UAE Issues Detailed Guide on Exempt Persons for Corporate Tax

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Dubai May 15, 2023:

The UAE’s Ministry of Finance has issued an Explanatory Guide for Federal Decree-Law No 47 of 2022 on Taxation of Corporations and Businesses, which provides the legislative basis for imposing a federal tax on corporations’ and business profits effective for financial years starting on or after June 1, 2023. It comprises 20 Chapters and 70 Articles, covering, inter alia, the scope of Corporate Tax, its application and rules pertaining to compliance and the administration of the Corporate Tax regime.

The guide provides an article-by-article explanation of the meaning and intended effect of the provisions of the Corporate Tax Law and its implementing decisions. It may be used in interpreting the Corporate Tax Law and how particular provisions may need to be applied.

Younis Haji Al Khouri, undersecretary of the Ministry of Finance, said: “The Ministry is working to provide clarity and guidance to those who are or may be subject to UAE’s Corporate Tax, so they can understand the provisions of the law and why it is enacted. The Explanatory Guide reflects our continued commitment to ensuring taxable persons are supported and provided with information ahead of the law’s entry into effect.”

The guide includes explanations of the various features of the UAE’s Corporate Tax regime which would encourage business activity and minimize the compliance burden for taxable persons. Further the guide also provides clause by clause clarifications and highlights targeted exemptions for certain entities from corporate taxation, especially those considered important to the social fabric of the UAE. These include government entities, investment funds, pension and social security funds, public benefit organisations and natural resource businesses.

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