UAE’s Ministry of Finance (MoF) has issued a new resolution, clarifying the criteria for corporate tax exemption and aiming to encourage growth across multiple industries.
The Ministerial Resolution No. (105) of 2023 outlines the mandatory conditions for a person or company to be exempt from corporate tax. Undersecretary MoF, Younis Haji Al Khoori, stressed that the resolution is intended to create a transparent and efficient tax system.
According to him, the conditions include situations such as unexpected emergencies or circumstances beyond the control of the individual or business seeking exemption.
The resolution also mentions the requirements that businesses must fulfill to maintain their eligibility for exemption from corporate tax, even if they do not meet the relevant conditions outlined in the corporate tax law.
It also requires the companies, in the process of liquidation or shutdown, to inform the Federal Tax Authority (FTA) within 20 working days from the start of these procedures.
If a person or entity fails to meet the exemption criteria due to an emergency, they must apply to the FTA within 20 working days of not fulfilling the exemption requirements.
They are also required to fix the emergency situation within 20 working days from the date of their application. If the situation is beyond their control, an extension of 20 working days may be granted.
The resolution also stresses that exploiting the tax system for personal gains will result in the individual losing their exemption status.
Businesses Exempt from Corporate Tax
Last month, MoF released a list of businesses exempt from registering for corporate tax under the Taxation of Corporations and Businesses. The list included government organizations, government-controlled entities, and extractive/non-extractive natural resource businesses that meet the criteria outlined in the corporate tax law.
Individuals, not residing in UAE and not having a permanent organization there, were also not required to register for corporate tax if their only source of income was in UAE.
MoF also unveiled plans to alleviate the corporate tax burden for small and micro enterprises, start-ups, and freelancers, starting from 1 June 2023.
