UAE FTA publishes FTA decision No 7 of 2023 on the Provisions of Exemption from Corporate Tax.

The Federal Tax Authority (FTA) of the United Arab Emirates (UAE) published FTA Decision No. 7 of 2023 (Decision), delineating certain procedures for registration and application for exemption under the UAE CT Law. Federal Tax Authority Decision No. 7 of 2023 is Issued on 7 April 2023  which is Effective from 1 June 2023

The highlights of the Decision are as follows:

Article 2-Corporate Tax Registration and Application for Exemption

1 . For A Qualifying Public Benefit Entity date for Applying Tax Registration and obtaining a Tax Registration Number is as of 1 October 2023.

2. Date for Applying for Tax Registration and obtaining a Tax Registration Number is as of 1 June 2024 for below categories;

• A Qualifying Investment Fund 
• A public pension or social security fund, or a private pension or social security fund
• A juridical person incorporated  in the State that is wholly owned and controlled by an Exempt Person and conducts any of the following:

1. Undertakes part or whole of the activity of the Exempt Person.
2. Is engaged exclusively in holding assets or investing funds for the benefit of the Exempt Person.
3. Only carries out activities that are ancillary to those carried out by the Exempt Person.

• Any other Person as may be determined in a decision issued by the Cabinet at the suggestion of the Minister.

3.Submit application for exemption from Corporate tax. 

If the Authority approves the application for Tax Registration (as per clause 2 above)  the Person may be entitled to submit an application for exemption from Corporate Tax .

4.File an annual declaration confirmation.

The Authority may request the Exempt Person in accordance with Clauses 1 and 3 of this Article to file an annual declaration confirming that it still fulfills the exemption conditions.

Article 3 – Timeline to Apply for Exemption and its Effective Date

1- Timeline to apply for exemption is within 60 business days from the end of the Tax Period in which the Person met the conditions for exemption  mentioned above clause 2

2.  If the Authority approves the exemption application , Exemption will be effective from the start of the Tax Period specified in the application.

3.The Authority may determine an alternative date for the effective date of the exemption, where any of the following scenarios, or other similar scenarios, takes place:

a. If the Tax Period specified in the registration form is incorrect, the exemption shall be effective from the correct date.
b. Where the applicant is acquired during a Tax Period by any of the following persons, the exemption shall not be granted from the start of the Tax Period if the conditions for exemption were not met at that time:

• • A Government Entity.
  • A Government Controlled Entity
  • A Qualifying Investment Fund 
  • A public pension or social security fund, or a private pension or social security fund that is subject to regulatory oversight of the competent authority in the State and that meets any other conditions that may be prescribed by the Minister

The Authority shall determine another date from which the exemption shall be granted to ensure that the date of exemption starts after the fulfillment of all remaining tax obligations.

c. If the Tax Period included in the application for exemption is incorrect and the Authority receives sufficient supporting information to evidence that the conditions have been met within the later Tax Period, the exemption shall be effective after the date of fulfillment of the conditions.

d. Any other instances specified or any other Person as may be determined in a decision issued by the Cabinet at the suggestion of the Minister

This Decision shall be published in the Official Gazette and shall come into effect as of 1 June 2023.