UAE Corporate Tax Update – Exemption from Tax Registration

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UAE Corporate TAX Registration

The United Arab Emirates will soon be introducing Corporate Tax, effective for financial years starting on or after 1 June 2023, applicable on the net profit of companies or other businesses in accordance with Federal Law No.47 of 2022 on Taxation of Corporations and Businesses.

On 10th April 2023, Ministerial Decision No. 43 of 2023 on Exception from Tax Registration for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (the “Corporate Tax Law”), in accordance with Article 51 of the Corporate Tax Law was issued which lists the persons who shall not be required to register for Corporate Tax.

UAE Corporate Tax Registration Exemptions

The following Persons shall not register for Corporate Tax with the Authority:

  1. A Government Entity.
  2. A Government Controlled Entity.
  3. A Person engaged in an Extractive Business that meets the conditions of Article 7 of the Corporate Tax Law.
  4. A Person engaged in a Non-Extractive Natural Resource Business that meets the conditions of Article 8 of the Corporate Tax Law.
  5. A Non-Resident Person that derives only State Sourced Income under *Article 13 of corporate tax Law and that does not have a Permanent Establishment in the State according to the provisions of the Corporate Tax Law.
*UAE-Sourced Income- Article 13

As per Article 13 of the Corporate Tax Law, income shall be considered UAE-Sourced Income in any of the following instances:

  1. where it is derived from a resident person;
  2. where it is derived from a non-resident person and the income received has been paid or accrued in connection with, and attributable to, a PE of that non-resident person in the UAE;
  3. where it is otherwise accrued in or derived from activities performed, assets located, capital invested, rights used, or services performed or benefitted from in the State.

Article 13 further states that UAE -Sourced Income shall include:

  1. income from the sale of goods in the UAE;
  2. income from the provision of services that are rendered or utilized or benefitted from in the UAE;
  3. income from a contract insofar as it has been wholly or partly performed or benefitted from in the UAE;
  4. income from movable or immovable property in the UAE;
  5. income from the disposal of shares or capital of a resident person;
  6. income from the use or right to use in the UAE, or the grant of permission to use in the UAE, any intellectual or intangible property;
  7. interest that meets any of the following conditions:
    1. the loan is secured by movable or immovable property located in the State;
    2. the borrower is a Resident Person;
    3. the borrower is a Government Entity;
  8. insurance or reinsurance premiums in any of the following instances:
    1. the insured asset is located in the UAE;
    2. the insured person is a Resident Person;
    3. the insured activity is conducted in the UAE.

As long as these entities continue to meet the exemption conditions specified in the relevant articles of the Decree-Law, there is no need for them to register with the Federal Tax Authority.

Alia Noor Associate Partner AAA
Alia Noor (FCMA, CIMA, MBA, GCC VAT Comp Dip, Oxford fintech programme, COSO Framework)

Associate Partner
Ahmad Alagbari Chartered Accountants

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