UAE's Federal Tax Authority Issues Comprehensive Guidelines on Taxation of Partnerships

UAE, 04 March, 2024 - In a bid to provide clarity and guidance to businesses navigating the UAE's economic landscape, the Federal Tax Authority (FTA) has unveiled a comprehensive guideline concerning the Taxation of Partnerships. Covering both incorporated and unincorporated partnerships, the guideline aims to illuminate the diverse legal and tax frameworks governing these entities, offering valuable insights for taxpayers and practitioners alike.

The release of the FTA's guideline has received commendation from industry experts, notably Safae Guennoun, founder of The Tax Point. Guennoun welcomed the newly issued FTA guidelines, lauding it as a significant stride towards recognizing the various forms of partnerships in the UAE. "This publication represents a significant step undertaken by the UAE in terms of recognizing the various forms of both incorporated and unincorporated partnerships as well as the different legal and tax modalities that apply depending on the level of fiscal transparency involved," Guennoun commented. She emphasized the importance of conducting a comprehensive tax analysis due to the complexity of partnership taxation, stressing the need to assess tax characterization and treatment accordingly.

Tax professional George Hoyek also commended the FTA for its efforts in simplifying complex scenarios through the guideline. He praised the authority for providing clear explanations with easy-to-grasp examples. Additionally, Hoyek highlighted the guideline's clarification regarding the treatment of Civil Companies as partnerships, rather than private commercial companies.

Acknowledging the FTA's endeavors, Parwin Dina, Partner at Global Tax Services, appreciated the guideline for offering more tax certainty to taxpayers. Dina noted the guideline's comprehensiveness in differentiating between incorporated and unincorporated partnerships, as well as its inclusion of compliance requirements and numerous examples.

The release of the FTA guideline marks a significant milestone in the UAE's efforts to streamline partnership taxation, providing clarity and guidance to businesses navigating the country's economic landscape. With Safae's endorsement of its comprehensiveness and clarity, the guideline is expected to serve as a valuable resource for taxpayers and practitioners alike.

To access the full guideline, click here : Taxation of Partnerships Corporate Tax Guide | CTGPTN1 March 2024

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