Taxmann's Law & Practice Relating to UAE Corporate Tax

Preface United Arab Emirates (UAE) has been on an economic development path since last 15 years. The country has consciously made attempts to diversify its dependence on Oil related revenue to non oil revenues. In its quest, it was obviously found easy to keep the business environment free of compliances and having minimum tax impact as the entire model was developed based on fixed fees being collected for registration and operation on annual basis – thus giving businesses free hand to manage its affairs with very little interference from regulatory authorities.

This approach of course yielded results and it attracted various businesses to be based in UAE and take advantage of its central geographical position, state of the art infrastructure and efficiency in operation to its advantage and thus be conducted from UAE. Thus, UAE has become a leading logistics sector player, a leading trader in the supply chain for Middle East and Africa, while also acting as a gateway to the trade to Europe and Asia to an extent. With expansion of economy and maturing of financial markets comes the responsibility to be a nation which embraces compliances also as any other reputed center would have. Thus, UAE working closely with OECD, IMF and other world bodies and with a view to create a level playing field with the nations that it wants to emulate to become like, the country was required to introduce various compliances in a phased manner.

So, first came Value Added Tax introduction, then various legislation to strengthen Anti Money Laundering compliances, there after introduction of Economic Substance Regulations, UBO filings, Country by country Reporting compliances and so on….This created an apt atmosphere for introduction of Corporate Taxation.

While the intent of the Government is to still retain attractiveness for UAE to be the business location of choice, hence they chose to have construct in a manner that it has one of the lowest tax rate while complying with all its international obligation. Next the objective is to implement it in a manner that ideal – viz. to collect the tax in a manner that it hurts minimum to the taxpayer.

However, whatever be the intent, when one starts introducing legislation of this nature, there is bound to be a period when there will be uncertainty, not so clear rules, not so clear guidance on how its going to apply in certain situations and so on. UAE has created some of its unique aspects like having multiple free zones to attracts businesses to come here and establish themselves, while these free zones gave freedom of ownership, there are minimum regulations around its operations unlike in other countries. Thus, we have a unique issue of how to give benefits to all the activities being done through free zone. Such and few other aspects will continue to pose interesting challenges on how to implement tax laws effectively to grant some benefits while covering most within the tax net.

The judicial implementation of the tax laws – through a decree and multiple cabinet decisions laying down guidance on various matters – also creates a unique I-9

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UAE Corporate Tax

aspect for one to know when to refer to what and which should be read as law and which as implementation of the law. Here, due to its typical structure, its not easy to comprehend for most tax practitioners having back ground of working in common law jurisdictions.

Such and few other challenges like this were actually driving us to compile this book in a lucid manner to explain with examples to ensure that concepts and its applications are understood in right context. With this aim, this effort to compile various parts of this book, which we also intend to keep updating as more and more developments will evolve over a period.

This book being one of the early attempts to simplify the tax law and its application, we believe it should be useful to tax professionals as also finance professionals to keep this as a ready reference for any one who needs reliable information.

Thus, its not aimed only at finance professionals but any one who want to understand the basic construct and its application along with various complex aspects of the tax laws.

This book is aimed to be simple to understand with use of simple language. While we have to explain the legal concepts, we have tried to give various illustrations to drive home the concepts. We have also tried to give all relevant references with a view to be easier to understand. We are sincerely looking forward to receive reader’s feedback which will not only help us to improve this further and we can take care of certain items overlooked when we come up with next updates.

Sincerely….

Nirav Shah

C ontents Page No.

Acknowledgement

I-7

Preface

I-9

Disclaimer

I-11

Chapter 1 Introduction 1.1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.2

Regulatory Environment in UAE . . . . . . . . . . . . . . . . . . . 1

1.3

Legal Structure of Entities . . . . . . . . . . . . . . . . . . . . . . . . 2

1.4

Federal Structure of the UAE . . . . . . . . . . . . . . . . . . . . . . 2

1.5

1.4-1

Legislative Powers . . . . . . . . . . . . . . . . . . . . . . . 2

1.4-2

Judiciary Powers . . . . . . . . . . . . . . . . . . . . . . . . 3

Tax landscape in the UAE . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.5-1

Value Added Tax (VAT). . . . . . . . . . . . . . . . . . . . 4

1.5-2

Corporate Income Tax . . . . . . . . . . . . . . . . . . . . 4

1.5-3

Federal Corporate Tax . . . . . . . . . . . . . . . . . . . . 5

1.6

Impact of UAE Corporate Tax . . . . . . . . . . . . . . . . . . . . . 5

1.7

Overview of UAE CT Law . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.7-1

Important Definitions . . . . . . . . . . . . . . . . . . . . 6

1.7-2

Applicability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

1.7-3

Entities exempt from CT . . . . . . . . . . . . . . . . . . 9

1.7-4

Taxable Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

1.7-5

Incomes exempt from tax . . . . . . . . . . . . . . . . . 9

1.7-6

Threshold and Tax rates . . . . . . . . . . . . . . . . . 10

1.7-7

Computation of Taxable income . . . . . . . . . . . 10

1.7-8

Non-deductible expenses . . . . . . . . . . . . . . . . . 11

1.7-9

Adjustment for losses. . . . . . . . . . . . . . . . . . . . 11

1.7-10

Nexus Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 I-13

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Transfer Pricing Regulation . . . . . . . . . . . . . . 12

1.7-12

General Anti-Abuse Rules . . . . . . . . . . . . . . . . 12

1.7-13

Compliance and Administration . . . . . . . . . . . 12

Chapter 2 Imposition of Corporate Tax and Applicable Rates 2.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

2.2

Article 2: Imposition of Corporate Tax . . . . . . . . . . . . . 14

2.3

2.2-1

Levy of Corporate Tax . . . . . . . . . . . . . . . . . . . 14

2.2-2

Tax Procedures Law . . . . . . . . . . . . . . . . . . . . . 14

Article 3: Corporate Tax Rate . . . . . . . . . . . . . . . . . . . . . 15 2.3-1

Tax Rates for Persons other than Free Zone Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

2.3-2

Tax Rates for Qualifying Free Zone Person . . 15

2.3-3

Tax Rate for Multinational Enterprises (MNE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

2.3-4

Consequences if an entity is artificially separated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Chapter 3 Exempt Persons 3.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

3.2

Article 4: Exempt person . . . . . . . . . . . . . . . . . . . . . . . . 17 3.2-1

List of exempt entities . . . . . . . . . . . . . . . . . . . 18

3.2-2

Government Entities . . . . . . . . . . . . . . . . . . . . 19

3.2-3

Government Controlled Entities . . . . . . . . . . . 19

3.2-4

Entities engaged in the extraction of natural resources and related non-extractive activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

3.2-5

Charities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

3.2-6

Specified Funds . . . . . . . . . . . . . . . . . . . . . . . . 20

3.2-7

Juridical Persons . . . . . . . . . . . . . . . . . . . . . . . 21

3.2-8

Any other specified person . . . . . . . . . . . . . . . 22

3.2-9

Mandatory to register for specified exempt persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

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3.3

3.4

3.5

3.6

3.2-10

Effective date of exemption . . . . . . . . . . . . . . . 22

3.2-11

Withdrawal of exemption . . . . . . . . . . . . . . . . 23

3.2-12

Immunity against the withdrawal of exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Article 5: Government Entity . . . . . . . . . . . . . . . . . . . . . 24 3.3-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

3.3-2

Meaning of Government entities . . . . . . . . . . 25

3.3-3

Tax on income from commercial activities

by Government entities . . . . . . . . . . . . . . . . . . 26

3.3-4

Application for a single taxable entity . . . . . . 26

3.3-5

Procedure to recognise a single taxable entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

3.3-6

Intimation for change in the business activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

3.3-7

Withdrawal of the status . . . . . . . . . . . . . . . . . 27

3.3-8

Consolidation of financial results . . . . . . . . . . 28

Article 6: Government-Controlled Entity. . . . . . . . . . . . 28 3.4-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

3.4-2

Meaning of government-controlled entities . . 29

3.4-3

Exemption for mandated activities. . . . . . . . . 29

3.4-4

Separate books of account for nonmandated activities . . . . . . . . . . . . . . . . . . . . . 29

Article 7: Extractive Business . . . . . . . . . . . . . . . . . . . . . 30 3.5-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

3.5-2

Meaning of extractive business . . . . . . . . . . . . 31

3.5-3

Meaning of business activities . . . . . . . . . . . . 31

3.5-4

Exemption for income from extractive business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

3.5-5

Conditions to claim the exemption for income from extractive business . . . . . . . . . . 32

3.5-6

Exemption for incidental or ancillary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

3.5-7

No exemption for income from other business activities . . . . . . . . . . . . . . . . . . . . . . 33

3.5-8

Computation of income from other business activities . . . . . . . . . . . . . . . . . . . . . . 33

Article 8: Non-Extractive Natural Resource Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

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3.7

3.8

3.6-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

3.6-2

Meaning of non-extractive natural resource business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

3.6-3

Exemption for income from non-extractive business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

3.6-4

Conditions to claim the exemption for income from non-extractive business . . . . . . . 36

3.6-5

Exemption for incidental or ancillary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

3.6-6

No exemption for income from other business activities . . . . . . . . . . . . . . . . . . . . . . 36

3.6-7

Computation of income from other business activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Article 9: Qualifying Public Benefit Entity . . . . . . . . . . 37 3.7-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

3.7-2

Exemption to Qualifying Public Benefit Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

3.7-3

Conditions to claim the exemption by Qualifying Public Benefit Entity . . . . . . . . . . . 39

3.7-4

List of Qualifying Public Benefit Entity . . . . . 40

3.7-5

Furnishing of information by Qualifying Public Benefit Entity . . . . . . . . . . . . . . . . . . . . 40

3.7-6

Registration of Qualifying Public Benefit Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

3.7-7

Application to claim exemption . . . . . . . . . . . 40

Article 10: Qualifying Investment Fund. . . . . . . . . . . . . 41 3.8-1

Meaning of Investment Fund . . . . . . . . . . . . . 41

3.8-2

Exemption to Investment Fund . . . . . . . . . . . 41

3.8-3

Condition for Qualifying Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Chapter 4 Taxable Person and Corporate Tax Base 4.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

4.2

Article 11: Taxable Person . . . . . . . . . . . . . . . . . . . . . . . 43 4.2-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

4.2-2

Basis of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

4.2-3

Tax Residency. . . . . . . . . . . . . . . . . . . . . . . . . . 45

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Contents

Page No.

4.3

4.4

4.5

4.6

4.2-4

Taxable Persons . . . . . . . . . . . . . . . . . . . . . . . . 47

4.2-5

Comprehensive Example . . . . . . . . . . . . . . . . . 50

Article 12: Corporate Tax Base . . . . . . . . . . . . . . . . . . . . 51 4.3-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

4.3-2

Taxable income of a juridical resident person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

4.3-3

Taxable income of a natural person. . . . . . . . . 52

4.3-4

Taxable income of a non-resident person . . . . 53

4.3-5

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Article 13: State-Sourced Income . . . . . . . . . . . . . . . . . 55 4.4-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

4.4-2

General rules for State-Sourced Income . . . . 57

4.4-3

Special rules for State-Sourced Income . . . . . 58

4.4-4

Comprehensive Example . . . . . . . . . . . . . . . . . 60

Article 14: Permanent Establishment . . . . . . . . . . . . . . 61 4.5-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

4.5-2

Fixed Place Permanent Establishment . . . . . . 64

4.5-3

Places constitute Fixed Place PE . . . . . . . . . . 66

4.5-4

Dependent Agent Permanent Establishment . . 68

4.5-5

Preparatory or Auxiliary Activities do not constitute PE . . . . . . . . . . . . . . . . . . . . . . . . . . 70

4.5-6

Anti-fragmentation rules . . . . . . . . . . . . . . . . . 71

4.5-7

Stay in UAE due to exceptional situations may not constitute a PE . . . . . . . . . . . . . . . . . 72

4.5-8

Other Permanent Establishments . . . . . . . . . . 73

4.5-9

Comprehensive Example . . . . . . . . . . . . . . . . . 73

Article 15: Investment Manager Exemption . . . . . . . . . 74 4.6-1

4.7

Investment Manager not to be treated as dependent agent PE . . . . . . . . . . . . . . . . . . . . . 75

Article 16: Partners in an Unincorporated Partnership . 76 4.7-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

4.7-2

Status of unincorporated partnership . . . . . . 78

4.7-3

Taxation of unincorporated partnership as a pass-through entity. . . . . . . . . . . . . . . . . . 78

4.7-4

Taxation of unincorporated partnership as a taxable unit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

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Page No. 4.7-5 4.8

Foreign Partnership . . . . . . . . . . . . . . . . . . . . . 82

Article 17: Family Foundation . . . . . . . . . . . . . . . . . . . . 83 4.8-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

4.8-2

Foundation v. Trusts . . . . . . . . . . . . . . . . . . . . 85

4.8-3

Taxation of family foundation as an independent juridical person . . . . . . . . . . . . . 85

4.8-4

Taxation of family foundation as a passthrough entity. . . . . . . . . . . . . . . . . . . . . . . . . . 85

4.8-5

Taxation of beneficiaries if family foundation treated as a pass-through entity . . . . . . . 86

Chapter 5 Free Zone Person 5.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

5.2

Article 18: Qualifying Free Zone Person . . . . . . . . . . . . 88

5.3

5.2-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

5.2-2

Taxation of Free Zone Persons . . . . . . . . . . . . 89

5.2-3

Condition to qualify as Free Zone Person . . . 90

5.2-4

De Minimis Requirement. . . . . . . . . . . . . . . . . 92

5.2-5

Qualifying Income . . . . . . . . . . . . . . . . . . . . . . 92

5.2-6

Non-Qualifying Revenue . . . . . . . . . . . . . . . . . 93

5.2-7

Qualifying Activities. . . . . . . . . . . . . . . . . . . . . 93

5.2-8

Excluded Activities. . . . . . . . . . . . . . . . . . . . . . 95

5.2-9

Implications of cessation of status as a Qualifying Free Zone Person . . . . . . . . . . . . . . 98

5.2-10

Exemption Period . . . . . . . . . . . . . . . . . . . . . . 98

5.2-11

Cost-benefit Analysis . . . . . . . . . . . . . . . . . . . . 98

5.2-12

Clarification needed . . . . . . . . . . . . . . . . . . . . . 99

5.2-12

Income Derived from Qualifying Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

Article 19: Election to be Subject to Corporate Tax . . . 97 5.3-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

Chapter 6 Calculating Taxable Income 6.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

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6.3

Article 20: General Rules for Determining Taxable Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 6.2-1

Determination of taxable income . . . . . . . . . 104

6.2-2

Method of Accounting . . . . . . . . . . . . . . . . . . 104

6.2-3

Adjustment from the standalone profit . . . . 105

6.2-4

Option to tax ‘gains or loss’ on a realisation basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

6.2-5

Accounting Standards v. The CT Law . . . . . . 108

6.2-6

Comprehensive Example . . . . . . . . . . . . . . . . 108

Article 21: Small Business Relief . . . . . . . . . . . . . . . . . 109 6.3-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

6.3-2

Threshold limit for small businesses relief. . 110

6.3-3

Eligible person . . . . . . . . . . . . . . . . . . . . . . . . 110

6.3-4

Treatment of tax losses . . . . . . . . . . . . . . . . . 111

6.3-5

Limitation on deduction for net interest . . . 111

6.3-6

Consequences of artificial separation of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

6.3-7

Certain provisions shall not apply . . . . . . . . 112

6.3-8

Illustration . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

6.3-9

Comprehensive Example . . . . . . . . . . . . . . . . 112

Chapter 7 Exempt Income 7.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

7.2

Article 22: Exempt Income . . . . . . . . . . . . . . . . . . . . . . 114

7.3

7.2-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

7.2-2

Exemption for dividend and profit distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . 115

7.2-3

Taxability of income from participating interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

7.2-4

Taxability of income from international transportation operation . . . . . . . . . . . . . . . . 116

Article 23: Participating Exemption . . . . . . . . . . . . . . 116 7.3-1

Income eligible for exemption . . . . . . . . . . . 118

7.3-2

Conditions to claim exemption for dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

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7.4

7.5

7.3-3

Conditions to establish ‘Participation Interest’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

7.3-4

Eligible income . . . . . . . . . . . . . . . . . . . . . . . 126

7.3-5

Restrictions on the participation exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128

Article 24: Foreign Permanent Establishment Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 7.4-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

7.4-2

Taxability of foreign subsidiary or foreign branch. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

7.4-3

Options available for taxability of foreign branch profits . . . . . . . . . . . . . . . . . . . . . . . . . 132

7.4-4

Condition to avail exemption in respect of foreign PE . . . . . . . . . . . . . . . . . . . . . . . . . 132

7.4-5

Computation of income and expenditure of foreign PE . . . . . . . . . . . . . . . . . . . . . . . . . 132

7.4-6

Allowability of the foreign tax credit . . . . . . 132

7.4-7

Comprehensive Example . . . . . . . . . . . . . . . 133

Article 25: Non-Resident Person Operating Aircraft or Ships in International Transportation . . . . . . . . . . 134 7.5-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

7.5-2

Eligible Person . . . . . . . . . . . . . . . . . . . . . . . . 134

7.5-3

Eligible income . . . . . . . . . . . . . . . . . . . . . . . 135

7.5-4

Reciprocity . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

Chapter 8 Reliefs 8.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

8.2

Article 26: Transfers within a Qualifying Group . . . . . 136

8.3

8.2-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

8.2-2

Conditions to be treated as a member of the Qualifying Group. . . . . . . . . . . . . . . . . 138

8.2-3

Withdrawal of relief . . . . . . . . . . . . . . . . . . . . 142

8.2-4

Illustration . . . . . . . . . . . . . . . . . . . . . . . . . . . 143

Article 27: Business Restructuring Relief . . . . . . . . . . 143

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Contents

Page No. 8.3-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145

8.3-2

Transactions not subject to UAE CT Law . . . 145

8.3-3

Conditions for tax-neutral business restructuring . . . . . . . . . . . . . . . . . . . . . . . . . 146

8.3-4

Conditions for relief . . . . . . . . . . . . . . . . . . . . 148

8.3-5

Relief to be allowed . . . . . . . . . . . . . . . . . . . . 149

8.3-6

Implications for breach of conditions . . . . . 150

8.3-7

General Rules for determining taxable income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152

Chapter 9 Deductions 9.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

9.2

Article 28: Deductible Expenditure . . . . . . . . . . . . . . . 154

9.3

9.4

9.5

9.2-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154

9.2-2

Allowable Expenditure . . . . . . . . . . . . . . . . . 154

9.2-3

Expenditures not allowed as a deduction. . . 156

9.2-4

Expenditure for more than one purpose . . . 157

Article 29: Interest Expenditure . . . . . . . . . . . . . . . . . . 157 9.3-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

9.3-2

Deductibility of an interest expenditure . . . . 157

Article 30: General Interest Deduction Limitation Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 9.4-1

Limit on deduction for interest expenditure. . . . . . . . . . . . . . . . . . . . . . . . . . . 158

9.4-2

De Minimis Net Interest Expenditure . . . . . . 159

9.4-3

Computation of EBITDA . . . . . . . . . . . . . . . . 159

9.4-4

Computation of net interest expenditure . . . 160

9.4-5

Inclusions in Interest . . . . . . . . . . . . . . . . . . . 160

9.4-6

Carry forward of interest . . . . . . . . . . . . . . . . 161

9.4-7

Carry forward of interest in Tax Groups . . . 162

9.4-8

Non-applicability of Interest capping rules . 163

Article 31: Specific Interest Deduction Limitation Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 9.5-1

Taxability of Interest on borrowed funds . . . 165

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UAE Corporate Tax

Page No. 9.6

Article 32: Entertainment Expenditure . . . . . . . . . . . . 166 9.6-1

9.7

Deduction for entertainment expenditure . . 166

Article 33: Non-deductible Expenditure . . . . . . . . . . . 167 9.7-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

9.7-2

Non-deductible expenditure . . . . . . . . . . . . . 167

Chapter 10 Transactions with Related Parties and Connected Persons 10.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170

10.2

Article 34: Arm’s Length Principle . . . . . . . . . . . . . . . . 170

10.3

10.4

10.2-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172

10.2-2

Overview of arm’s length principle . . . . . . . . 172

10.2-3

International transfer pricing regulations . . 173

10.2-4

Comparability analysis . . . . . . . . . . . . . . . . . 173

10.2-5

Transfer Pricing Methods . . . . . . . . . . . . . . . 174

10.2-6

Selection of most appropriate method . . . . . 181

10.2-7

Corresponding adjustment . . . . . . . . . . . . . . 183

Article 35: Related Parties and Control . . . . . . . . . . . . 184 10.3-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

10.3-2

Related Parties (Two natural persons) . . . . . 185

10.3-3

Related Parties (Natural and Juridical persons) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

10.3-4

Related Parties (Two or more juridical persons) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

10.3-5

Related Parties (Person and its PE or foreign PE) . . . . . . . . . . . . . . . . . . . . . . . . . . . 188

10.3-6

Related Parties (Partners in unincorporated partnership) . . . . . . . . . . . . . . . . . . . . . . . . . . 189

10.3-7

Related Parties (Trustee, founder, settlor or beneficiary of a trust). . . . . . . . . . . . . . . . . . . 189

Article 36: Payments to Connected Persons . . . . . . . . 189 10.4-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190

10.4-2

General rule of deduction . . . . . . . . . . . . . . . 190

10.4-3

Deductibility of payment made to connected persons . . . . . . . . . . . . . . . . . . . . . 191

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Page No. 10.4-4

Connected Persons . . . . . . . . . . . . . . . . . . . . . 191

10.4-5

Persons to whom this provisions shall not apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

10.4-6

Adjustments in the value of transactions between related persons . . . . . . . . . . . . . . . . 193

Chapter 11 Tax Loss Provisions 11.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195

11.2

Article 37: Tax Loss Relief . . . . . . . . . . . . . . . . . . . . . . 195

11.3

11.4

11.2-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196

11.2-2

Set-off of business loss . . . . . . . . . . . . . . . . . 196

11.2-3

When is set-off not allowed? . . . . . . . . . . . . . 197

11.2-4

Mandatory to set-off the losses . . . . . . . . . . . 198

Article 38: Transfer of tax loss . . . . . . . . . . . . . . . . . . . 198 11.3-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198

11.3-2

Conditions to transfer tax loss . . . . . . . . . . . 199

11.3-3

How much losses can be transferred? . . . . . 202

11.3-4

Adjustment after transfer of losses . . . . . . . . 202

11.3-5

Transfer of Unutilised Tax Losses in Business Restructuring . . . . . . . . . . . . . . . . . 202

11.3-6

Comprehensive illustration . . . . . . . . . . . . . . 203

Article 39: Limitation of carry forward of loss . . . . . . 203 11.4-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204

11.4-2

Minimum holding of interest . . . . . . . . . . . . 204

11.4-3

Change of ownership interest . . . . . . . . . . . . 205

11.4-4

Relaxation for Listed Company . . . . . . . . . . 205

11.4-5

Comprehensive illustration . . . . . . . . . . . . . . 206

Chapter 12 Tax Group Provisions 12.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208

12.2

Article 40: Tax Group . . . . . . . . . . . . . . . . . . . . . . . . . . 208 12.2-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210

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UAE Corporate Tax

Page No. 12.2-2

Conditions to form a tax group . . . . . . . . . . . 210

12.2-3

Reporting to FTA . . . . . . . . . . . . . . . . . . . . . . 214

12.2-4

Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . 214

12.2-5

Liability of the companies forming a tax group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214

12.2-6

Addition in a tax group . . . . . . . . . . . . . . . . . 214

12.2-7

Leaving a tax group . . . . . . . . . . . . . . . . . . . . 214

12.2-8

Complying Conditions . . . . . . . . . . . . . . . . . . 215

12.2-9

Replacement of a parent company . . . . . . . . 215

12.2-10 Illustrations . . . . . . . . . . . . . . . . . . . . . . . . . . 215 12.3

Article 41: Date of Formation and Cessation of a Tax Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 12.3-1

12.4

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216

Article 42: Taxable Income of a Tax Group . . . . . . . . . 217 12.4-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218

12.4-2

Computation of taxable income of the tax group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218

12.4-3

Consequences of exiting from the tax group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220

12.4-4

Offsetting the unutilised tax loss. . . . . . . . . . 220

12.4-5

Limit to offset the loss . . . . . . . . . . . . . . . . . . 223

12.4-6

Sequence of set off . . . . . . . . . . . . . . . . . . . . . 223

12.4-7

Treatment of unutilised losses on change in tax group constitution . . . . . . . . . . . . . . . . 224

12.4-8

Calculation of the direct or indirect ownership interest . . . . . . . . . . . . . . . . . . . . . 225

12.4-9

Business Restructuring and Tax Group . . . . 225

12.4-10 Cost-benefit analysis . . . . . . . . . . . . . . . . . . . 226 12.4-11 Comprehensive Illustrations . . . . . . . . . . . . . 226

Chapter 13 Calculation of Corporate Tax Payable 13.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228

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Contents

Page No. 13.2

Article 43: Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . 228 13.2-1

13.3

13.4

13.5

13.6

Computation of income in local currency . . 228

Article 44: Calculation and Settlement of Corporate Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229 13.3-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230

13.3-2

Self Assessment System . . . . . . . . . . . . . . . . . 230

13.3-3

Illustration . . . . . . . . . . . . . . . . . . . . . . . . . . . 230

Article 45: Withholding Tax . . . . . . . . . . . . . . . . . . . . . 231 13.4-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231

13.4-2

Rate of withholding tax . . . . . . . . . . . . . . . . . 231

13.4-3

Obligation to withhold the Tax . . . . . . . . . . . 231

Article 46: Withholding tax credits . . . . . . . . . . . . . . . 232 13.5-1

Withholding tax credit and refund . . . . . . . . 232

13.5-2

Illustrations . . . . . . . . . . . . . . . . . . . . . . . . . . 232

Article 47: Foreign tax credits . . . . . . . . . . . . . . . . . . . 233 13.6-1

Double taxation under the UAE CT Law . . . 233

13.6-2

Avoidance of double taxation Internationally . . . . . . . . . . . . . . . . . . . . . . . . 233

13.6-3

Method adopted by UAE CT Law . . . . . . . . . 233

13.6-4

Set-off of foreign tax credit . . . . . . . . . . . . . . 233

13.6-5

Illustrations . . . . . . . . . . . . . . . . . . . . . . . . . . 234

13.6-6

Foreign taxes for which Foreign Tax Credit is available . . . . . . . . . . . . . . . . . . . . . . . . . . . 236

13.6-7

When will foreign tax be considered as “paid”? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237

13.6-8

Who can claim Foreign Tax Credit? . . . . . . . 238

13.6-9

How to calculate the Foreign Tax Credit? . . 239

13.6-10 Unutilised Foreign Tax Credit . . . . . . . . . . . . 241 13.6-11 Scenarios where no Foreign Tax Credit is allowed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 13.6-12 Timing mismatches . . . . . . . . . . . . . . . . . . . . 242 13.6-13 Maintenance of records . . . . . . . . . . . . . . . . . 245 13.6-14 Impact of Double Taxation Agreements . . . . 245

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Page No.

Chapter 14 Payment and Refund of Corporate Tax 14.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236

14.2

Article 48: Corporate Tax Payment . . . . . . . . . . . . . . . 236

14.3

14.2-1

Timeline to settle the CT payment . . . . . . . . 236

14.2-2

Illustration . . . . . . . . . . . . . . . . . . . . . . . . . . . 237

14.2-3

Specification of type and tax period . . . . . . . 237

Article 49: Corporate Tax Refund . . . . . . . . . . . . . . . . . 237 14.3-1

Cases of corporate tax refund . . . . . . . . . . . . 237

14.3-2

Application of refund . . . . . . . . . . . . . . . . . . . 238

14.3-3

Set-off of refund against tax payable . . . . . . 238

14.3-4

When can a refund be denied? . . . . . . . . . . . 238

14.3-5

Intimation by the FTA to the taxpayer . . . . . 238

Chapter 15 Anti-Abuse Rules 15.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249

15.2

Article 50 : General Anti-Abuse Rule . . . . . . . . . . . . . . 249 15.2-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251

15.2-2

BEPS Action Plan 6 . . . . . . . . . . . . . . . . . . . . 251

15.2-3

GAAR v. BEPS . . . . . . . . . . . . . . . . . . . . . . . . 252

15.2-4

Conditions for applicability of GAAR . . . . . . 253

15.2-5

Relief where tax advantage is consistent with UAE CT Law . . . . . . . . . . . . . . . . . . . . . 253

15.2-6

Consequences of applying GAAR . . . . . . . . . 254

15.2-7

How to invoke GAAR? . . . . . . . . . . . . . . . . . . 254

15.2-8

GAAR will not apply if business purpose is bona fide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255

15.2-9

Applicability of various Ministerial Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256

15.2-10 Comprehensive Example . . . . . . . . . . . . . . . . 256

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Contents

Page No.

Chapter 16 Tax Registration and De-Registration 16.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257

16.2

Article 51: Tax registration . . . . . . . . . . . . . . . . . . . . . . 257

16.3

16.2-1

Obtaining Tax Registration . . . . . . . . . . . . . . 257

16.2-2

Tax Registration for Exempt Person . . . . . . . 258

16.2-3

Exemption from the registration requirement . . . . . . . . . . . . . . . . . . . . . . . . . . 258

Article 52: De-registration . . . . . . . . . . . . . . . . . . . . . . 259 16.3-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259

16.3-2

Application to the FTA for de-registration . . 260

16.3-3

Time Limit for filing of application . . . . . . . 260

16.3-4

Approval of de-registration . . . . . . . . . . . . . . 260

16.3-5

De-registration without application . . . . . . . 260

Chapter 17 7D[ 5HWXUQV DQG &ODULȴFDWLRQV 17.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261

17.2

Article 53: Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . 262

17.3

17.2-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262

17.2-2

Information to be submitted in the tax return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263

17.2-3

Due date to submit the tax return . . . . . . . . . 263

17.2-4

Information to be disclosed in the tax return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263

17.2-5

List of exempt persons required to file a declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . 263

17.2-6

Unincorporated Partnership Firms . . . . . . . 264

17.2-7

Filing of declaration. . . . . . . . . . . . . . . . . . . . 265

17.2-8

Tax return of Tax Group . . . . . . . . . . . . . . . . 265

Article 54: Financial Statements . . . . . . . . . . . . . . . . . 265 17.3-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265

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17.4

17.5

17.6

17.3-2

Maintenance of Financial Statements . . . . . 266

17.3-3

Submission of Financial Statement . . . . . . . 266

17.3-4

Persons required to prepare and maintain Audited Financial Statements . . . . . . . . . . . . 266

17.3-5

Reporting requirement for unincorporated partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . 266

Article 55: Transfer Pricing Documentation . . . . . . . . 266 17.4-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267

17.4-2

Documents to be maintained . . . . . . . . . . . . 267

17.4-3

Disclosure requirements for related parties internationally . . . . . . . . . . . . . . . . . . . . . . . . 268

Article 56: Record Keeping . . . . . . . . . . . . . . . . . . . . . . 269 17.5-1

Maintenance of Records under UAE CT Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270

17.5-2

Time period . . . . . . . . . . . . . . . . . . . . . . . . . . 270

17.5-3

Tax Procedure. . . . . . . . . . . . . . . . . . . . . . . . . 270

Article 57: Tax Period . . . . . . . . . . . . . . . . . . . . . . . . . . 273 17.6-1

17.7

17.8

17.9

Tax Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273

Article 58: Change of Tax Period . . . . . . . . . . . . . . . . . 273 17.7-1

Request to FTA . . . . . . . . . . . . . . . . . . . . . . . . 274

17.7-2

Application to FTA . . . . . . . . . . . . . . . . . . . . . 274

Article 59: Clarifications . . . . . . . . . . . . . . . . . . . . . . . . 274 17.8-1

Ideal Tax System . . . . . . . . . . . . . . . . . . . . . . 275

17.8-2

Advance Pricing Agreement . . . . . . . . . . . . . 275

17.8-3

Process of obtaining an APA . . . . . . . . . . . . . 275

17.8-4

Validity of APA . . . . . . . . . . . . . . . . . . . . . . . . 275

17.8-5

Types of APA . . . . . . . . . . . . . . . . . . . . . . . . . . 275

Illustration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276

Chapter 18 Violations and Penalties 18.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277

18.2

Article 60 : Assessment of Corporate Tax and Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277 18.2-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277

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Page No. 18.2-2

Assessment by the FTA . . . . . . . . . . . . . . . . . 278

18.2-3

Issue of Tax assessment . . . . . . . . . . . . . . . . . 278

18.2-4

Issue of Estimated Tax Assessment . . . . . . . 278

18.2-5

Issue of Administrative Penalties Assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279

18.2-6

Penalty and Prosecution . . . . . . . . . . . . . . . . 281

18.2-7

Judgment by the Court . . . . . . . . . . . . . . . . . 282

18.2-8

Review and Reconsideration of decision . . . 283

18.2-9

Dispute Resolution Committee . . . . . . . . . . . 283

18.2-10 Procedures of Appeal before Courts . . . . . . . 284 18.2-11 Inadmissible Appeal. . . . . . . . . . . . . . . . . . . . 284

Chapter 19 Transitional Rules 19.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286

19.2

Article 61: Transitional Rules . . . . . . . . . . . . . . . . . . . . 286 19.2-1

Adjustments in respect of the closing balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . 286

19.2-2

Any other prescribed conditions . . . . . . . . . . 287

Chapter 20 Closing Provisions 20.1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290

20.2

Article 62: Delegation of Power . . . . . . . . . . . . . . . . . . 290 20.2-1

20.3

Article 63: Administrative Policies and Procedures . . 291 20.3-1

20.4

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291

Article 65: Revenue Sharing . . . . . . . . . . . . . . . . . . . . . 291 20.5-1

20.6

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291

Article 64: Cooperating with the Authority . . . . . . . . . 291 20.4-1

20.5

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292

Article 66: International Agreements . . . . . . . . . . . . . . 292 20.6-1

Overview of DTAA . . . . . . . . . . . . . . . . . . . . . 292

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20.7

20.6-2

International Agreements and UAE CT Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292

20.6-3

List of Double Taxation Avoidance Agreements (DTAA) the UAE has signed with other countries. . . . . . . . . . . . . . . . . . . . 293

Article 67: Implementing Decisions . . . . . . . . . . . . . . . 297 20.7-1

20.8

Article 68: Cancellation of Conflicting Provisions. . . . 298 20.8-1

20.9

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298

Article 69: Application of this Decree-Law to Tax Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298 20.9-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298

20.9-2

Illustration . . . . . . . . . . . . . . . . . . . . . . . . . . . 299

20.10 Article 70: Publication and Application of this Decree-Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299 20.10-1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299

APPENDIX Cabinet Resolution No. 44 of 2020 organising reports submitted by multinational companies . . . . . . . . . . . . . . . . . . 303 Federal Decree-Law No. 47 of 2022 - Issued 3 October 2022 (Effective 15 days after publishing in the Official Gazette) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311 Federal Decree-Law No. 60 of 2023-Amending Certain Provisions of the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . 354 Determination of Tax Residency . . . . . . . . . . . . . . . . . . . . . . . . 356 Federal Tax Authority Decision No. 13 of 2023 regarding determination of Conditions for Conversion of Amounts Quantified in a Currency other than the United Arab Emirates Dirham for the Purposes of the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . 359 Ministerial Decision No. 27 of 2023 on Implementation of Certain Provisions of Cabinet Decision No. 85 of 2022 on Determination of Tax Residency . . . . . . . . . . . . . . . . . . . . . 361 Cabinet Decision No. 37 of 2023 Regarding the Qualifying Public Benefit Entities for the Purposes of Federal DecreeLaw No. 47 of 2022 on the Taxation of Corporations and

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Contents

Page No. Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364 Ministerial Decision No. 43 of 2023 Concerning Exception from Tax Registration for the Purpose of Federal DecreeLaw No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401 Cabinet Decision No. 49 of 2023 on Specifying the Categories of Businesses or Business Activities Conducted by a Resident or Non-Resident Natural Person that are Subject to Corporate Tax . . . . . . . . . . . . . . . . . 403 Cabinet Decision No. 56 of 2023 on Determination of a Non-Resident Person’s Nexus in the State for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . . . . 405 Ministerial Decision No. 68 of 2023 on the Treatment of all Businesses and Business Activities Conducted by a Government Entity as a Single Taxable Person . . . . . . . . . . . . 407 Ministerial Decision No. 73 of 2023 on Small Business Relief for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . 411 Cabinet Decision No. 74 of 2023 on the Executive Regulation of Federal Decree-Law No. 28 of 2022 on Tax Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413 Cabinet Decision No. 75 of 2023 on the Administrative Penalties for Violations Related to the Application of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . 431 Cabinet Decision No. 81 of 2023 on Conditions for Qualifying Investment Funds for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . . . . . . . . . . . . 436 Ministerial Decision No. 82 of 2023 on the Determination of Categories of Taxable Persons Required to Prepare and Maintain Audited Financial Statements for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . 440 Ministerial Decision No. 83 of 2023 on the Determination of the Conditions under which the Presence of a Natural Person in the State would not Create a Permanent Establishment for a Non-Resident Person for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . 441 Ministerial Decision No. 97 of 2023 Requirements for

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UAE Corporate Tax

Page No. Maintaining Transfer Pricing Documentation for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . . . . 443 Cabinet Decision No. 100 of 2023 on Determining Qualifying Income for the Qualifying Free Zone Person for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . 445 Ministerial Decision No. 105 of 2023 on the Determination of the Conditions under which a Person may Continue to be Deemed as an Exempt Person, or Cease to be Deemed as an Exempt Person from a Different Date for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . 454 Ministerial Decision No. 114 of 2023 on the Accounting Standards and Methods for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456 Ministerial Decision No. 115 of 2023 on Private Pension Funds and Private Social Security Funds for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . . . . . . . . . . . . 458 Ministerial Decision No. 116 of 2023 on the Participation Exemption for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . 461 Ministerial Decision No. 120 of 2023 on the Adjustments Under the Transitional Rules for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468 Ministerial Decision No. 125 of 2023 on Tax Group for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . 473 Ministerial Decision No. 126 of 2023 on the General Interest Deduction Limitation Rule for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . . . . . . . . . . . . 478 Ministerial Decision No. 127 of 2023 on Unincorporated Partnership, Foreign Partnership and Family Foundation for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . 484 Ministerial Decision No. 132 of 2023 on Transfers Within a Qualifying Group for the Purposes of Federal DecreeLaw No. 47 of 2022 on the Taxation of Corporations and

Contents

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Page No. Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486 Ministerial Decision No. 133 of 2023 on Business Restructuring Relief for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . 490 Ministerial Decision No. 134 of 2023 on the General Rules for Determining Taxable Income for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . 494 Ministerial Decision No. (265) of 2023 Regarding Qualifying Activities and Excluded Activities for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses . . . . . . . . . . . . . . . . 500

Law & Practice Relating to UAE Corporate Tax AUTHOR : PUBLISHER : DATE OF PUBLICATION : EDITION : ISBN NO : NO. OF PAGES : BINDING TYPE :

NIRAV SHAH TAXMANN JANUARY 2024 2024 EDITION 9789357781183 542 HARDBOUND

Rs. 2995 | USD 70

Description This book aims to analyse and elucidate the intricacies of tax laws and their practical applications strictly within the context of the United Arab Emirates (UAE). It addresses the challenges for tax practitioners in understanding the law and its applications. It does so by providing an article-wise commentary on the UAE Corporate Tax along with the following: u

Relevant Cabinet and Ministerial Decisions

u

Case Studies

u

Illustrations

u

FAQs

u

Charts & Tables

Beyond its immediate utility, the book is designed to serve as a comprehensive reference tool. It stands as a valuable resource for professionals dealing with tax, yet its scope is not confined to experts alone. The content is approachable and engaging for anyone interested in the tax environment of the UAE, whether they are practitioners, scholars, or laypersons.

The Present Publication is the 1st Edition and is updated till 31st December 2023. This book is authored by CA Nirav Shah, with the following noteworthy features: u

[Clear & Example Driven Format] has been followed in this book to present the analysis and make complex tax concepts more accessible to the readers

u

[Discussion on Implementation of UAE Corporate Tax] involving Decrees and Cabinet Decisions

u

[Highly Structured Contents to Present the Legal Framework and Real-world Application] The book’s structure is thoughtfully organised to provide a lucid explanation, where it not only clarifies legal jargon but also bridges the gap between theory and practice, offering readers a wellrounded understanding of the subject matter

The book contains twenty chapters, each including an analysis of the Articles of the UAE Corporate Tax. The appendix to the book includes Federal Decree Law 47 of 2022, as amended by Federal Decree Law 60 of 2023, and all Cabinet and Ministerial Decisions.

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