Corporate Tax Exemptions Granted to Specific Individuals by Ministry of Finance

Galadari Alerts: Corporate Tax Exemptions Granted to Specific Individuals by Ministry of Finance

The United Arab Emirates will soon be introducing Corporate Tax, effective for financial years starting on or after 1 June 2023, applicable on the net profit of companies or other businesses in accordance with Federal Law No.47 of 2022 on Taxation of Corporations and Businesses. This move aligns the UAE with other countries who have implemented Corporate Tax.

The main objective behind the introduction of Corporate Tax is to further the UAE’s objectives of accelerating its development and transformation whilst continuing to attract foreign investment and promote economic growth. To ensure transparency and an efficient tax system that promotes business growth, the Ministry of Finance has issued Ministerial Decision No. 105 of 2023 on Determination of Conditions under which a Person may Continue or Cease to be Deemed an Exempt Person.

As per the Decision, a business can still qualify for a Corporate Tax exemption under certain circumstances, such as during liquidation or termination, provided that the Federal Tax Authority is notified within 20 business days from the initiation of the liquidation or termination process.

A business is obliged to address non-compliance within 20 business days of the application submission. If it is not able to comply with this timeframe due to circumstances beyond the company’s control, an additional 20 days may be granted.

The decision also covers situations where a company no longer meets the exemption criteria for the sole purpose of receiving a Corporate Tax benefit. If this happens, the company will lose its exempt status from the date it no longer meets the exemption criteria.

For more information on UAE Corporate Tax, please get in touch with Paula Villegas Guevara. Paula is a member of the Corporate and Commercial practice at Galadari.

Paula Villegas Guevara Senior Associate [email protected]