The Federal Tax Authority (FTA) has issued a new guide outlining the application of corporate tax to free zone persons in line with the free zone corporate tax regime. This regime allows qualifying free zone persons to benefit from a zero per cent corporate tax rate on qualifying income. The guide provides general guidance on the conditions required for a free zone person to be considered a qualifying free zone person and benefit from the zero per cent corporate tax rate. It also outlines the activities that are considered qualifying and excluded for these persons.
The document includes many examples to help businesses understand how the key elements of the corporate tax law apply to free zone persons. It also explains the calculation of corporate tax for free zone persons, including the determination of qualifying income and taxable income subject to the 9 per cent corporate tax rate. Additionally, the guide outlines the conditions for maintaining adequate substance for qualifying free zone persons and the criteria for determining a foreign or domestic permanent establishment. It also clarifies the treatment of income derived from immovable property and qualifying intellectual property.
The FTA states that if a qualifying free zone person operates through a permanent establishment in the UAE or a foreign country, the profits attributable to such a permanent establishment will be subject to the nine per cent corporate tax rate. The FTA encourages all free zone persons to read the guide thoroughly to understand the definitions and interactions of the different rules. The guide, along with other corporate tax implementing decisions, is available on the FTA’s website.
Overall, this new guide on corporate tax for free zone persons provides valuable information for businesses operating in free zones in the UAE. By understanding the conditions and activities that qualify for a zero per cent corporate tax rate, businesses can make informed decisions regarding their tax obligations. The examples included in the guide help illustrate how the corporate tax law applies to free zone persons, making it easier for businesses to comply with the regulations.
In conclusion, the FTA’s guide on corporate tax for free zone persons is a useful resource for businesses looking to benefit from the zero per cent corporate tax rate in free zones. By following the guidance outlined in the document, businesses can ensure compliance with the corporate tax law and make informed decisions regarding their tax obligations. The FTA’s efforts to provide clear and comprehensive guidance on this topic are commendable and will benefit businesses operating in free zones in the UAE.
