By issuing updated Ministerial Decision No. (301) of 2024 on tax groups for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and an updated Ministerial Decision No. (302) of 2024 on the Participation Exemption and Foreign Permanent Establishment Exemption for the purposes of the same Decree-Law, the UAE Ministry of Finance has announced changes to its current Ministerial Decisions.
These revisions offer important clarifications and administrative relief to improve compliance and strengthen the UAE’s standing as a top international business destination.
The revised Ministerial Decision offers a number of administrative reliefs and explanations for companies creating tax groups, and it will be applicable to Tax Periods starting on or after January 1, 2025.
By facilitating the compliance procedures necessary to prove that they are not tax residents in another jurisdiction, the amended provisions streamline the requirements placed on foreign juridical persons that are deemed Resident Persons in the United Arab Emirates, as well as juridical persons established in the United Arab Emirates but that are effectively managed and controlled outside the country.
The revisions make it clearer when Tax Groups are required to use the arm’s length principle for determining taxable income attributable to one of their members. Notably, the need to compute such income is eliminated if the Tax Group receives revenue that qualifies for a Foreign Tax Credit. Furthermore, Tax Groups with Pre-Grouping Tax Losses have the option to surrender their losses, providing them more flexibility and lessening the Corporate.
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