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Art 3(2)(a) of the UAE Corporate Tax Law (CTL) provides for a 0 percent tax rate for Qualifying Income. Art 18(1)(b) of this Law vests the Cabinet with authority ‘to specify’ Qualifying Income. The Cabinet in Decision No. 55/2023 delegated to the UAE Minister of Finance (the MoF) power to list the Qualifying Activities, i.e. activities which generate Qualifying Income. On 1st June 2023, the MoF released Decision No. 139 with such list.

On 1 of June 2023 the UAE Minister of Finance issued the Decision No.139. It lists activities in the free zones qualifying for 0% Corporate Tax rate. MoF established that ‘holding of shares and other securities’ ‘shall be considered Qualifying’.

The regulator is paying special attention to the fight against anti-competitive agreements. The courts are also making no less a contribution, forming common approaches to the consideration of such cases. The decisions of the Russian Constitutional Court are particularly significant: its legal positions contribute to uniform law enforcement in this area. The Court recently adopted two rulings clarifying the issues of cartel immunities and the interpretation of the concept of ‘income’. Elena Sokolovskaya, a partner at Pepeliaev Group, is reviewing the main conclusions.

This article will focus on the issues of confirming economic substance in the UAE.

Before we begin I would like to provide some key background information which will help you to understand what place economic substance has within the system of tax legal relationships.

In September 2022, amendments came into force to the Law on Advertising that have fundamentally changed the format of control over advertising on the Internet and have introduced a recording system for it. Since then, the torrent of questions from market players regarding the application of the updated legislation has only been increasing. Elena Sokolovskaya, partner at Pepeliaev Group, will point out the main issues and analyse the approaches to contentious situations used by the regulators (the Russian Federal Service for Supervision of Communications, Information Technology and the Mass Media and the Russian Federal Antimonopoly Service).