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Cabinet Decisions on Corporate Tax (CT) in the UAE

Cabinet Decisions on Corporate Tax (CT) in the UAE

The Cabinet Decisions related to Corporate Tax (CT) in the UAE are a set of executive regulations that provide further clarification and detailed rules for the implementation of UAE Corporate Tax Law No. 47 of 2022. These decisions were issued to ensure smooth enforcement of the law and to address practical aspects of its application.

Key Cabinet Decisions on Corporate Tax:

1. Taxable Persons:

1. • The decisions clarify the criteria for determining taxable persons, including businesses and individualssubject to the corporate tax, and specify the definition of a taxable group.

2. Taxable Income:

1. • Detailed guidance on how to calculate taxable income, including deductions, exemptions, and allowable business expenses.

3. Free Zone Entities:

1. • The Cabinet decisions outline the tax regime for entities in free zones, emphasizing that businesses in free zones may still enjoy tax incentives if they meet specific operational and substance requirements.

4. Transfer Pricing and Documentation:

1. • Further rules on transfer pricing requirements, including documentation standards for related-party transactions, ensuring businesses comply with OECD guidelines and prevent profit-shifting practices.

5. Economic Substance:

1. • Rules concerning economic substance requirements for entities engaged in specific activities, ensuring that businesses have sufficient economic presence in the UAE to benefit from tax exemptions.

6. Filing and Reporting:

1. • Clear guidelines for corporate tax filing, including deadlines, quarterly and annual reporting obligations, and procedures for self-assessment of taxes.

7. Tax Rates and Deductions:

1. • Clarification on the 9% corporate tax rate, as well as conditions for specific deductions, tax credits, and tax groupings that companies may apply.

8. Administrative and Penalty Provisions:

1. • The decisions also address the penalties for non-compliance, as well as the dispute resolution process, providing businesses with clear mechanisms for addressing any tax-related issues.

These Cabinet Decisions play a critical role in providing clarity and operational guidance to businesses on how to comply with the UAE’s new corporate tax regime, helping the country maintain its attractiveness for both local and international investors.