The UAE Ministry of Finance has granted Corporate Tax Exemption to certain individuals. The Ministry has released a new decision, Ministerial Decision No. (105) of 2023, which aims to provide further guidance on the application of Corporate Tax Law. The decision sets out clear conditions for determining whether a person remains exempt from corporate tax, thereby promoting transparency and efficiency in the tax system and supporting business growth in the UAE.
Under the new decision, businesses that do not meet the relevant exemption conditions in certain circumstances can still maintain their eligibility for a Corporate Tax exemption. This includes situations where a business is undergoing liquidation or termination, as long as they submit a notification to the Federal Tax Authority within 20 business days from the start of the liquidation or termination procedure, according to The UAE Ministry of Finance.
His Excellency Younis Haji Al Khouri, the Undersecretary of the Ministry of Finance, emphasized the significance of the new decision in promoting transparency, efficiency, and business growth in the UAE. He explained that the Ministerial Decision provides clear conditions for determining when a person can no longer be considered an Exempt Person due to an event or situation beyond their control that they could not have reasonably foreseen or prevented.
In such circumstances, the affected person is required to submit an application to the Federal Tax Authority within 20 business days from the date they no longer meet the exemption conditions. They are also expected to rectify the failure to meet the conditions within 20 business days from the submission of the application. If they are unable to do so due to reasons beyond their control, they may be granted an extension of up to an additional 20 business days.
Furthermore, the Ministerial Decision also covers instances where a business intentionally ceases to meet exemption conditions to receive a corporate tax benefit. In such situations, the business will lose its exempt status immediately on the date it no longer satisfies the exemption conditions.