The UAE Ministry of Finance has announced three new Ministerial Decisions for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. These include Ministerial Decision No. 114 of 2023 on the Accounting Standards and Methods; Ministerial Decision No 115 of 2023 on Pensions and Social Security Funds; Ministerial Decision No 116 of 2023 on Participation Exemption; and.<\/p>\n\n\n\n
His Excellency, Younis Haji Al Khouri,\nUndersecretary of the Ministry of Finance, said: “The three new decisions aim\nto enhance the flexibility of UAE’s Corporate Tax regime and ensure a\nsupportive business environment for all sectors. The decisions cover several\nimportant aspects related to private\nregulated pension funds and social security funds which are normally exempted\nfrom corporate tax in other countries. Designating International\nFinancial Reporting Standards as the applicable accounting standards and further simplifying accounting processes for SMEs reflects\nthe Ministry of Finance’s commitment to impose a minimal compliance burden for\nbusinesses in scope of the Corporate Tax regime. In addition, the<\/strong>\nparticipation exemption will prevent double corporate tax on the profits of one\nentity and eliminate international double taxation.”<\/p>\n\n\n\n Pensions and Social Security\nFunds<\/strong><\/p>\n\n\n\n The decision on Pensions and\nSocial Security Funds sets out further conditions\nfor private regulated pension funds and social security funds in the UAE to be\nexempt from Corporate Tax. The decision ensures alignment with international\ntax practices so that UAE private pension or social security funds exempt\nstatus is also recognised when investing internationally, and double tax treaty\nbenefits can be obtained. In addition, the decision sets out details of maximum\ncontributions per beneficiary and the annual confirmation of compliance by a\nstatutory auditor to ensure integrity of the exemption. <\/p>\n\n\n\n Accounting Standards and Methods<\/strong><\/p>\n\n\n\n The decision on Accounting Standards and Methods provides clear guidelines for businesses preparing\ntheir Financial Statements that will be used as the starting point to calculate\ntaxable income for corporate tax purposes. The decision confirms that International\nFinancial Reporting Standards (IFRS) are the applicable accounting standards in\nthe UAE and must be used by larger businesses that have revenues of more than\nAED 50,000,000. The decision provides small and medium businesses that have\nrevenues of less than AED50,000,000 with the option of applying IFRS for SMEs.\nTo reduce the compliance burden even further, the decision confirms that the\ncash basis accounting may be used by businesses that have less than\nAED3,000,000 in revenue. The decision also provides clarity on what is meant by\nconsolidated financial statements for tax grouping purposes. Where, such\nfinancial statements will be the aggregation of the parent company and each subsidiary\u2019s\n(that is a member of the tax group) standalone financial statements once\nintra-group transactions are eliminated. <\/p>\n\n\n\n Participation Exemption<\/strong><\/p>\n\n\n\n The decision on Participation\nExemption provides for Corporate Tax exemptions on dividends, profit\ndistributions, and capital gains from a Participating Interest, which is\ndefined as a 5% or greater ownership interest in another entity’s shares or\ncapital, held for at least 12 months. The exemption applies if the subsidiary\nis in a jurisdiction with a Corporate Tax rate of at least 9% or can\ndemonstrate an effective tax rate of at least 9% on profits, income, or equity.\nThe decision also clarifies that the relief will apply to various ownership\ninterest types, including preferential shares, ordinary shares and redeemable\nshares and membership and Partner Interest where the aggregated acquisition cost\nof the ownership interests is equal to or exceeds AED4,000,000. This ensures\nUAE-based companies with specific investments in foreign entities that meet the\nrequired conditions, do not suffer any UAE Corporate Tax on such investments. <\/p>\n\n\n\n All Cabinet and Ministerial Decisions and more information relating to Corporate Tax can be viewed on the Ministry of Finance’s website: www.mof.gov.ae.<\/p>\n","protected":false},"excerpt":{"rendered":" The UAE Ministry of Finance has announced three new Ministerial Decisions for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. These include Ministerial Decision No. 114 of 2023 on the Accounting Standards and Methods; Ministerial Decision No 115 of 2023 on Pensions and Social Security Funds; Ministerial …<\/p>\n","protected":false},"author":5,"featured_media":47188,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,4],"tags":[],"class_list":["post-53840","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-economy","category-news"],"_links":{"self":[{"href":"https:\/\/www.uaebarq.ae\/en\/wp-json\/wp\/v2\/posts\/53840","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.uaebarq.ae\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.uaebarq.ae\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.uaebarq.ae\/en\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.uaebarq.ae\/en\/wp-json\/wp\/v2\/comments?post=53840"}],"version-history":[{"count":1,"href":"https:\/\/www.uaebarq.ae\/en\/wp-json\/wp\/v2\/posts\/53840\/revisions"}],"predecessor-version":[{"id":53841,"href":"https:\/\/www.uaebarq.ae\/en\/wp-json\/wp\/v2\/posts\/53840\/revisions\/53841"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.uaebarq.ae\/en\/wp-json\/wp\/v2\/media\/47188"}],"wp:attachment":[{"href":"https:\/\/www.uaebarq.ae\/en\/wp-json\/wp\/v2\/media?parent=53840"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.uaebarq.ae\/en\/wp-json\/wp\/v2\/categories?post=53840"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.uaebarq.ae\/en\/wp-json\/wp\/v2\/tags?post=53840"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}