Tax Time & Exemption Hacks: Understanding the Latest FTA Decisions

By Rohini Gadkari   01 May, 2023

As you may know, Corporate Tax is arriving on 1 June 2023. There are a series of rules being released over time to help business owners keep compliant with the new law. The UAE Government has recently issued another series of Ministerial & Cabinet decisions that will impact Corporate Tax (CT). Here is a summary of what you need to know:

 

1. Decision No.5 of 2023 on the 'Conditions for change in Tax Period'

A taxpayer can change its Tax Period by making an application to the Federal Tax Authority (FTA), subject to the satisfaction of conditions, which is, Tax Return pertaining to the Tax period which needs to be changed should have not been filed, and Tax period can be either extended up to 18 months or shortened to be between 6 and 12 months. The timeline for making the application is before the lapse of 6 months from the end of the original tax period.

However, an application for shortening a tax period cannot be filed for the prior or current tax period. There are good reasons why someone might want to change their Tax Period, like if they want to align it with their company's financial reporting or if there are legal reasons for doing so.

 

2. Decision No.6 of 2023 on the 'Tax Deregistration Timeline'

For a Natural Person, the timeline for tax deregistration is within 3 months from the date of cessation of the business, and for Juridical Person it is within 3 months from the day the entity ceases to exist, cessation of business, dissolution, liquidation, or otherwise.

 

3. Decision No.7 of 2023 on the 'Provisions of exemption from Corporate Tax'

FTA had recently issued a Cabinet Decision on the exemption from seeking CT registration for certain class of exempt persons viz. Government Entities, Government Controlled Entities, and persons engaged in extractive / non-extractive natural resource business, subject to fulfillment of certain conditions. Exempt Persons not covered under the aforesaid clause will have to apply for CT registrations and file an exemption application in accordance with this Decision.

 

As an entrepreneur or business owner, make sure you stay updated on CT regulations to streamline compliance and focus on operations. The recent CT regulations can majorly impact UAE businesses.

Are you prepared for Corporate Tax? Contact Us if you are not sure or want to find out more.