United Arab Emirates Tax Updates June 2023

Ministerial decision on Transfer Pricing Documentation-Master file and Local file

On 11th May 2023, Ministry of Finance released Decision No. 97 of 2023 on requirements for maintaining Transfer Pricing documentation for the purposes of Federal Decree Law No. 47 of 2022 on Taxation of Corporations and Businesses.

According to the decision, following Taxable Person are required to maintain both Master File and Local File:

Entity that is a constituent company of a Multinational Group that has total consolidated group Revenue of AED 3.15 billion or more in the relevant Tax Period, (or)

Entity that earns a Revenue of AED 200 million or more in the relevant Tax Period

Cabinet decision on Categories of Businesses or Business Activities Natural Person that are Subject to Corporate Tax

On 8 May 2023, the Cabinet of Ministers issued Decision No. (49) of 2023. This Decision specifies the categories of Businesses or Business Activities conducted by a resident or non-resident natural person that are subject to Corporate Tax.

Resident or non-resident natural persons (individuals) shall only be subject to Corporate Tax where the turnover or gross amount of income derived from Businesses or Business Activities exceeds AED 1, 000, 000 within a Gregorian calendar year.

The following are not considered income from a Business or Business Activity:

On 12th May 2023


Explanatory guide

Ministerial Decision No. 114 of 2023


Accounting Standards and Methods for Corporate Tax Purposes

Ministerial Decision No. 115 of 2023


Private Pension Funds and Private Social Security Funds for Corporate Tax Purposes

Ministerial Decision No. 116 of 2023


Participation Exemption for Corporate Tax Purposes

Ministerial Decision No. 120 of 2023


Adjustments under the Transitional Rules



Ministerial Decision No. 125 of 2023


Tax Group

Ministerial Decision No. 126 of 2023


General Interest Deduction Rule

Ministerial Decision No. 127 of 2023


Unicorporated Partnership, Foreign Partnership and Family Foundation

Ministerial Decision No. 132 of 2023


Transfers within a Qualifying Group

Ministerial Decision No. 127 of 2023


Business Restructuring Relief

Ministerial Decision No. 127 of 2023


General Rules for Determining Taxable Income

Wages

Personal Investment income

Real Estate investment income

The UAE Tax Authorities have issued following other Regulations in connection with UAE Corporate Tax in the month of May 2023:

New Tax Treaty between the Czech Republic and the UAE signed

On 24 May 2023, the treaty between the Czech Republic and the UAE on the avoidance of double taxation with respect to taxes on income and the prevention of tax evasion and avoidance was signed in Prague.

The treaty will enter into force after the ratification instruments are exchanged and, once in force and effective, will replace the 1996 tax treaty between the two countries.

Customs Policy on conditions and regulations for implementation of CEPA between the UAE and Republic of India

The Dubai Customs vide Customs Policy No. (56/2023) has decided the customs tariff applied on imported goods originating from India when exported directly to the UAE. The policy was issued for implementation of Comprehensive Economic Partnership Agreement (CEPA) between the UAE and Republic of India has become effective from May 1st 2023.

Tax advisory