Legislation Details
- Full Title: Federal Decree by Law Concerning Corporate and Business Tax
- Law Type: Federal Decree-Law
- Law Number: [number] of 2022
- Issued Date: 03 Oct 2022
- Effective Date: 25 Oct 2022
- Official Gazette: No. 737
- Sector: Tax
- Status: Active
- Number of Articles: 240
- Chapters/Parts: 0
- Amendments: 3
Summary
This Federal Decree-Law establishes a corporate tax regime in the United Arab Emirates. It imposes a corporate tax on the business income of companies and other juridical persons operating in the UAE, with certain exemptions and reliefs. The law aims to modernize the UAE's tax system, diversify government revenue sources, and align the country's tax practices with international standards. It is a significant development that will impact businesses across various sectors in the UAE. (Federal Decree by Law Concerning Corporate and Business Tax, 2022)
What is the scope and purpose of this law?
The law applies to all juridical persons and their business income in the UAE. It imposes a corporate tax on taxable income, with certain entities and income streams exempted. The purpose is to establish a comprehensive corporate tax regime in the UAE, in line with international best practices, to diversify government revenue sources and align the country's tax system with global standards. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 1-2)
What are the key definitions under this law?
Some key definitions include:
- Business: Any activity conducted regularly, on an ongoing and independent basis by any Person and in any location, such as industrial, commercial, agricultural, vocational, professional, service or excavation activities or any other activity related to the use of tangible or intangible properties. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 1)
- Taxable Person: A Person subject to Corporate Tax in the State under this Decree-Law. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 1)
- Exempt Person: A Person exempt from Corporate Tax under Article (4) of this Decree-Law. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 1)
- Permanent Establishment: A place of Business or other form of presence in the State of a Non-Resident Person in accordance with Article (14) of this Decree-Law. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 1)
What are the main obligations and requirements?
The key obligations under this law include: 1. Taxable Persons must register for corporate tax with the Federal Tax Authority. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 51) 2. Taxable Persons must file annual corporate tax returns and pay any tax due. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 53-54) 3. Taxable Persons must maintain proper books of account and transfer pricing documentation. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 55-56) 4. Taxable Persons must comply with anti-abuse rules and the arm's length principle for related party transactions. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 34-36, 50)
What licensing, registration, or approval requirements exist?
The law does not specify any licensing, registration, or approval requirements beyond the requirement for Taxable Persons to register for corporate tax with the Federal Tax Authority. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 51)
What rights and protections does this law provide?
The law provides the following key rights and protections: 1. Exempt Persons are not subject to corporate tax, including government entities, government-controlled entities, and certain public benefit and mutual fund entities. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 4-10) 2. Taxable Persons can claim deductions for various business expenses and reliefs, such as group transfers and business restructuring. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 26-33) 3. Taxable Persons can carry forward tax losses and claim foreign tax credits. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 37-47)
Which authorities or bodies are responsible for enforcement?
The key authorities responsible for enforcement of this law are: 1. The Ministry of Finance, which is responsible for administering the corporate tax regime and issuing implementing decisions. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 62-67) 2. The Federal Tax Authority, which is responsible for tax registration, returns, payments, and enforcement. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 51-60)
What are the penalties for non-compliance?
The law specifies the following penalties for non-compliance: 1. Failure to register for corporate tax: A fine of up to AED 20,000. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 60) 2. Failure to file a tax return: A fine of up to AED 20,000. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 60) 3. Failure to pay corporate tax on time: A penalty of 5% of the unpaid tax, plus an additional 1% for each month the tax remains unpaid. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 60) 4. Providing false information: A fine of up to AED 100,000. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 60)
What fees, charges, or financial provisions are specified?
The law does not specify any fees, charges, or other financial provisions beyond the corporate tax rates and penalties for non-compliance. The corporate tax rates are set at: 1. 9% on the first AED 375,000 of taxable income. 2. 15% on taxable income exceeding AED 375,000. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 3)
What exemptions or exceptions apply?
The law provides the following exemptions from corporate tax: 1. Government entities. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 5) 2. Government-controlled entities. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 6) 3. Extractive businesses and non-extractive natural resource businesses. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 7-8) 4. Qualifying public benefit entities and mutual funds. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 9-10)
How are disputes resolved under this law?
The law does not specify any dispute resolution mechanisms. Disputes arising from the application of this law would likely be resolved through the general judicial system in the UAE.
What are the key deadlines and time limits?
The law specifies the following key deadlines and time limits: 1. Tax returns must be filed within 9 months after the end of the fiscal year. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 53) 2. Corporate tax must be paid within 9 months after the end of the fiscal year. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 48) 3. Tax losses can be carried forward for a maximum of 5 years. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 39)
How does this law interact with other UAE legislation?
This law interacts with several other UAE federal laws, including: 1. Federal Law No. 7 of 2017 on Tax Procedures, which provides general rules for tax administration. (Federal Decree by Law Concerning Corporate and Business Tax, 2022) 2. Federal Decree-Law No. 13 of 2016 on the Establishment of the Federal Tax Authority, which governs the authority responsible for administering taxes. (Federal Decree by Law Concerning Corporate and Business Tax, 2022) 3. Federal Decree-Law No. 32 of 2021 on Commercial Companies, which regulates the establishment and operations of companies in the UAE. (Federal Decree by Law Concerning Corporate and Business Tax, 2022)
When did this law come into effect?
This Federal Decree-Law Concerning Corporate and Business Tax came into effect on 25 October 2022, as specified in the law. It was published in the Official Gazette No. 737 on 10 October 2022. (Federal Decree by Law Concerning Corporate and Business Tax, 2022, Art. 70)
Source Documents
This article analyses Federal Decree by Law Concerning Corporate and Business 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.