Explanatory guide on UAE corporate tax is now released

Time to assess your situation in light of these guidelines

The long-awaited Explanatory Guide (Guide) was just released by the Ministry of Finance (MoF). The Guide provides an article-by-article explanation of the meaning and intended effect of the provisions of the Corporate Tax Law and its implementing decisions (issued as of 30 April 2023). The Guide may be used to interpret the Corporate Tax Law and how particular provisions must be applied.

Interestingly, the MoF clarifies the tax treatment of Family Foundations, including trusts. Those entities may opt in to be treated as tax transparent subject to approval from the competent authority. In this context, the beneficiary or beneficiaries of the Family Foundations opting in to be treated as tax transparent would be seen as directly owning or benefiting from the activities and assets of the Family Foundation. Depending on the nationality and country of domicile of the beneficiary(-ies), we cannot exclude that this approach could trigger cross-border tax issues with foreign jurisdictions. Therefore, each Family Foundation should assess the opportunity to opt in to be treated as tax transparent or not before submitting such application to the competent authority. (Source: WAM)

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By: Alejandra Esmoris | Head of Private Clients at CVML Dubai