UAE amends Corporate Tax Law

The UAE government has issued a Federal Decree-Law amending certain provisions of the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporation and Businesses (Corporate Tax Law).

The amendments aim to clarify the mechanism for calculating and settling corporate tax due in cases where the tax credits or other forms of relevant tax incentives and reliefs are applied. The new decree also grants the taxable person the right to claim a payment in respect of unutilised tax credits, subject to prescribed conditions, timeframes and procedures.

The new Decree-Law introduces amendments that set out the mechanism for calculating and settling corporate tax due where the relevant incentives apply.

Specifically, the new Decree-Law clarifies that the tax liability shall be settled sequentially as follows: first, by utilising the withholding tax credit balance due to the taxable person, as provided under Article (46) of the Law. Where a balance of due corporate tax remains, the available foreign tax credit, as stipulated under Article (47), shall be utilised. Should any corporate tax liability remain thereafter, any other balances or forms of incentives or reliefs determined pursuant to a decision issued by the Cabinet at the suggestion of the Minister shall be utilised.

Any remaining corporate tax due after utilising the applicable credits and incentives shall be settled in accordance with Article (48) of the Law.

The decree also introduced a new article stipulating that the taxable person may claim a payment in respect of any unutilised tax credits arising from the relevant incentives or reliefs under the Decree-Law referred to above, in certain cases and subject to the conditions, timeframes and procedures set out in a decision issued by the Cabinet at the suggestion of the Minister.

In addition, the newly introduced article authorises the Federal Tax Authority to withhold amounts from corporate tax revenues and where relevant, any top-up tax revenues for the purpose of settling the approved claims, pursuant to a decision issued by the Authority’s Board of Directors.

WAM