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UAE announces new corporate tax rules to support companies' transition once law takes effect in June

Ministry of Finance issues a decision that applies to certain assets and liabilities held by businesses before the law's implementation

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By Web Desk

Published: Fri 26 May 2023, 11:11 AM

The UAE's Ministry of Finance (MoF) on Friday announced a new decision specifying corporate tax rules that aim to ease companies' transition period once the law comes into effect on June 1.

In an advisory, the authority said these 'transitional rules' introduce "adjustments for the opening balance sheet" under the Corporate Tax Law. It also provides "important clarifications" that will allow for businesses' smooth transition before and after the law's implementation.

Under the new decision on Transitional Rules for Corporate Tax, firms can "adjust their tax treatment of assets and liabilities based on specific rules and must decide how to do that when they submit their first tax return".

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The choice, however, would be permanent except in special circumatances, the ministry said.

Among the assets and liabilities where these new rules apply are: Immovable property, intangible assets, financial assets, and financial liabilities.

Flexibility

The decision grants further flexibility to the real estate sector, the MoF said.

" Companies with immovable property recorded on a historical cost bases, before the corporate tax comes into effect, can select the basis of the relief, using either: A time apportionment method or valuation method," it explained.

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Web Desk

Published: Fri 26 May 2023, 11:11 AM

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