UAE Corporate Tax: Businesses in free zones await further updates on qualifying status

UAE Corporate Tax: Businesses in free zones await further updates on qualifying status

Dubai: The UAE Ministry of Finance recently conducted two awareness sessions on the corporate tax. The session held in Dubai on June 22 focused on free zones and associated tax benefits. Such sessions are immensely helpful to businesses and other stakeholders. In addition to being well organised, the session provided important guidance on the tax implications on free zones entities. The cabinet and ministerial decisions on free zone taxation introduced important terms such as qualifying income, qualifying activities, excluded activities and de-minimis. This should be considered as the start of the tax journey. The authorities will be issuing additional guidance as to what some of these terms mean. An updated explanatory guide and a set of revised frequently asked questions (FAQs) is expected to be released, in addition to other important developments. For companies in the import-export business, there has been a curiosity of the tax implications on direct/third-port shipments. For example, would tax be applicable if the goods are moving say, from India to Germany without even coming to the UAE? We have highlighted the potential tax implications in various scenarios. The UAE is growing in its status as a financial hub, a logistics and distribution hub, and a