Analytics and brochures

The requirement to ensure adequate substance for taxation purposes appeared in article 18(1)(a) of the Corporate Tax Law. It stipulates that taxpayers in the UAE’s free zones which “maintain adequate substance” in the UAE may apply a 0% tax rate to qualifying income.

Article (20)(5)(a) of the Corporate Tax Law  authorizes the MoF to ‘prescribe … the circumstances and conditions under which a Person may prepare financial statements using the cash basis of accounting’. On May 9, 2023 the MoF exercised this authority in Decision No. 114 allowing to ‘prepare Financial Statements using the Cash Basis of Accounting, in any of the following instances: 1. Where the Person derives Revenue that does not exceed AED 3,000,000. 2. In exceptional circumstances and pursuant to an application submitted by the Person to the Authority’. What else do we know about this cash method? 

The law on the “linear amnesty” has come into force. The Law was adopted in pursuance of the Russian President's instruction No. Pr-1842 dated 12 November 2020 to develop mechanisms for the registration of rights to infrastructure lines created before the modern legal system of city-planning regulation appeared.

The FTA has just released a Corporate Tax Guide on Small Business Relief for taxpayers with Revenue of less than or equal to AED 3,000,000 (approx. USD 800,000).

A distribution company (‘Distribution Co’) is incorporated in a free zone in the UAE. This zone is not included in the list of the designated zones. However, Distribution Co buys products and orders services from third parties to transport and store them in a UAE designated zone, and then distributes to the UAE mainland or abroad arranging delivery to the buyers (customers). Does this activity qualify for 0% Corporate Income Tax (CIT)?

PGP Tax Consultancy advises that the Prime Minister of the UAE Mohammed bin Rashid Al Maktoum has issued Cabinet Decision No. 75 of 2023 on the Administrative Penalties for Violations Related to the Application of Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses. This Decision came into effect on 1 August 2023.