MoF issues new decisions on tax grouping, interest capping and unincorporated partnerships

MoF issues new decisions on tax grouping, interest capping and unincorporated partnerships

ABU DHABI, 30th May, 2023 (WAM) -- The UAE Ministry of Finance has issued three new Ministerial Decisions for the purposes of Corporate Tax. These include Ministerial Decision No. 125 of 2023 on Tax Grouping, Ministerial Decision No. 126 of 2023 on General Interest Deduction Limitation Rule, and Ministerial Decision No. 127 of 2023 on Unincorporated Partnerships.

Younis Haji Al Khouri, Under-Secretary of the Ministry of Finance, said, “The new decisions reflect how the UAE's corporate tax regime maintains flexibility and ensures straightforward tax processes to enable compliance, while reinforcing the UAE's position as a leading business and investment hub. With tax grouping, groups are treated as if they were one entity which alleviates the administration and compliance burden. The interest capping rules provide clarity to businesses when expensing debt financing costs and are built on OECD best global practice. Finally, the decision on unincorporated partnerships clarifies that an unincorporated partnership is not subject to corporate tax, unless it is a corporate entity, meaning that individual partners will be taxed on their share of the income carried on by the partnership.”

Tax Grouping

The Decision on Tax Grouping further clarifies the conditions under which UAE resident entities that are 95 percent or more