Alert UAE Corporate Tax

Press Note 

The Federal Tax Authority (‘FTA’) has issued press release on 14 May 2023 announcing opening of Corporate Tax registration process for all Public Joint Stock Companies and Private Companies, except Free Zone Persons and Natural Persons conducting Business or Business Activity.

It is further clarified that such companies will need to register individually for the respective entity and process/ application for Tax Grouping can be made later (as may be notified by the FTA).

Ministerial Decision No 97 of 2023 

The Ministerial Decision 97 of 2023 provides that only taxpayers which are part of a multinational group with consolidated revenues of more than or equal to AED 3.15 billion or taxpayers with more than or equal to AED 200 million revenues in the relevant tax period are required to maintain UAE transfer pricing documentation (i.e., Master file and Local file).

While the Decision provides relaxation from maintenance of Transfer Pricing documentation for certain set of taxpayers, it does not altogether exempt them from the applicability of Transfer Pricing provisions. In other words, all entities would still need to undertake the transactions with the Related Parties and Connected Persons at Arm’s Length Price, for which benchmarking analysis needs to be done.

Further, the Transfer Pricing Disclosure form needs to be filed along with return of income showing details of related parties and connected persons transactions .

Ministerial Decision No 49 of 2023 

Individuals conducting business or business activities will be subject to Corporate Tax and registration requirements only if their combined turnover exceeds AED1 million in a calendar year.

As per the Decision, only business or business-related activity income is taxed, while personal income from employment, investments and real-estate (without licensing requirements) is not subject to Corporate tax.