The government of the United Arab Emirates has issued a federal decree-law amending certain provisions of Federal Decree-Law No. 47 of 2022 concerning the Tax on Profits of Commercial Businesses (the Corporate Tax Law). The objective of these amendments is to clarify the mechanism for calculating and paying the due corporate tax in the presence of balances or other forms of related tax incentives and facilities, as well as to grant the taxable person the right to claim the repayment of the unused tax balance in accordance with the controls, periods, and procedures issued in this regard.
The new decree-law includes an amendment that clarifies the mechanism for calculating and paying the due corporate tax in the case of related tax incentives. The new decree-law stipulates that the tax must be paid in the following order: first, the tax credit attributable to the taxable person as specified in Article 46 of the Law is used. If there remains a balance of the due corporate tax after that, the available foreign tax credit of the taxable person as specified in Article 47 of the Law is used. If there remains a balance of the due corporate tax after that, any other balances or forms of incentives or facilities determined by a decision issued by the Council of Ministers based on a proposal from the Minister are used. If there remains a balance of the due corporate tax after the application of the balances and incentives, it is paid in accordance with Article 48 of the Law.
Furthermore, the new decree-law introduces a new article that includes provisions allowing the taxable person to claim the repayment of the unused balance of tax credits that may arise from the incentives or facilities stipulated in the aforementioned decree-law, in accordance with the controls, periods, and procedures issued by a decision of the Council of Ministers based on a proposal from the Minister.
The new article also authorizes the Federal Tax Authority to withhold amounts from corporate tax revenues and complementary tax revenues, as necessary, for the purpose of settling the claimed amounts, based on a decision of the Authority's Board of Directors.
