Page 5 - ICAI UAE TAX UPDATE_JULY 2024

3 UAE TAX UPDATES
3.1 UAE Corporate Tax – First Tax Period of Juridical Person

The Federal Tax Authority (FTA) has issued public for example the Revenue threshold for Small Business
clarifications to elucidate specific aspects of the Federal Relief. The only exception is the de minimis threshold
Decree Law No. 47 of 2022 concerning the Taxation of for the purposes of the General Interest Deduction
Corporations and Businesses. Limitation Rule.

This clarification particularly focus on the first Tax Period Non-Resident Person with a Permanent Establishment
of a Juridical Person. in the UAE

Juridical persons which are incorporated, formed or Where a Non-Resident Person has a Permanent
established under the Commercial Companies Law Establishment, the first Tax Period will be the Financial
Year or part thereof beginning from when the Permanent
The Commercial Companies Law applies to commercial Establishment first began operations.
companies established in the UAE and to foreign
incorporated companies that establish their head office Where such activities began before 1 June 2023, the first
or a branch or representative office in the UAE. Tax Period will be the first Financial Year commencing
on or after 1 June 2023.
The first Financial Year under the Commercial Companies
Law may not necessarily be a 12-month period, but Resident Person effectively managed and controlled in
instead can be a period between 6 months and 18 the UAE
months.
Where a juridical person is incorporated or otherwise
Where a juridical person which is a Taxable Person established or recognised under the applicable
is formed under other legislation, such as Free legislation of a foreign jurisdiction but is a Resident
Zone regulations, which nonetheless has the same Person by virtue of being effectively managed and
requirements for the first Financial Year as Commercial controlled in the UAE, the first Tax Period will be the
Companies Law, the same analysis. Financial Year or part thereof commencing on or after 1
June 2023.
The Financial Year followed by the Taxable Person under
the Commercial Companies Law shall be accepted as Cessation before or during first Tax Period
the Financial Year and, therefore, will be the Tax Period
for the Corporate Tax Law. Where there is a cessation of Business or Business
Activity, whether by dissolution, liquidation, or
Where, as a result, the first Tax Period of such Taxable otherwise, during the first Tax Period, the Taxable Person
Person is not a 12-month period but a period between is required to make an application for Tax Deregistration.
6 months and 18 months, the Taxable Person is not The cessation of a Taxable Person’s Business or
required to make any application to the FTA to change Business Activities, whether by dissolution, liquidation,
its Tax Period. or otherwise, during its first Tax Period does not impact
its obligation to register for Corporate Tax, i.e. a Taxable
This is unlike other situations where a Taxable Person is Person is still required to register for Corporate Tax even
required to make an application to the FTA to change the where the cessation takes place after the start of the first
start and end date of its Tax Period. Tax Period.

Where the first Tax Period is longer or shorter than a In such cases, a Taxable Person is still required to submit
12-month period, there is no pro-rating of the various a Tax Deregistration application within the deadline of 3
thresholds prescribed under the Corporate Tax Law, months from the Deregistration triggering event.
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