The UAE Ministry of Finance has introduced a set of pivotal amendments, comprising Cabinet Decision No. 100 of 2023 on Determining Qualifying Income, and Ministerial Decision No.265 of 2023 on Qualifying Activities and Excluded Activities, aimed at bolstering the country’s free zones and ensuring compliance with international taxation standards.
Younis Haji Al Khoori, the esteemed Under-Secretary of the Ministry of Finance, emphasized the critical role played by the UAE’s free zones in fostering an attractive business landscape and promoting foreign direct investment. Al Khoori highlighted the UAE’s commitment to providing a competitive corporate tax regime, solidifying the nation’s status as a prominent global business hub, and advancing its sustainable development agenda.
The revised Cabinet Decision extends the spectrum of Qualifying Income to encompass revenue generated from the ownership or exploitation of Qualifying Intellectual Property, following the prescribed methodology of the Organization for Economic Co-operation and Development (OECD) modified nexus approach, outlined in the Ministerial Decision No.265 of 2023.
Ministerial Decision 265 of 2023 also acknowledges the trading of Qualifying Commodities as a Qualifying Activity, entitling income earned from physical trading of metals, minerals, energy, and agricultural commodities traded on recognized stock exchanges to the advantageous 0% corporate tax rate. The decision also encompasses derivative trading income, utilized to hedge against the risks associated with these trading activities.
Moreover, the Ministerial Decision clarifies the scope of Qualifying Activities and Excluded Activities, providing a clear and definitive framework for businesses operating within the free zones, promoting transparency and predictability for stakeholders.
The Ministry of Finance has made all relevant Cabinet Decisions and Ministerial Decisions related to the Corporate Tax Law available on its official website, ensuring accessibility and transparency for the business community and interested parties. This move by the UAE Ministry of Finance is expected to further consolidate the nation’s position as an alluring destination for international investment, reinforcing its commitment to progressive economic policies and global business standards.