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: 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.
UAE-Ministry of Finance issues decision on transfer pricing documentation requirements for corporate tax purposes
The Ministry of Finance has released Ministerial Decision No (97) of 2023, aimed at enhancing transparency and fairness in the UAE’s tax system. This decision outlines requirements related to transfer pricing documentation, complementing Federal Decree Law No (47) of 2023 on the Taxation of Corporations and Businesses. These regulations ensure that pricing between related parties and connected persons, especially within multinational enterprise (MNE) groups, is unaffected by their relationships. Conditions for Maintaining Master File and Local File The decision specifies that taxpayers must maintain a master file and a local file under the following conditions: 1. Disclosure Required in Local File – Related Parties and Connected Persons The decision mandates that taxable persons must include transactions or arrangements with the following related parties and connected persons in the local file: 2. No Disclosure Required in Local File – Related Parties and Connected Persons The following related parties and connected persons are exempt from inclusion in the local file: Determining Independent Transactions or Arrangements The Authority will consider all relevant facts to determine whether related persons are acting independently. 1. Transactions Considered IndependentRelated parties will be deemed independent if: 2. Transactions Considered Not IndependentIf one party’s activities are subject to detailed instruction or comprehensive control by the other, they will not be considered independent. The Authority will provide guidelines for applying this decision and maintaining transfer pricing documentation. The decision will take effect the day following its publication.
