UAE -Ministerial Decision on Exempt Persons for Corporate Tax Purposes

The Ministry of Finance (MoF) of the United Arab Emirates (UAE) has issued Ministerial Decision No. 105 of 2023. This decision outlines the conditions under which a person may continue to be deemed as an exempt person or cease to be deemed as an exempt person from a different date for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.

The aim is to ensure that businesses remain eligible for Corporate Tax exemption if they meet the specified criteria;

1. In Case of Liquidation or Termination

A business undergoing liquidation or termination will be deemed an exempt person if a notification is submitted to the Federal Tax Authority (FTA) within twenty (20) business days from the start of the liquidation or termination procedure.

2. In Case the Failure to Meet the Conditions is of a Temporary Nature

A person may continue to be deemed as an exempt person if all of the following conditions are met:

• 1. The failure to meet the exemption conditions is due to a situation or event beyond the person’s control, which they could not have reasonably predicted or prevented.
• 2. The person submits an application to the Authority within twenty (20) business days from the date they fail to meet the exemption conditions under the relevant Corporate Tax Law provisions.
• 3. The person is expected to rectify the failure to meet the conditions within twenty (20) business days from submitting the application.
• 4. Upon request by the Authority, the person provides evidence of implementing appropriate procedures to monitor compliance with the relevant Corporate Tax Law conditions, within twenty (20) business days from the Authority’s request, or within any other period determined by the Authority.
• 5. The Authority may extend the period by an additional twenty (20) business days if the failure to rectify the issue is beyond the person’s reasonable control.

The Authority will review the application and notify the person of its decision within twenty (20) business days of submission, or within any other required review period, as long as the person has been notified.

Ceasing to Deem the Person as an Exempt Person from a Different Date

A person will cease to be deemed as an exempt person starting from the date they fail to meet the conditions for exemption if the primary or one of the main purposes of ceasing is to obtain a Corporate Tax advantage, as per the General Anti-Abuse Rules of the Corporate Tax Law.