United Arab Emirates Tax Updates July 2023

UAE Tax Authority releases conditions for availing tax exemption for Free Zone Entities

The UAE Ministry of Finance has published Cabinet Decision No. 55 of 2023 on determining qualifying income of a qualifying free zone person and Ministerial Decision No. 139 of 2023 on Qualifying Activities and Excluded Activities.

Qualifying free zone persons are eligible for a 0% corporate tax rate on qualifying income. Cabinet Decision No. 55 provides qualifying income includes the following categories of income:

Income derived from transactions with other free zone persons, except for income derived from excluded activities;

Income derived from transactions with a non-free zone person, but only in respect of qualifying activities that are not excluded activities; and

Any other income provided that the qualifying free zone person satisfies the de minimis requirements.

UAE issues more Decisions in June 2023 to clarify / explain various provisions of Corporate Tax Law:

Ministerial Decision No 125 of 2023


Tax Group

Ministerial Decision No 126 of 2023


General Interest Deduction Limitation Rule

Ministerial Decision No 127 of 2023


Unincorporated Partnership, Foreign Partnership and Family Foundation

Ministerial Decision No 132 and 133 of 2023


Transfers within a Qualifying group and Business Restructuring Relief

Ministerial Decision No 134 of 2023


General Rules for Determining Taxable Income

Cabinet Decision No. 56 of 2023


Determination of a non-resident person's nexus in the UAE

Tax Treaty between Russia and the UAE under negotiation

On June 12, 2023, the UAE, represented by the Ministry of Finance, held the second round of negotiations on the double taxation agreement on income and capital between the UAE and the Russian Federation.

His Excellency Younis Haji Al Khoori emphasised the importance of these dialogues in promoting bilateral relations between the UAE and the Russian Federation, especially in the financial, trade and investment sectors. His Excellency said: “The negotiations on the double taxation agreement are of paramount importance, as we aim to eliminate the barriers that hinder economic cooperation between Russia and the UAE.”

UAE Cabinet announced the setting up of Investment Ministry and approved National energy strategy, Hydrogen strategy and establishment of Financial stability council

The UAE Cabinet announced the establishment of the Ministry of Investment under the directives of the President, His Highness Sheikh Mohamed bin Zayed Al Nahyan, to support the country’s business objectives, investment policies and promote its world-class infrastructure to further attract investments in various sectors.

The Cabinet also approved the updated National Energy Strategy 2050 to triple the contribution of renewable energy by 2030 to reduce the impact of climate change and achieve climate neutrality. It also approved the establishment of the Financial Stability Council to enhance financial stability, monitor risks and deal with any financial crises in order to maintain the development of the national economy.

Research hubs merge to create new technology, research and innovation powerhouse

The Sharjah Research Technology and Innovation Park (SRTIP) and the Sharjah Oasis for Technology and Innovation (SOTI) have merged to create a new research, technology, and innovation powerhouse – the Sharjah Research, Technology and Innovation Park Free Zone Authority.

Tax advisory