Ministry of Finance issues Ministerial Decision on exempt persons for corporate tax purposes

The Ministry of Finance (MoF) of the United Arab Emirates (UAE)? issues Ministerial Decision No. 105 of 2023 on the Determination of the Conditions under which a Person may Continue to be Deemed as an Exempt Person, or Cease to be Deemed as an Exempt Person from a Different Date for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.

The rules seek to ensure that businesses remain eligible for a Corporate Tax exemption if they meet these criteria;

1- In Case of Liquidation or Termination

A business undergoing liquidation or termination provided that a notification has been submitted to the Federal Tax Authority (“FTA”) within (20) twenty business days from the date of the beginning of the liquidation or termination procedure will deemed to be exempt person.

2- In Case the Failure to Meet the Conditions is of a Temporary Nature

The Person may continue to be deemed as an Exempt Person where all of the following conditions are met:

• The failure to meet the conditions to be deemed as an Exempt Person is due to a situation or an event beyond the Person’s control which he could not reasonably have predicted or prevented.
• The Person has made an application to the Authority to continue to be treated as an Exempt Person within (20) twenty business days from the date it fails to meet the conditions to be exempt under the relevant provisions of the Corporate Tax Law.
• Person is expected to rectify the failure to meet the conditions within (20) twenty business days from the submission of the application.
• Upon request by the Authority, the Person provides evidence to support putting in place the appropriate procedures to monitor the compliance with the relevant conditions of the Corporate Tax Law, within (20) twenty business days from the date of the request by the Authority, or any other period as may be determined by the Authority.
• This period may be extended by an additional 20 business days if the failure to rectify is beyond the Person’s reasonable control.
• The Authority shall review the application submitted and notify the Person of its decision within (20) twenty business days of the submission of the application, or such other time period required to review the application, provided that the person has been notified.

Ceasing to Deem the Person as an Exempt Person from a Different Date

The Person shall cease to be deemed as an Exempt Person starting from the day it fails to meet the conditions to be exempt in case the main purpose or one of the main purposes of this cessation is to obtain a Corporate Tax advantage as per General anti-abuse rules of the Corporate Tax Law.