Deloitte Insights

UAE Corporate Tax: In Focus

Webinar recording archive

We hosted the seventh webinar in our United Arab Emirates (UAE) ‘Corporate Tax (CT) through the Lens of Pillar 2 (P2)’ series. This session focused on the advantages of housing shipping operations in the UAE, including the treatment of shipping income under UAE CT and P2.

Key topics covered in the webinar included:

  • Updates on the latest P2 developments, particularly the QRTC developments globally.
  • Treatment of shipping income under UAE CT and P2.
  • Case studies illustrating practical applications.

Throughout the series, our experts explored several guiding questions:

  • How will the UAE CT regime impact the Effective Tax Rate under P2?
  • What is the alignment between CT and P2?
  • To what extent can P2 rules and commentary be applied to interpret UAE CT law provisions?
  • What are the significant distinctions between CT and P2?

Our Business Tax team hosted the second webinar in our United Arab Emirates (UAE) Free Zone webinar series. In this session, they focused on the specifics of the qualifying activities under the UAE Free Zone Corporate Tax regime related to goods and materials, specifically manufacturing, processing, distribution, and logistics services. 

Key topics included what constitutes the aforementioned qualifying activities, activities that might be treated as ancillary to such qualifying activities, discussions around key clarifications provided, and specific issues related to these qualifying activities through practical examples. 

Additionally, they shared actionable insights relevant for ensuring that such qualifying activities remain covered within the Qualified Free Zone regime.

The Federal Tax Authority (FTA) has released a guide providing general guidance on the application of the Corporate Tax Law to Free Zones and Free Zone Persons.

The guide offers the views and interpretations of the FTA regarding the Free Zone rules, including the conditions required to be considered a Qualifying Free Zone Person and the definitions of Qualifying Activities and Excluded Activities.

During the first in a series of webinars on this topic, our experts summarized the key elements of this comprehensive 135-page guide.

Our recent webinar focused on the Participation Exemption regime as outlined in the United Arab Emirates (UAE) Corporate Tax (CT) Law.

During this session, our experts explored the provisions within the UAE CT Law governing the exemption of income derived from ownership interests in other entities, known as 'Participating Interest.' 

Key topics covered included:

  • Criteria for an ownership interest to qualify as a Participating Interest.
  • Types of income eligible for the participation exemption.
  • How this exemption interacts with other aspects of the CT Law (Tax Groups, Relief provisions, the Pillar 2 rules, etc.).
  • Practical challenges in meeting the ‘subject to tax’ test.
  • Taxation of unrealized gains on ownership interests otherwise eligible for participation exemption.
  • Considerations regarding expenditures related to exempt income.

The sixth webinar in our United Arab Emirates (UAE) ‘Corporate Tax (CT) through the Lens of Pillar 2 (P2)’ webinar series focused on the treatment of private/family wealth structures, including trusts, foundations, and partnerships, under UAE CT and P2.

The key topics covered during the session included:

  • Update on the latest P2 developments, especially QRTC developments around the globe;
  • Treatment of UAE/foreign trust, foundation, and partnership structures under UAE CT and P2, in particular;
  • Ultimate Parent Entity complexities;
  • Implications for beneficiaries, unit holders, and partners.

The United Arab Emirates (UAE) Corporate Tax (CT) Law includes specific provisions governing the taxability of both incorporated and unincorporated partnerships and their partners. Its application involves intricacies in terms of elections for tax treatments, the status of partners' salaries or payments for services provided, etc. 

Considering this, our experts hosted a webinar to discuss and provide actionable insights into the following areas:

  • Types of entities covered under Incorporated or Unincorporated Partnerships;
  • Key features of Unincorporated Partnerships and the taxability options under UAE CT law; 
  • Tax implications under fiscally transparent vs fiscally opaque unincorporated partnerships, including relevant provisions of deductibility of various expenses;
  • Tax implications in the hands of partners;
  • Tax Treatment of a foreign partnerships;
  • Compliance requirements for the partnerships and partners.

The introduction of CT in the UAE brings forth the crucial concept of tax grouping, providing opportunities for optimization and reduced compliance. However, its application poses challenges such as group formation, income computation, asset transfer treatment, and accounting complexities. Considering this, our experts held a webinar on Tuesday, 26 March 2024, to discuss the key aspects and provide actionable insights. During the session, our tax experts covered the following topics:

  • Criteria for forming a Tax Group and a qualifying group from a UAE CT perspective.
  • Computational aspects of a Tax Group.
  • Transfers within a qualifying tax group.
  • Practical challenges and issues emerging from transfer pricing and tax accounting perspectives.

We held the fifth webinar in our United Arab Emirates (UAE) ‘Corporate Tax (CT) through the Lens of Pillar 2 (P2)’ webinar series on Thursday, 21 March 2024. This session focused on the treatment of tax accounting and reporting implications. The key topics covered included:

  • Update on the latest P2 developments;
  • A recap on collection of top-up taxes and tax sharing;
  • Treatment and importance of tax accounting under the UAE CT and P2;
  • Accounts required for CT and P2;
  • Treatment of losses under CT and P2.

We hosted a 30-minute webinar that focused on the treatment of withholding taxes and tax credits. 

The session covered key topics such as an update on the latest Pillar Two (P2) developments, including compliance costs, and the treatment of source/withholding taxes and tax credits under the UAE Corporate Tax (CT) and Pillar Two. 

Specifically, it addressed Article 47 of the CT Law and Chapter 4 of the Global Anti-Base Erosion (GloBE) rules. The discussion included a focus on distributions versus service payments, such as licenses, and provided relevant examples.

We hosted the third webinar of our CT through the lens of P2 webinar series on Tuesday, 16 January 2024. This webinar provided insightful updates on Pillar 2's impact on reorganizations, including the latest in disclosure requirements, trends, and treatments under the UAE Corporate Tax and Pillar 2 regime. 

The session also encompassed the overall approach to domestic and cross-border reorganizations, transitional rule implications (Article 9 GloBE and GAAR), and the effects of various reliefs (Article 6.3.2 GloBE and Articles 26/27 of the CT Law).

On 3 November 2023, the Ministry of Finance (MoF) of the United Arab Emirates (UAE) published Cabinet Decision No. 100 of 2023 on ‘Determining Qualifying income for Qualifying Free Zone Person for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses’ and Ministerial Decision No. 265 of 2023 ‘Regarding Qualifying Activities and Excluded Activities for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses’. 

Although published later, these decisions are stipulated to take effect from 1 June 2023. They revoke the previously issued Cabinet Decision No. 55 of 2023 and Ministerial Decision No. 139 of 2023, respectively. The updated decisions provide clarity in key areas of the Qualified Free Zone regime, expand the list of 'Qualifying Activities', and provide other important changes for taxpayers seeking to become a Qualifying Free Zone Person.

In light of this, our Corporate Tax team held a 60-minute webinar where they discussed the key highlights of the Cabinet and Ministerial Decisions issued, as well as their direct impact on free zone businesses. They also shared insights on the major changes brought about by these Decisions.

This session of our Corporate Tax through the lens of Pillar 2 webinar series focused on the impact of Pillar 2 on real estate. The key topics covered during the session included:

  • An update on the latest Pillar 2 developments (especially UAE not implementing in 2024).
  • Details on real estate investments and transactions under the CT and Pillar 2 regimes, including:
    • Holding real estate by individuals
    • MD 120 transitional rules/elections
    • Article 20(2) of CT Law/MD 134 elections for unrealized gains and losses
    • Real Estate Investment Trust considerations.

As a reminder, this webinar series is tailored for outbound and inbound multinational enterprises that will be impacted by Pillar 2. During the series, we will be guided by the following questions:

  • How will the CT regime drive the Effective Tax Rate for Pillar 2?
  • What is the level of convergence between CT and Pillar 2?
  • To what extent can the Pillar 2 rules/commentary be deployed to interpret the provisions of the CT law?
  • What are the key differences between CT and Pillar 2?

Free Zones are an integral part of the United Arab Emirates (UAE) economy and play a critical role in driving economic growth and transformation in the country. Qualifying Free Zone Persons can benefit from a 0% Corporate Tax rate on Qualifying Income and 9% Corporate Tax rate on certain income from specific sources. 

In order to be a Qualifying Free Zone Person, a Free Zone must comply with the Transfer Pricing (TP) rules stated under Article 34 and Article 55 of the CT Law, which requires taxpayers to comply with the arm’s length principle on their related party transactions and to maintain TP documentation.

Given the above, our team of TP experts hosted a 60-minute webinar on Thursday, 17 August 2023 where they delved into the TP rules and their impact on Free Zone Persons operating in the UAE. The webinar session covered a wide range of topics related to TP, including:

  • The application of the arm’s length principle in the UAE.
  • Interpreting Qualifying Activities while considering TP regulations.
  • TP analysis and benchmarking for Free Zone entities.
  • TP documentation and compliance requirements; and
  • Roadmap to 1 January 2024.

Outbound and inbound multinational enterprises continue to be impacted by Pillar 2, which plays a crucial role in shaping the global tax landscape. As international tax regulations undergo significant changes, staying abreast of the latest developments becomes paramount for businesses operating across borders.

In light of this, our Tax experts conducted a 30-minute webinar on Tuesday, 20 June 2023, at 11:00 am (UAE time), to highlight the best practices for businesses in navigating the complexities of Pillar 2 and its implications. The webinar served as a platform for participants to gain insights into the latest advancements related to Pillar 2, the recent UAE Corporate Tax (CT) Cabinet decisions and their alignment/misalignment with Pillar 2, as well as the convergence and difference between the CT regime and Pillar 2. 

With the Federal Decree-Law no. 47 of 2022 on the Taxation of Corporations and Businesses (the CT Law) effective and enacted for reporting purposes, it is critical to understand how this will impact the financials for interim and year-end reporting.

According to the requirements of IAS12 (Accounting for Income Taxes), businesses are required to assess current and deferred taxes on reporting date. This will include incorporating appropriate disclosures in the financial statements to provide stakeholders with material and relevant insights on the (future) tax impacts.

In light of the latest developments in terms of Cabinet and Ministerial decisions and the upcoming FY23 Q2 reporting, our Tax experts conducted a 30-minute webinar on Monday, 19 June 2023, at 11:00 am (UAE time), where they discussed the key tax accounting implications businesses could face during their interim and year-end reporting for FY23 due to the enactment of the CT law.

On 1 June 2023, the Ministry of Finance (MoF) of the United Arab Emirates (UAE) issued Cabinet Decision No. 55 of 2023, determining qualifying income for qualifying free zone persons under the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. This decision carries significant implications for businesses operating in free zones.

In light of this, our Corporate Tax team held a 60-minute webinar on Tuesday, 6 June 2023, at 11:00 am (UAE time). During this session, our experts discussed the key highlights of the Cabinet Decision and its direct impact on free zone businesses. Furthermore, they shared their insights on the major challenges that businesses may encounter when applying the Corporate Tax Law.

On 12 May 2023, the Ministry of Finance (MoF) of the United Arab Emirates (UAE) 2023 issued an Explanatory Guide for Federal Decree-Law no. 47 of 2022 on Taxation of Corporations and Businesses (the CT Law) set to go live as of 1 June 2023.

The guide is a detailed walkthrough of every Article in the CT Law and subsequent Cabinet and Ministerial Decisions issued up to date with the aim of enhancing transparency and fairness in the tax system in the UAE. 

Following the release of the guide, our Corporate Tax team held a 60-minute webinar on Thursday, 18 May 2023 at 11:00am (UAE time). During this session our experts discussed the highlights of the guide and shared their view on major challenges businesses might still face with an application of the CT Law. 

On 31 January 2022, the Ministry of Finance (MoF) of the UAE announced the introduction of a federal CT on business profits effective for financial years starting on or after 1 June 2023.

Recognizing the importance of consultation with the business community and other interested stakeholders, the MoF has launched a public consultation process ahead of the official release of the relevant legislation. Input received will be carefully considered and will assist the MoF in further refining and implementing the proposed CT regulations.

In light of the above, Deloitte held a webinar on Thursday, 19 May 2022, and discussed the following points:

  • Additional details and content provided in the document
  • Tax implications based on the detailed examples provided in the document
  • Highlight areas of uncertainty and respective policy options

The Ministry of Finance (MoF) announced on 31 January 2022 that the United Arab Emirates (UAE) will introduce a federal Corporate Tax (CT) on business profits. According to the implementation plan, CT will be effective for financial years starting on or after 1 June 2023. The time to start preparing is now.

In light of the above, we held a 60-minute webinar on Tuesday, 8 February 2022, where we provided businesses with an introduction and overview of this major development, summary of key announcements, focus areas for organizations, Deloitte’s phased approach and feedback from our “CT business readiness” survey.

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