UAE Corporate Tax - Business Activities of a Government entity treated as a Single Taxable Person

The Ministry of Finance (‘MoF’) has issued Ministerial Decision No. 68 of 2023 on Treatment of all Businesses and Business Activities Conducted by a Government Entity as a Single Taxable Person. This Decision is issued in accordance with Clause 6 of Article 5 of the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (‘Corporate Tax Law’).

Only Federal and Local Government entities are impacted by this Ministerial Decision.

Highlights of the Decision include:

• A Federal and Local government Entity are defined as government itself, its ministries, agencies, departments, authorities, and public institutions.
• To be treated as a Single Taxable Person, an application shall be made by a Representative Entity of the Federal or Local Government. The application shall include all businesses and business activities conducted under a license issued by a licensing authority.
• The Representative Entity shall be responsible for complying with all the obligations set out in the Corporate Tax Law.
• A Representative Entity can be replaced without discontinuing the treatment as a Single Taxable Person. Any new or discontinued businesses or business activities can be added or removed within 20 business days of the occurrence of such event.
• The start and end date will be from the beginning of the tax period specified in the application, or from any other tax period as determined by the FTA.
• For computing Taxable Income, the Representative Entity shall consolidate financial results, assets, and liabilities of all businesses or business activities and eliminate intragroup transactions of the Single Taxable Person.

The procedural requirements to make an application online will be clarified in due course.

Through this decision, Federal and Local government entities can effectively form a tax group, allowing them to file a single Corporate Tax return and reduce compliance and associated costs.

If you need any further information on this topic or any other matter related to Corporate Tax in the UAE, please contact our Tax experts.