The wait is over!
The UAE Federal Decree Law No 47 of 2022 on Taxation of Corporates and Business (Corporate Tax – CT) has been released on 9 Dec 2022. The effective date is Tax Periods commencing on or after 1 June 2023.
Kindly refer below key highlights:
- UAE sourced income defined to include various transactions / activities in UAE such as sale of goods, provisions of services, performance of contract, income from movable and immovable properties etc (Article 13).
- A Non-Resident is considered to have Permanent Establishment (PE) in UAE, if it has a fixed place of business or dependent agent in UAE. In addition, Non-Resident having a nexus in UAE, is also considered to have a PE in UAE (Article 14).
- Unincorporated Partnership (Article 16)
- An Unincorporated Partnership will not be considered as Taxable Person and the Partners of an Unincorporated Partnership to be treated as individual Taxable Persons. The assets, liabilities, income and expenditure of Unincorporated Partnership to be allocated to each partner in proportion to their distributive shares.
- An application can be made to the Federal Tax Authority to treat Unincorporated Partnership as a Taxable Person for CT.
- Family Foundation can make an application to the Federal Tax Authority to be treated as Unincorporated Partnership for CT (Article 17).
- Qualifying Free Zone Person is subject to 0% CT on Qualifying Income. Definition of Qualifying Income to be specified in the Regulations (Article 3 and Article 18).
- Manner of calculation of taxable income has been laid down which includes adjustment to the accounting income with respect to unrealized gain or loss, exempt income, transfers within the group etc. (Article 20).
- Small Business Relief – Revenue threshold will be specified for a Taxable Resident person to elect to be treated as not deriving any taxable income (Article 21).
- Net Interest Expenditure, disallowed in excess of 30% of accounting earnings before the deduction of interest, tax, depreciation and amortisation (EBITDA), can be carried forwarded and deducted in subsequent 10 Tax Periods (Article 30).
- General Anti-Abuse Rules (GAAR) have been introduced. If GAAR provisions are applied, the Federal Tax Authorities may counteract or adjust the Corporate Tax advantages obtained out of subject transaction or arrangement (Article 50).
- Taxable and Exempt Person to maintain all relevant records and documents for a period of seven years following the end of the Tax Period (Article 56).
Copy of the UAE Federal Decree Law on Corporate Tax is attached herewith for your kind reference.
We will be issuing detailed analysis on the CT provisions in the coming weeks.
Please feel free to contact us for any further clarification/impact assessment assignments.
Contact Details
Email: mcatax@mcagulf.com
Telephone (Dubai UAE): +971 4 3319501
Mobile/WhatsApp: +971 50 5528079
Working Hours: 9AM – 6PM, Monday to Friday
