December 9, 2022, and effected on June 1st, 2023. This initiative aims to bolster the UAE's strategic objectives, foster development, and elevate its global business attractiveness. The UAE Corporate Tax adheres to international norms, leveraging its extensive network of double tax treaties to reinforce its status as a premier business and investment hub. Crafted with clarity and adherence to global best practices, the UAE's Corporate Tax framework is designed to be transparent and globally accepted.

What is Corporate Tax in UAE:

Corporate Tax (CT), also known as Corporate Income Tax (CIT) or Business Profits Tax, is a direct tax levied on the net income or profits generated by corporations and entities in the course of their business activities.

Recent Amendments to Corporate Tax Regulations:

Ministerial Decision No. 116 of 2023 (May 10, 2023):

Addressing the Participation Exemption under Federal Decree-Law No. 47 of 2022, this decision provides clarity on income exemption for Participating Interests under specific conditions.

Ministerial Decision No. 43 of 2023

This decision focuses on tax registration exemptions under the CT Law, offering insights into corporate tax registration requirements for exempt persons and unincorporated partnerships.

Ministerial Decision No. 68 of 2023

 Specifically addressing Government entities, this decision allows a government entity to treat all its businesses or activities as a Single Taxable Person (STP).

Ministerial Decision No. 73 of 2023

 Providing details on Small Business Relief, this decision clarifies aspects of the revenue threshold and conditions necessary to qualify for relief under the UAE CT Law.

Decisions No. 5, 6 & 7 of 2023

 Issued by the Federal Tax Authority, these decisions, effective from June 1, 2023, address changing tax periods, tax deregistration timelines, and provisions for exemption from corporate tax.

Decision No (37) of 2023

 Outlining Qualifying Public Benefit Entities (QPBE), this decision designates a QPBE as an Exempt Person for UAE CT purposes, contingent upon meeting specific conditions.

Ministerial Decisions No. 82

 Effective from May 13, 2023, Decision No. 82 defines taxable persons' obligation to maintain audited financial statements, while Decision No. 83 specifies conditions exempting non-resident persons from establishing a Permanent Establishment in the UAE.

Ministerial Decision No.97 of 2023

 Effective immediately, this decision mandates Taxable Persons to maintain Transfer Pricing Documentation under the UAE CT Law, providing clarity on compliance conditions and thresholds.

Ministerial Decision No. 105 of 2023:

 Outlining conditions for an individual to maintain or terminate their status as an Exempt Person under the UAE CT Law.

Cabinet of Ministers Decision No. (49) of 2023

 Effective from June 1, 2023, this decision outlines the categories of businesses or business activities subject to Corporate Tax for both resident and non-resident natural persons.

Ministerial Decisions No. 114 & 115 of 2023

Decision No. 114 establishes Accounting Standards, and Decision No. 115 addresses Private Pension and Social Security Funds under the CT Law, aligning practices with International Financial Reporting Standards (IFRS).

Ministerial Decision No. 120 of 2023

 Addressing transitional adjustments related to a Taxable Person’s opening balance sheet for Corporate Tax in the UAE.

 

Read more: Requirement for Filling Corporate Tax  Return  in UAE

 

Ministerial Decisions No. 125, 126 & 127 (May 22, 23, and 24, 2023):

Addressing Tax Groups, the General Interest Deduction Limitation Rule, and Unincorporated Partnership, Foreign Partnership, and Family Foundation.

Cabinet Decision No 55 of 2023

 Significantly impacting Free Zone entities under the UAE CT Law, this decision introduces a de minimis threshold in UAE that could make them taxable under the new rules.

Ministerial Decision No. 139 of 2023

 Issued in accordance with Cabinet Decision No 55 of 2023, this decision defines Qualifying Activities and Excluded Activities for the purposes of the CT Law.

Cabinet Decision No. (75) of 2023

 Specifies administrative penalties due to non-compliance with the UAE corporate tax Law, effective from August 1, 2023.

These recent changes underscore the UAE's commitment to aligning its tax framework with international standards. Staying informed and proactive is crucial for businesses to maintain compliance and optimize financial strategies in this evolving tax landscape. Engaging with experts will be essential to navigate these changes effectively and capitalize on opportunities presented by the dynamic business environment.

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