UAE: Corporate Tax Regulations for Free Zones Updated

United Arab Emirates News developments

UAE: Corporate Tax Regulations for Free Zones Updated

Gulf News (United Arab Emirates), 3 November 2023: The UAE’s Finance Ministry has announced it has updated the corporate tax regulations for free zones.

The Ministry issued Cabinet Decision No. 100/2023 and Ministerial Decision No. 265/2023 to effect these changes.

Cabinet Decision No. 100/2023 expands the definition of Qualifying Income to include income from the ownership or exploitation of Qualifying Intellectual Property, following the methodology of the Organisation for Economic Co-operation and Developments modified nexus approach outlined in Ministerial Decision No. 265/2023.

Ministerial Decision No. 265/2023 lists the trading of Qualifying Commodities as a Qualifying Activity, allowing a 0% corporate tax rate for income generated from physical trading of various commodities on recognised stock exchanges. It also covers derivative trading income used for risk hedging in these trading activities.

In addition, it clarifies the scope of Qualifying and Excluded Activities. This provides free zone businesses with transparency.

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Tanya Jain