Decoding UAE’s Corporate Tax & Transfer Pricing Regulations

The UAE Ministry of Finance (MOF) has issued a federal decree/law for implementing Federal Corporate Tax (CT) that will be effective for financial year starting on or after 1 June 2023. Earlier this year in April 2022, the MOF had issued a public consultation document (which had an overview of the proposed law) for the comments of stakeholders. Finally, after much await, the final law has been released on the MOF website on 9th December 2022. UAE CT has tried to incorporate best practices globally and minimise the compliance burden on the business.

Few of the key highlights of the law are as follows:

• CT will be payable on the net profits of UAE businesses as reported in their financial statements prepared in accordance with accounting standards accepted in UAE with minimum adjustments
• No CT for the entity located in free trade zones subject to certain conditions
• No registration/CT applicability on small business (threshold yet to be notified)
• Tax Group regime
• General anti-abuse rules