Ministerial Decisions

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Ministerial Decisions on Corporate Tax (CT) in the UAE

Ministerial Decisions on Corporate Tax (CT) in the UAE are issued by the Ministry of Finance (MoF) to provide detailed regulations and clarifications on the practical application of the UAE Corporate Tax Law (No. 47 of 2022). These decisions complement the Cabinet Decisions and offer specific instructions on various aspects of the corporate tax framework, including compliance, reporting, and exemptions.

Key Aspects of Ministerial Decisions on Corporate Tax:

Tax Filing and Compliance:

- Ministerial decisions provide specific guidelines on the filing process, including the format, deadlines, and required documentation for tax returns and annual reports.

Transfer Pricing:

- Detailed rules on transfer pricing documentation requirements, ensuring businesses comply with the OECD’s arm’s length principle for related-party transactions. This includes guidance on how to prepare and submit transfer pricing reports.

Free Zone Rules:

- The decisions specify conditions under which entities in UAE free zones can continue to benefit from tax exemptions, and how they must demonstrate economic substance to qualify for these exemptions.

Economic Substance Requirements:

- Further clarification on economic substance rules for certain business activities, ensuring that companies are genuinely engaged in qualifying activities within the UAE to maintain their tax benefits.

Tax Grouping and Consolidation:

- The decisions offer guidance on how companies can group their entities for tax purposes, allowing them to consolidate profits and losses and benefit from tax efficiencies.

Corporate Tax Rates and Exemptions:

- Detailed instructions on how the 9% corporate tax rate applies, as well as how to claim specific tax exemptions for certain types of income, such as income from foreign sources.

Penalties and Enforcement:

- The decisions define penalties for non-compliance with corporate tax regulations, including fines for late filings, incorrect reporting, or failure to maintain adequate records.

Specific Exemptions:

- Ministerial decisions also clarify exemptions for certain entities, such as government bodies, non-profit organizations, and certain investments, to ensure proper implementation of tax law in these sectors.