Page 6 - ICAI UAE TAX UPDATE_APRIL 2024

interest of at least 75% in the other taxable person or a Transfer Pricing:
third person should have a direct or indirect ownership
interest of at least 75% in each of the taxable persons. • Arm’s Length Principle enforced for transactions
• These entities must share the same financial with Related Parties.
year and prepare financial statements using the same • Related Parties defined with a 50% ownership.
accounting standards. They must not be exempt or Kinship, Control, Significant influence criteria
qualifying free zone persons. included.
• Payments to ‘Connected Persons’ as mentioned in
Tax Loss Relief: the CT Law must align with market value.
• Internationally recognized Transfer Pricing (TP)
• Tax loss relief allows offsetting negative taxable methods adopted.
income against subsequent periods, limited to 75% • Authority to adjust Taxable Income if results
of total taxable income unless otherwise specified. deviate from Arms Length Price (ALP) range.
Unused losses can be carried forward until fully utilized, • ‘Disclosure Form’ to be filed for businesses to be
offsetting against the taxable person’s income or other notified.
group companies’ income. • ‘Master File’ and ‘Local File’ Documentation must
for Entities with revenue AED 200 Millions or more. Also,
Transfer of Tax loss: applies to UAE entities of Multi National Enterprises
(MNE) Groups subject to Contry by Country Reporting
• Transfer of tax losses between eligible resident (CbCR) compliance.
and juridical persons requires 75% or more common • ‘CbCR’ mandatory for UAE-headquartered MNE
ownership, same financial year end, and use of identical Groups with AED 3.15 Billions Consolidated Group
accounting standards, with transferred losses limited Revenue.
to the business part transferred. Exempt and QFZPs are
ineligible for such transfers. Corporate Tax Returns and Payment:

GAAR: • Taxable person must file a corporate tax return
and settle the corporate tax payable no later than 9
• Law also covers General Anti Avoidance Rule months from the end of the tax period.
(GAAR) which is conceptually similar to what is adopted
in many developed countries.
• Enter into valid commercial transactions to avoid
any transactions primarily aimed at securing a corporate
tax advantage

Transitional Rules:

• UAE CT Law states that the opening balances of
first tax period have to be at arm’s length as per Article
34. This aims to mitigate the impact of past transactions
on future income.

6 www.icaidubai.org

UA E TAX UP DATE NEWSLET TER ISSUE 01 - April 2024