A Guide to the Reform in Ministerial Decisions in the UAE

The UAE government has made wonderful efforts to introduce and implement taxation system. It is all done to create an ease and support. Besides, new reforms and decisions were brought recently to provide greater relief to the businesses and companies operating in country. The Ministry of Finance or MOF has taken up the initiative to introduce 3 new Ministerial Decisions. Nevertheless, the decisions are introduced to make the tax very much easier and very simplified for the businesses, and organizations in United Arab Emirates. Furthermore, it is a bonus because it is a relief for the taxpayers in the country.

All the efforts are dedicated to making the UAE a Tax Friendly country. UAE has aim to provide the maximum flexibility for the business and trade sector. It paves the way toward a better taxation system in the country in order to provide huge support to businesses in United Arab Emirates. Nonetheless, it provides a just and favorable business environment to its entrepreneurs. It also simplifies complicated taxation.

All the decisions are aimed at making the taxable income calculation much easier. This is a way to address certain situations and scenarios. It also offers the appropriate tax relief to businesses, companies, and enterprises in the UAE. Under Ministerial Decision No. 132 of 2023, there is a complete guideline regarding how the companies within a qualifying group can attain tax relief. The tax relief is related to obtaining relief in corporate tax especially while transferring the liabilities and assets of the company.

The relief is applied over the tax period and cannot change or revoke for the next 2 years. If any company intends to leave the group, even then the same is applied. The Ministerial Decision No. 133 which is introduced in the year 2023. It is introduced to provide relief from Corporate Tax for businesses and companies. It is offered to businesses that are engaged in mergers and restructuring. Additionally, it is applied when a company is transferring, merging, or restructuring into another legal entity.

This helps companies that are rearranging themselves. It improves the profitability and operational efficiency of the businesses. During the mergers, restructuring, and transfers the businesses can avoid paying the corporation tax. Although, if any further transfers are made within the next 2 years, the relief is reversed or revoked. Another reform was introduced by the UAE authorities namely Ministerial Decision No. 134 in the year 2023. This is an example decision that simplifies the calculation of taxable income in the UAE.

Furthermore, it highlights the adjustments made in the taxable income. It takes into account the gains and losses from the financial statements. Also, it provides a set of rules for the alterations in the assets and liabilities value during the transfers that involve the related parties or restructuring. This decision provides clear instructions on how to calculate taxable income making it easier for businesses.  It also defines the conditions that are applied on a realization basis. It provides a full-fledged guideline on how to adjust the changes in the assets and liabilities for qualifying groups, related parties, or for business restructuring.

There were 3 Ministerial Decisions or reforms made in the year 2023. The MOF intends to simplify the taxation procedure as much as it could be. Nevertheless, they aimed to provide maximum relief and ease to the corporations, companies, and corporations operating in the United Arab Emirates.

Meanwhile, this will create a more compliant landscape in the region that supports fairness and justice. Besides, it makes the entire taxation system more effective and efficient.  It also supports favorable business conditions along with healthy competition. UAE will ultimately enjoy economic growth and a balanced and cohesive business environment. Provided content can also be obsoleted with the passage of time or the new laws can also replace the old laws and information. Therefore no liability is owned. We suggest booking the legal appointment with legal experts always, in order to grab the right opinion and learn about the right course of action.