Post the release of the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (the “Corporate Tax Law”), the UAE Ministry of Finance (‘MOF’) / Federal Tax Authority (‘FTA’) has initiated issuing further guidance on the provisions of the Corporate Tax (‘CT’)Law.
On clarificatory note, the MOF has issued today Ministerial Decision No. 43 of 2023concerning exceptions from tax registration for the purpose of the CT Law.
The decision is issued in accordance with Article 51 of the CT Law, which requires taxable persons to register for CTLaw with the FTA, except the following persons:
- A Government Entity.
- A Government Controlled Entity.
- A Person engaged in an Extractive Business that meets the conditions of Article 7 of the CT Law.
- A Person engaged in a Non-Extractive Natural Resource Business, that meets the conditions of Article 8 of the CT Law.
- A Non-Resident Person that derives only State Sourced Income under Article 13 of CT Law and that does not have a Permanent Establishment (‘PE’) in the State according to the provisions of the CT Law.
It is important to note that if such exempt entities [as mentioned at sr.no. (a) to (d)] are carrying out any taxable business activity subject to UAE CT Law, then they would be required to register for the UAE CTLaw.
Further, the examination of PE for Non-Residents becomes of paramount importance, as the taxability of such Non-Residents and the requirement to register for the CT Law depends on whether they constitute a PE in the UAE or not.
It also implies that till the time withholding tax provisions are introduced in the CT Law, income derived by the Non-Residents (from UAE resident payer entities) without constituting a PE in the UAE (such as royalties, fees for management services, interest, dividend, etc.) may not be subject to CTand such non-residents may not need to worry about CTregistration and compliances.
How can PKF help?
PKF UAE is a leading firm that provides professional financial advisory, assurance, VAT, Corporate Tax, ESR and International tax services in the UAE. PKF UAE brings world-class capabilities and high-quality service to clients helping them to align their working model to government reporting and compliance requirements.
With the fast-pacedongoing developments in the UAE CT regime, it is important for businesses in the UAE to understand the CT provisions, assess the impact of CT Law,decide the appropriate way forward compliant with the CT regulations, get the IT systems ready, understand Transfer Pricing (‘TP’) implications including benchmarking&policies and ensuring timely CT and TP compliances.
PKF UAE can assist in providing such services, undertaking Corporate Tax and Transfer Pricing impact assessment, analysing relevant implications and providing assistance in Corporate Tax and Transfer Pricingcompliances.
Contacts
You may email us or can contact any of our team members relating to your queries on this subject:
| Stany Pereira |
| Managing Partner |
| stany@pkfuae.com |
| Shailesh Kumar |
| Director- Tax Services |
| skumar@pkfuae.com |
| Mradul Gupta |
| Senior Manager |
| mgupta@pkfuae.com |
| Nandita Salgaonkar |
| Manager – Tax Services |
| nsalgaonkar@pkfuae.com |
| Radhika Doshi |
| Assistant Manager – Tax Services |
| rdoshi@pkfuae.com |
| Jaya Agarwal |
| Tax Senior- Tax Services |
| jaagarwal@pkfuae.com |
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