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  • The Much-Awaited UAE Corporate Tax Law is Published

The Much-Awaited UAE Corporate Tax Law is Published

09 December 2022

Pursuant to the announcement made in January 2022 and subsequent apt consultation with UAE businesses at large, the Federal Decree-Law No. 47 of 2022 on Taxation of Corporations and Businesses (Corporate Tax Law) has been published today.

The Corporate Tax Law will be effective from tax periods commencing on or after 01 June 2023.

The Corporate Tax Law will be supported by decisions to be issued subsequently by the Cabinet in relation to the provisions of the Law.

A summary of Articles of the Corporate Tax Law in brief is given below. Our detailed analysis of the key provisions of Corporate Tax Law shall follow.

Chapter Article Range Particulars Preliminary Comments
1 Definitions & General provisions

Several definitions have been provided, which shall aide in reading / interpreting the subsequent articles of the Corporate Tax Law.

An important aspect to note that the definitions itself have attempted to segregate treatment of persons/ businesses established in one of the Free Zone by defining ‘Free Zone Person’ and ‘Qualifying Income’.
2 2-3 Imposition of Corporate Tax and Applicable rates While the Corporate Tax rates for UAE based businesses either in Mainland and/or Free Zone have been published but the Corporate Tax rates applicable to businesses exposed to OECD Pillar 2.0 are yet to be published.
3 4-10 Exempt Person In line with the public consultation paper, several Persons / Businesses / activities have been identified as operating exempted business along with key conditions for the exemption to apply.
4 11-17 Taxable Person and Corporate Tax Base Various categories of Taxable Persons have been clarified including and not limited to residents, non-residents, qualifications of Permanent Establishment, Partnerships, Family foundations etc.
5 18-19 Free Zone provisions Businesses established in certain Free Zones are expected to be exempted from CT. However, the further nuances shall be clarified by way of Cabinet Decisions; especially on the aspect if a Free Zone business is carrying out activities in the UAE Mainland and/or deriving income from the UAE Mainland
6 20-21 Calculation of Taxable Income Guidance for arriving at Taxable Income has been provided in greater detail
7 22-25 Exempt Income Clarification on what income should be considered for exemption along with qualifying conditions has been laid out including that of certain key sectors such as shipping, aviation, and related activities
8 26-27 Reliefs for Qualifying groups and Business Restructuring Guidance on how losses can be transferred within a Corporate Tax Group along with conditions thereof and relaxations from computing gain or loss on business restructurings has been clarified
9 28-33 Deductions Detailed listing has been provided for deductible and non-deductible expenses along with the conditions / restrictions there on.
10 34-36 Related Party Transactions Guidance on how the transactions with related party/ connected person has to be treated and valued has been provided in much detail including determining the methods on the basis of which arm’s length value shall be computed
11 37-39 Tax Loss reliefs, transfer and limitations Much guidance has been provided on eligibility / conditions to carry forward, transfer and/or lapse of tax losses
12 40-42 Tax Group provisions Detailed guidance on eligibility to form or restriction not to form Corporate Tax Group has been provided
13 43-47 Calculation of Corporate Tax Payable and guidance on Withholding Taxes, Foreign Tax Credit

Following further deductions are allowed while final payment of Corporate Tax liability for a particular tax period:

  • Withholding Tax
  • Foreign Tax Credit
  • Any other credits and/or relief as may be defined
14 48-49 Payment and refund of Corporate Tax Payment of Corporate Tax liability has to be made within 9 months from the end of the relevant tax period with no requirement of provisional and/or advance payment of Corporate Tax liability. Further, if there is excess Withholding Tax liability then the same can be claimed as refund subject to the applicable procedures.
15 50 Anti- Abuse Rules It has been clarified that typically Corporate Tax planning considerations shall not be the only consideration to drive a transaction but should have valid commercial reason/ economic reality. Transactions structured with the only intention to reap benefits/ reliefs of Corporate Tax could be questioned
16 51-52 Tax Registration and Deregistration Enabling Articles related registration and de-registration has been provided. Procedures for the same could be provided by way of Cabinet decisions.
17 53-59 Tax Returns and Clarifications Enabling Article related return filing requirements has been provided along with certain key details that have to be submitted along with the returns. It appears that audited / certified financial statements and transfer pricing documentation may be required to be filed; however, whether such financial statements and transfer pricing documentation is required to be filed along with the Corporate Tax returns remains to be expressly clarified.
18 60 Assessments and penalties Enabling Articles regarding conducting periodic Corporate Tax assessment has been provided along with powers to levy penalties in case of violations
19 61 Transitional provisions It appears that there is no need to recast previous year’s financial statements, which shall be the opening balance sheet for tax period reporting subject to considerations around transfer pricing
20 62-70 Closing provisions Specific Articles for sharing of revenue between Federal and Local government, regard to international agreements i.e., double tax treaties and repealing of conflicting provisions have published


We expect that the FTA will release Cabinet Decisions, Executive Regulations and guides in due course which will provide further clarity on application of certain key exemptions; especially related to those businesses established in the Free Zones and the generic procedures to be followed while complying with the provisions of the Corporate Tax Law.

With Corporate Tax regime going live for tax periods commencing on or after 01 June 2023, it is important any business operating within UAE [either on mainland and/or Free Zone] or any business established outside of the UAE but operating in the UAE or even dealing with the UAE to conduct the impact analysis and plan seamless transition to the Corporate Tax Regime in the UAE. With the timely and detailed publication of the Corporate Tax Law well in advance of the implementation, the UAE has once again portrayed of retaining its position as one of the most attractive business destinations in the world. 

If you believe that your business in the UAE or to do with the UAE shall be impacted, please reach out to our tax experts, who can partner with you on this important journey to implement Corporate Tax for your business.