Tax Assessments and Penalties: UAE Corporate Tax Law

• Taxable Person shall maintain all records and documents for a period of (7) seven years following the end of the Tax Period
• Tax Authorities may plan the assessment and tax Audit any time
• Taxable person must cooperate with the Tax Officer and provide all supporting documents as and when required to support their tax return and calculation of the tax liability of specified tax period.
• The procedural law will explain the penalties for the non-compliance and tax evasion (will be release later as Cabinet Decision)

Amount of Annual Income Subject to Corporate Tax-CD-116 of 2022

0% CT rate

Taxable Person Income not exceeding (375,000) shall be subject to Corporate Tax at the rate of (0%) zero percent in the Tax Period irrespective of whether the Taxable Person conducts multiple Businesses or Business Activity in that Tax Period.
Where it is established to the Authority that one or more Persons have artificially separated their Business or Business Activity all those business together will be restricted to 375k for 0%

9% CT rate

Income in excess of 375k charged at 9%

Small Business Relief for the Purposes of Federal Decree-Law no 47,MD-73-2023

• Taxable Person’s Revenue Threshold AED 3 million
• Tax periods commencing from on or after 1.6.2023 and ending on or before 31-12-2026
• A Taxable Person shall not be able to elect to apply the Small Business Relief if their Revenue in any relevant or previous Tax Period has exceeded the threshold set out in Clause 1 of this Article.
• Exceptions
• Component of MNCs with turnover of AED 3.15 billion
• Qualifying Free Zone Person
• Tax loss in the relevant tax Period can not be carried forward
• Net interest expense can not be carried forward as well
• Anti avoidance rules applies if the Authority establishes that artificial separation of businesses

Conditions for Change in Tax Period-FTA decision no 5 2023

• The change is for one of the following reasons:
• Aligning the Resident Taxable Person’s Financial Year with the Financial Year of another Resident Person for the purpose of forming a Tax Group or joining an existing Tax Group, or aligning the Taxable Person’s Financial Year with the Financial Year of its domestic or foreign head office, subsidiary, parent, or ultimate parent company.
• There is valid commercial, economic, or legal reason to change the Tax Period.
• The Taxable Person’s liquidation.
• The Taxable Person has not yet filed the Tax Return for the Tax Period he is applying to change
• The application for change in Tax Period is in respect of any of following: a. Extend the current Tax Period to be a maximum of 18 months; or b. Shorten the next Tax Period to be between 6 and 12 months.

Provisions of Exemption from Corporate Tax-FTA Decision no 7-2023

• UAE Corporate tax law Registration and Application for Exemption
• A Qualifying Public Benefit Entity under Article 9 of this Decree-Law has to apply for tax registration before 1-10-2023
  The Person included in any of the categories mentioned in paragraphs (f), (g), (h) and (i) of Clause 1 of Article 4 of Federal Decree-Law No. 47 of 2022 referred to above, shall apply for Tax Registration and obtain a Tax Registration Number as of 1 June 2024 after registration accepted can apply for exemption

Categories of Taxable Persons Required to Prepare and Maintain Audited Financial Statements –MD-82 202

For the purposes of Clause 2 of Article 54 of the Corporate Tax Law, the following categories of
Taxable Persons shall prepare and maintain audited financial statements:

1. A Taxable Person deriving Revenue exceeding AED 50,000,000 (fifty million United Arab Emirates dirhams) during the relevant Tax Period.
2. A Qualifying Free Zone Person.

Exception from Tax Registration –MD-43-2023

The following Persons shall not register for Corporate Tax with the Authority:
(a) A Government Entity.
(b) A Government Controlled Entity.
(c) A Person engaged in an Extractive Business that meets the conditions of Article 7 of the Corporate Tax Law in UAE.
(d) A Person engaged in a Non-Extractive Natural Resource Business, that meets the conditions of Article 8 of the Corporate Tax Law.
(e) A Non-Resident Person that derives only State Sourced Income under Article 13 of the Corporate Tax Law and that does not have a Permanent Establishment in the State according to the provisions of the Corporate Tax Law.
Paragraphs (a) to (d) of Clause (1) of this Article shall be without prejudice to the obligation of the Person to register for Corporate Tax in cases where the Person becomes a Taxable Person under the provisions of the UAE Corporate Tax Law.

Requirements for Maintaining Transfer Pricing Documentation-MD-97-2023

Conditions for Maintaining Master File and Local File

1. Component of an MNC with group turnover of AED 3.15 mil
2. 2.Turnover above 200 million
   Taxable Person shall include transactions or arrangements with all of the following Related Parties and Connected Persons in the local file:
   a) A Non-Resident Person.
   b) An Exempt Person.
   c) A Resident Person that has made an election under Article (21) of the Corporate income tax law in UAE and meets the conditions of such election.
   d) A Resident Person whose income is subject to a different Corporate Tax rate from that applicable to the income of the Taxable Person.

Categories of Businesses or Business Activities Conducted by a Resident or Non-Resident Natural Person that are Subject to Corporate Tax-CD-49 2023
The natural person will be subject to CT only when turnover from businesses or business activities exceed AED 1 mil in a calendar year
Turnover from the following sources shall not be considered as Businesses or Business Activities
conducted by a resident or non-resident natural person subject to Corporate Tax,
regardless of the amount of Turnover derived from such activities:
a. Wage.
b. Personal Investment income.
c. Real Estate Investment income

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