Last Updated on: 12th July 2023, 04:43 am
UAE Issues New Corporate Sector Tax Policies
The Ministry of Finance of the United Arab Emirates (MoF) has issued a new resolution that clarifies the criteria for corporate income tax exemption and aims to encourage growth in various sectors.
Ministerial Decision No. (105) of 2023 defines the mandatory conditions for the exemption of a natural or legal person from corporate income tax. Treasury Undersecretary Younis Haji Al Khoori stressed that the resolution aims to create a transparent and efficient tax system.
According to him, conditions include situations such as unforeseen emergencies or circumstances beyond the control of the person or entity requesting a waiver.
The resolution also mentions the requirements that companies must meet in order to maintain their entitlement to corporate income tax exemption even if they do not meet the requirements set out in the corporate income tax law.
In addition, companies that are in the process of liquidation or closure are required to notify the Federal Revenue Commissioner (AFC) within 20 business days of the commencement of these processes.
If an individual or organization does not meet the exemption criteria due to an emergency, they must submit an application to the ALE within 20 business days of not meeting the exemption requirements.
You are also required to resolve the emergency within 20 business days from the date of your request. If the situation is beyond your control, an extension of 20 working days can be granted.
The resolution also states that exploiting the tax system for personal gain would result in the loss of tax-exempt status.
Companies Exempt From Corporate Income Tax
Last month, the Treasury released a list of companies exempt from corporate tax registration under corporate and business taxes. The list included governmental organizations, state-controlled companies and companies that extract raw materials/non-extractive raw materials and meet the criteria set out in the Corporate Income Tax Act.
Non-UAE residents who did not have a permanent organization there were also not required to register for corporate income tax if their sole source of income was in the UAE.
The Treasury also unveiled plans to ease the tax burden for small and micro businesses, start-ups and the self-employed effective June 1, 2023.
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