UAE Corporate Tax – Conditions for remaining an Exempt Person in exceptional circumstances.
10 May 2023
The Ministry of Finance has issued a Ministerial Decision (No (105) of 2023), which provides rules to allow a business to remain eligible for corporate tax exemption if:
* it is undergoing liquidation or termination, or
* it is experiencing a temporary event or situation that means it is temporarily unable to meet the conditions for exemption.
There are a number of conditions that must be met, including a requirement to notify the Federal Tax Authority within 20 days of the beginning of the liquidation or termination, or 20 days from the date the business fails to meet the conditions for exemption.
The Decision also clarifies that the exempt person loses the tax exemption from the day it fails to meet the conditions to be exempt under the Corporate Tax Law, if it is found that one of the main purposes was to avoid corporate tax.
BDO comment:
These rules have been introduced to support businesses where, in exceptional circumstances, they are unable to meet the conditions for exemption. They will be a welcome benefit to some businesses in the future, but no action is required at the present time.
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