Abu Dhabi – Mubasher: The Ministry of Finance in the UAE has issued an explanatory guide to Federal Decree-Law No. 47 of 2022 regarding corporate and business tax, the “Company Tax Law.”
The guide provides a detailed explanation of each article and the intended purpose of the provisions of the law and relevant executive decisions. According to a press release.
The guide includes explanations of the advantages of the corporate tax system in the UAE, which would encourage business activities and reduce compliance burdens on taxpayers.
Among the advantages of the system is the provision of financial and administrative facilities to support startups and small companies, as businesses eligible for these facilities will not be charged any tax and will benefit from simplified requirements for tax returns when their revenues reach 3 million dirhams.
The guide shows other advantages, which are the determination of 0% for the spot tax at the source on foreign and domestic payments, and the exemption of profits of foreign branches, dividends, capital gains realized locally, and foreign shares from corporate tax when the relevant conditions are met.
The guide also provides a detailed explanation of the requirements and limits of transfer pricing documents in accordance with international standard comparisons to ensure that compliance burdens on small and medium-sized companies are minimized, with the possibility of benefiting from tax losses in future tax periods without being bound by time conditions, and the possibility of carrying forward tax losses between tax group companies. , when the relevant conditions are met.
Groups in the UAE can pay and file corporate tax returns on a consolidated basis as a single taxable entity to ensure administrative efficiency and simplification, and facilitate in-group transfers and business restructuring transactions.--
Last September, the UAE issued Federal Decree Law No. 47 of 2022 regarding corporate and business tax, provided that businesses in the country are subject to corporate tax starting from its first fiscal year that starts on or after June 1, 2023.
The corporate tax was also set at a rate of 9% on taxable income that exceeds the amount of 375 thousand dirhams, and a rate of zero% on the part of the taxable income that does not exceed that amount.
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