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Summary of Public Consultation Document issued for UAE Corporate Tax

On 31 January 2022, the UAE Ministry of Finance announced the introduction of Federal Corporate Tax (CT) in UAE w.e.f. 1 June 2023.

While the UAE Federal Tax Authority (FTA) is finalizing the UAE CT regime, on 28 April 2022, it issued a public consultation document covering various aspects of the proposed law. The business community and other interested stakeholders are expected to provide their comments online at the prescribed link by 19 May 2022.

In this alert, we have captured certain key aspects of the document and possible impact areas:

Taxable Persons

•UAE CT will apply to UAE companies and other legal persons incorporated in the UAE as well as to a foreign legal entity having a Permanent Establishment (PE) in UAE.

•UAE CT will not apply to individuals unless he is engaged in business or commercial activity in the UAE, which requires him to obtain a commercial license or equivalent permit from the relevant competent Authority in the UAE.

•The following persons are exempted from UAE CT:
-Federal and Emirate Governments and their authorities and other public institution;
-Wholly-owned, Government-owned UAE companies that carry out the sovereign or mandated activity and that are listed in a cabinet decision;
-Businesses engaged in the extraction and exploitation of UAE natural resources that are subject to Emirate level taxation;
-Charities and other public benefit organizations that are listed in a Cabinet Decision;
-Public and regulated private social security and retirement pension funds;
-Investment funds, subject to meeting certain conditions.

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