UAE Corporate Tax: Recent Decisions and Their Key Highlights

UAE Corporate Tax Recent Decisions

The UAE Ministry of Finance and Federal Tax Authority have recently issued new decisions regarding Corporate Tax, aimed at streamlining tax regulations and providing clarity to taxpayers. The decisions cover various aspects, including registration, tax periods, exemption, audit requirements, and permanent establishment. In this article, we will discuss the UAE Corporate Tax Recent Decisions key highlights of these recent decisions in detail. Below are some points about UAE Corporate Tax Recent Decisions.

1. Exception from Registration:

One of the key decisions is Ministerial Decision No. 43, which exempted certain entities from registering for Corporate Tax with the Federal Tax Authority. These include:

• Government Entities and Government Controlled Entities.
• Persons engaged in Extractive Business and Non-Extractive Natural Resources Business.
• Non-Resident Persons that derive only UAE Sourced Income and do not have a Permanent Establishment in UAE.

2. Conditions for Change in Tax Period:

Under Federal Tax Authority Decision No. 5, taxable persons can apply to Federal Tax Authority to change their tax period or o change the start and end date of the Tax Period, subject to certain conditions. These include:

• Liquidation of the taxable person.
• Aligning the Resident Taxable Person’s financial year with another Resident Person’s financial year for the purpose of forming or joining a Tax Group.
• Aligning the Taxable Person’s financial year with its domestic or foreign head office, subsidiary, parent or ultimate parents’ company for the purpose of financial reporting or to benefit from tax relief.
• Valid commercial, economic, or legal reasons to change the Tax Period.

3. Tax Deregistration Timeline:

Federal Tax Authority Decision No. 6 sets out the specific timelines for filing tax deregistration applications, which include:

• Natural Persons must file a Tax Deregistration application within three months of the cessation of business and business activity.
• Juridical Persons must file a Tax Deregistration application within three months of the entity’s cessation to exist, dissolution, liquidation, or cessation of business.

4. Provisions for Exemption from Corporate Tax:

The Federal Tax Authority Decision No. 7 has introduced provisions for certain entities to apply for exemption from Corporate Tax. These include:

• Qualifying Public Benefit Entities must apply and obtain a Tax Registration Number by October 1, 2023.
• Qualifying Investment Funds, public/private pension or social security funds, and juridical persons wholly owned and controlled by an exempt person must apply and obtain a Tax Registration Number by June 1, 2024.
• If the Authority approves the Tax Registration application, the person may apply for exemption from Corporate Tax within 60 business days from the end of the Tax Period in which conditions are met.

5. Audit Requirements:

Under Ministerial Decision No. 82, the Ministry of Finance has introduced new regulations for preparing and maintaining audited financial statements for certain categories of taxable persons. These include:

• Taxable Persons deriving revenue exceeding AED 50,000,000 during the relevant Tax Period.
• Qualifying Free Zone Persons.

6. Conditions for Non-Permanent Establishment:

Ministerial Decision No. 83 sets out conditions under which the presence of a natural person in the UAE would not create a permanent establishment. These include:

• The presence of the natural person in the UAE is a consequence of exceptional circumstances of a public or private nature.
• The exceptional circumstances cannot be reasonably predicted by the natural person or Non-Resident Person.
• The natural person did not express any intention to remain in the UAE when the exceptional circumstances end.
• The Non-Resident Person does not have a Permanent Establishment in the UAE before the occurrence of the exceptional circumstances.
• The Non-Resident Person did not consider that the natural person is creating a Permanent Establishment or deriving income in the UAE as per the tax legislation applicable in other jurisdictions.

In conclusion, the recent decisions issued by the Ministry of Finance and the Federal Tax Authority provide valuable insights into the current state of UAE corporate taxation. From exempting certain entities from registration to outlining conditions for tax period changes and tax deregistration, these decisions bring clarity to the tax landscape in the UAE. Additionally, the provisions for exemption from corporate tax for qualifying entities, the requirement for maintaining audited financial statements, and the conditions for a natural person’s presence not creating a permanent establishment provide further guidance for businesses operating in the UAE. Overall, these decisions demonstrate the UAE’s commitment to transparency and consistency in its tax policies, which bodes well for businesses looking to invest in the country.

This is all about UAE Corporate Tax Recent Decisions if you have any question regarding UAE Corporate Tax Recent Decisions then contact us.