Legislation Details
- Full Title: Cabinet Resolution Concerning the Determination of the Amount of Annual Income Subject to Corporate Tax
- Law Type: Cabinet Resolution
- Law Number: No. (116) of 2022
- Issued Date: 30 Dec 2022
- Effective Date: 30 Dec 2022
- Official Gazette: No. 743
- Sector: Tax
- Status: Active
- Number of Articles: 11
- Chapters/Parts: 0
- Amendments: 0
Summary
This Cabinet Resolution sets out the thresholds and tax rates for corporate income that is subject to the UAE's new Corporate Tax regime. It establishes that the first AED 375,000 of a company's taxable income is subject to a 0% corporate tax rate, while any income above that threshold is taxed at 9%. The Resolution aims to provide clarity on the application of the Corporate Tax Law and ensure consistent implementation across the UAE. (Cabinet Resolution Concerning the Determination of the Amount of Annual Income Subject to Corporate Tax, 2022, Art. 1-4)
What is the scope and purpose of this law?
The scope of this Cabinet Resolution is to determine the specific thresholds and tax rates for corporate income that is subject to the UAE's new Corporate Tax regime. It applies to all legal persons and business income that is liable for Corporate Tax under Federal Decree-Law No. (47) of 2022 Concerning the Corporate Tax. The purpose is to provide clear guidelines on the application of the Corporate Tax Law and ensure a consistent approach to taxation across the UAE. (Cabinet Resolution Concerning the Determination of the Amount of Annual Income Subject to Corporate Tax, 2022, Art. 1-4)
What are the key definitions under this law?
The Cabinet Resolution provides the following key definitions:
- State: The United Arab Emirates
- Ministry: Ministry of Finance
- Minister: Minister of Finance
- Authority: Federal Tax Authority
- Person: Any natural or legal person
- Taxpayer: A person who is subject to Corporate Tax in a country under the Corporate Tax law
- Corporate Tax Law: Federal Decree-Law No. (47) of 2022 Concerning the Corporate Tax
- Corporate Tax: The tax imposed under the Corporate Tax Law on legal persons and business income
- Taxable Income: Income subject to the Corporate Tax under the Corporate Tax Law
- Tax Period: The period for which the tax return must be submitted
- Tax Return: Information provided to the Authority for Corporate Tax purposes
- Business: Any activity practiced regularly, continuously and independently by any person and in any place
- Business Activity: Any transaction, activity, series of transactions, or series of activities carried out by a person in the course of his business
(Cabinet Resolution Concerning the Determination of the Amount of Annual Income Subject to Corporate Tax, 2022, Art. 1)
What are the main obligations and requirements?
The key obligations and requirements under this Cabinet Resolution are: 1. The first AED 375,000 of a taxpayer's taxable income is subject to a 0% corporate tax rate, regardless of whether the taxpayer carries on multiple businesses or business activities. (Cabinet Resolution Concerning the Determination of the Amount of Annual Income Subject to Corporate Tax, 2022, Art. 2(1)) 2. If the Federal Tax Authority determines that one or more persons have separated their business or business activity in a fictitious manner to obtain a corporate tax advantage, the entire taxable income will be subject to the 9% corporate tax rate. (Cabinet Resolution Concerning the Determination of the Amount of Annual Income Subject to Corporate Tax, 2022, Art. 2(2)) 3. The Federal Tax Authority will consider various factors to determine whether a separation of business or business activity is legitimate or fictitious, including the persons' financial, economic and organizational ties. (Cabinet Resolution Concerning the Determination of the Amount of Annual Income Subject to Corporate Tax, 2022, Art. 2(3)) 4. Any taxable income exceeding AED 375,000 is subject to a 9% corporate tax rate. (Cabinet Resolution Concerning the Determination of the Amount of Annual Income Subject to Corporate Tax, 2022, Art. 3)
Which authorities or bodies are responsible for enforcement?
The key authorities responsible for the enforcement of this Cabinet Resolution are: 1. The Ministry of Finance, which is responsible for issuing the necessary decisions to implement the provisions of this Resolution. (Cabinet Resolution Concerning the Determination of the Amount of Annual Income Subject to Corporate Tax, 2022, Art. 4) 2. The Federal Tax Authority, which is responsible for verifying whether persons have separated their business or business activity in a fictitious manner to obtain a corporate tax advantage. (Cabinet Resolution Concerning the Determination of the Amount of Annual Income Subject to Corporate Tax, 2022, Art. 2(2-3))
How does this law interact with other UAE legislation?
This Cabinet Resolution is closely related to and implements provisions of the following UAE federal laws: - Federal Decree-Law No. (47) of 2022 Concerning the Corporate Tax - Federal Decree-Law No. (13) of 2016 concerning the Establishment of the Federal Tax Authority, as amended - Federal Decree-Law No. (7) of 2017 Concerning Tax Procedures, as amended - Cabinet Resolution No. (36) of 2017 Concerning the Executive Regulations of Federal Law No. (7) of 2017 concerning Tax Procedures, as amended (Cabinet Resolution Concerning the Determination of the Amount of Annual Income Subject to Corporate Tax, 2022, Art. 1)
When did this law come into effect?
This Cabinet Resolution came into effect on 30 December 2022, the same date it was issued. It was subsequently published in the Official Gazette No. 743 on 16 January 2023. (Cabinet Resolution Concerning the Determination of the Amount of Annual Income Subject to Corporate Tax, 2022, Preamble)
Source Documents
This article analyses Cabinet Resolution Concerning the Determination of the Amount of Annual Income Subject to Corporate Tax for legal research and educational purposes. For the purpose of interpretation and application, reference must be made to the original Arabic text. In case of conflict, the Arabic text prevails. This does not constitute legal advice.