1.Change in Tax Period

Article 58 of the UAE Corporate tax (“CT”) Law allows the Taxable Person to change (i) its start and end date of the Tax Period or (ii) use a different Tax Period, on an application to the Federal Tax Authority (“FTA”) subject to fulfilling certain conditions.

Recently, FTA has issued its Decision No. 5 of 2023 which sets out the conditions for such change in the Tax Period.

The highlights of the same are below:

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• Change can only be for any of the following reasons:
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  • Liquidation
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  • Aligning the Financial Year (FY) with another taxable person’s FY for formation of the Tax Group or joining existing Tax Group, OR Aligning the FY with the FY of Head Office, parent, subsidiary or ultimate parent company for financial reporting purposes OR taking the benefit of any tax reliefs available under the UAE CT Law or foreign legislation
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  • Valid commercial, economic, or legal reason

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• Tax Return for the proposed Tax Period is yet to be filed

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• The application can be for:
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  • Extending the current Tax Period for maximum of 18 months, OR
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  • Shortening the next Tax Period between 6 and 12 months

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• The application shall be made before the lapse of 6 months from the end of the original Tax Period, and where application relates to shortening a Tax Period, the application shall not be in respect of a prior or current Tax Period.

PB Comments:

• It would be interesting to see how Taxable Person transitions into new Tax Period from administrative perspective.

2.Tax Deregistration

• Article 52 of the UAE Corporate tax (“CT”) Law deals with the provisions relating to Tax Deregistration of the Taxable Person.

• Recently, FTA has issued its Decision No. 6 of 2023 which provides for the time limits for the purposes of Deregistration. The same are summarized as under:
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  • In case of natural persons: within 3 months of the date of cessation of the Business or Business Activity
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  • In case of juridical persons: within 3 months of date the entity ceases to exist, cessation of the Business, dissolution, liquidation or otherwise, as the case may be

3.Exemption provisions for select categories of exempt persons

• Article 4 of the UAE Corporate tax (“CT”) Law exempts select categories of organizations from Corporate- tax.

• Below are few categories of organization, inter-alia, which have an exemption from Corporate- tax:
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  • Qualifying Public Benefit Entities (referred to as “e”)
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  • Qualifying Investment Funds (referred to as “f”)
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  • Public / Private (as applicable) Pension and Social Security Fund (referred to as “g”)
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  • Person incorporated in UAE and wholly owned and controlled by prescribed Exempt Persons (referred to as “h”)
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  • Any other person as notified (referred to as “i”)

• Recently, FTA has issued its Decision No. 7 of 2023 which mandates Registration and exemption application for above exempt persons. The same are summarized as under:
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  • Qualifying Public Benefit Entities shall apply for Tax Registration and obtain a Tax Registration Number as of 1 October 2023 (no need for additional application for the purposes of exemption).
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  • Other exempt person shall apply for Tax Registration and obtain a Tax Registration Number as of 1 June 2024. Further, such exempt persons could submit an additional application for exemption where the relevant exemption conditions are met.
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  • Annual declaration confirming the fulfillment of exemption conditions could also be requested by the FTA for above exempt persons.

• The Decision also sets out time lines to apply for the exemption and the effective date of exemptions.