| 1 |
1 |
Definitions & General provisions |
Several definitions have been provided, which shall aide in reading / interpreting the subsequent articles of the Corporate Tax Law.
An important aspect to note that the definitions itself have attempted to segregate treatment of persons/ businesses established in one of the Free Zone by defining ‘Free Zone Person’ and ‘Qualifying Income’. |
| 2 |
2-3 |
Imposition of Corporate Tax and Applicable rates |
While the Corporate Tax rates for UAE based businesses either in Mainland and/or Free Zone have been published but the Corporate Tax rates applicable to businesses exposed to OECD Pillar 2.0 are yet to be published. |
| 3 |
4-10 |
Exempt Person |
In line with the public consultation paper, several Persons / Businesses / activities have been identified as operating exempted business along with key conditions for the exemption to apply. |
| 4 |
11-17 |
Taxable Person and Corporate Tax Base |
Various categories of Taxable Persons have been clarified including and not limited to residents, non-residents, qualifications of Permanent Establishment, Partnerships, Family foundations etc. |
| 5 |
18-19 |
Free Zone provisions |
Businesses established in certain Free Zones are expected to be exempted from CT. However, the further nuances shall be clarified by way of Cabinet Decisions; especially on the aspect if a Free Zone business is carrying out activities in the UAE Mainland and/or deriving income from the UAE Mainland |
| 6 |
20-21 |
Calculation of Taxable Income |
Guidance for arriving at Taxable Income has been provided in greater detail |
| 7 |
22-25 |
Exempt Income |
Clarification on what income should be considered for exemption along with qualifying conditions has been laid out including that of certain key sectors such as shipping, aviation, and related activities |
| 8 |
26-27 |
Reliefs for Qualifying groups and Business Restructuring |
Guidance on how losses can be transferred within a Corporate Tax Group along with conditions thereof and relaxations from computing gain or loss on business restructurings has been clarified |
| 9 |
28-33 |
Deductions |
Detailed listing has been provided for deductible and non-deductible expenses along with the conditions / restrictions there on. |
| 10 |
34-36 |
Related Party Transactions |
Guidance on how the transactions with related party/ connected person has to be treated and valued has been provided in much detail including determining the methods on the basis of which arm’s length value shall be computed |
| 11 |
37-39 |
Tax Loss reliefs, transfer and limitations |
Much guidance has been provided on eligibility / conditions to carry forward, transfer and/or lapse of tax losses |
| 12 |
40-42 |
Tax Group provisions |
Detailed guidance on eligibility to form or restriction not to form Corporate Tax Group has been provided |
| 13 |
43-47 |
Calculation of Corporate Tax Payable and guidance on Withholding Taxes, Foreign Tax Credit |
Following further deductions are allowed while final payment of Corporate Tax liability for a particular tax period:
- Withholding Tax
- Foreign Tax Credit
- Any other credits and/or relief as may be defined
|
| 14 |
48-49 |
Payment and refund of Corporate Tax |
Payment of Corporate Tax liability has to be made within 9 months from the end of the relevant tax period with no requirement of provisional and/or advance payment of Corporate Tax liability. Further, if there is excess Withholding Tax liability then the same can be claimed as refund subject to the applicable procedures. |
| 15 |
50 |
Anti- Abuse Rules |
It has been clarified that typically Corporate Tax planning considerations shall not be the only consideration to drive a transaction but should have valid commercial reason/ economic reality. Transactions structured with the only intention to reap benefits/ reliefs of Corporate Tax could be questioned |
| 16 |
51-52 |
Tax Registration and Deregistration |
Enabling Articles related registration and de-registration has been provided. Procedures for the same could be provided by way of Cabinet decisions. |
| 17 |
53-59 |
Tax Returns and Clarifications |
Enabling Article related return filing requirements has been provided along with certain key details that have to be submitted along with the returns. It appears that audited / certified financial statements and transfer pricing documentation may be required to be filed; however, whether such financial statements and transfer pricing documentation is required to be filed along with the Corporate Tax returns remains to be expressly clarified. |
| 18 |
60 |
Assessments and penalties |
Enabling Articles regarding conducting periodic Corporate Tax assessment has been provided along with powers to levy penalties in case of violations |
| 19 |
61 |
Transitional provisions |
It appears that there is no need to recast previous year’s financial statements, which shall be the opening balance sheet for tax period reporting subject to considerations around transfer pricing |
| 20 |
62-70 |
Closing provisions |
Specific Articles for sharing of revenue between Federal and Local government, regard to international agreements i.e., double tax treaties and repealing of conflicting provisions have published |