The Ministry of Finance (MoF) of the United Arab Emirates (UAE) has released a new resolution defining the requirements for company tax exemption and trying to boost growth across diverse industries.
The required requirements for a person or corporation to be excluded from corporate tax are outlined in Ministerial Resolution No. (105) of 2023. Younis Haji Al Khoori, Undersecretary of the MoF, emphasized that the resolution is aimed to build a transparent and efficient tax system.
He defines the conditions as “unexpected emergencies or situations beyond the control of the person or business seeking exemption.”
The resolution also outlines the requirements that enterprises must follow to continue to be eligible for corporation tax exemption, even if they do not meet the applicable circumstances established in the corporate tax legislation.
It also requires firms that are in the process of liquidation or closure to notify the Federal Tax Authority (FTA) within 20 working days of the start of these proceedings.
If a person or business fails to meet the exemption criterion due to an emergency, they must apply to the FTA within 20 working days of failing to meet the exemption criteria.
They must also resolve the emergency problem within 20 working days of their application. If the circumstance is beyond their control, they may be allowed a 20-day extension.
The resolution further emphasizes that abusing the tax system for personal benefit will result in the individual’s exemption status being revoked.
Businesses Exempt from Corporate Tax
The Ministry of Finance published a list of enterprises that are excluded from filing for corporation tax under the Taxation of Corporations and Enterprises Act last month. Government organizations, government-controlled enterprises, and extractive/non-extractive natural resource firms that fit the criteria established in the corporate tax legislation were included on the list.
Individuals who did not live in the UAE and did not have a permanent organization there were likewise exempt from paying corporation tax if their main source of income was in the UAE.
The MoF also announced intentions to reduce corporation tax burdens for small and micro firms, start-ups, and freelancers beginning 1 June 2023.
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