Understanding the motive of Law and maintaining the requisite documents is the soul of taxation. Taxes have been an integral part of many economies for years now, however the tax landscape of the Gulf region had not gained momentum till 2015.
OECD and G20 published final reports outlining recommendations for Action Plan on Base Erosion and Profit Shifting (‘BEPS’) in 2015. Being the signatory to Inclusive Framework members and Multilateral Convention, UAE brought into force various regulations requiring disclosures of the organisational structure and nature of activities.
UAE introduced VAT on 1st January 2018 at a standard rate of 5% backed by a vision to reduce the economy’s dependence on income sourced from hydrocarbons. In 2019, the country further introduced Country by Country Reporting (CbCR) and Economic Substance Regulation (ESR) and in 2020, it became mandatory to furnish details of the Ultimate Beneficial Owner (UBO). Each of these regulations are concrete steps taken by the UAE to comply with its commitment to BEPS.
The UAE aims to achieve its strategic objectives and accelerate its development and transformation further with the issuance of the Federal Decree-Law No. (47) of 2022 (issued on 9 December 2022) on the Taxation of Corporations and Businesses (UAE Corporate Tax Law) at a standard rate of 0% and 9% which is effective for tax periods beginning on or after 1 June 2023. The UAE Corporate Tax Law has been established based on global best practices and it adheres to the international principles that are globally known and accepted.
Here, we have Frequently Asked Questions version 2.0 - pertaining to areas within the UAE business landscape - likely to be impacted by Corporate Tax provisions. Also, please note that the contents herein are prepared on the basis of interpretation of the Corporate Tax Law, cabinet decisions and clarifications released.
