UAE, 17 January, 2025 : The UAE Ministry of Finance has issued updated Ministerial Decisions No. (301) and No. (302) of 2024, introducing key amendments to the Corporate Tax Law under Federal Decree-Law No. 47 of 2022, effective from 1 January 2025. These changes aim to simplify compliance and reinforce the UAE’s position as a global business hub.
Tax Groups
The amended decision offers administrative relief for businesses forming Tax Groups. It clarifies compliance procedures for foreign entities considered tax residents in the UAE and simplifies the calculation of taxable income under the arm’s length principle. Additionally, Tax Groups can now choose to forfeit Pre-Grouping Tax Losses, reducing their compliance burden.
Participation and Foreign Permanent Establishment Exemptions
The updated decision also provides clarity on the Participation Exemption and Foreign Permanent Establishment Exemption. It ensures income from ownership transfers under Qualifying Group Relief or Business Restructuring Relief won’t face double taxation, even with claw-back provisions. The asset test for the Participation Exemption now applies only to related parties, easing compliance for investments in funds.
The decision further addresses adjustments to tax losses for Participations and specifies that foreign Permanent Establishments transferring assets to companies can benefit from the Participation Exemption once their profits offset the Permanent Establishment’s tax losses.
Commitment to Growth
Undersecretary of the Ministry of Finance, H.E. Younis Haji AlKhoori, affirmed that these amendments align with the UAE’s commitment to creating a dynamic, investor-friendly tax environment to foster growth and strengthen its global business position.
Source : www.mof.gov.ae
