UAE corporate tax: MoF issues new decisions related to free zones

UAE corporate tax: MoF issues new decisions related to free zones

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The UAE Ministry of Finance (MoF) has issued new cabinet decisions related to corporate tax for free zones.

These include Cabinet Decision No 100 of 2023 on ‘Determining Qualifying Income’, as well as Ministerial Decision No 265 of 2023 on ‘Qualifying Activities’ and ‘Excluded Activities’.

With the revised decision, the scope of ‘Qualifying Income’ has been extended to include the amount of qualifying income derived from the ownership or exploitation of ‘Qualifying Intellectual Property’ calculated based on the methodology of the OECD’s modified nexus approach, which is recommneded in Ministerial Decision No 265 of 2023.

Ministerial Decision 265 of 2023 on ‘Qualifying Activities’ and ‘Excluded Activities’ also lists the trading of ‘Qualifying Commodities’ as a ‘Qualifying Activity’, which allows for the free zone zero per cent corporate tax rate to apply to income earned from the physical trading of metals, minerals, energy, and agricultural commodities that are traded on a recognised stock exchange, as well as the associated derivative trading income used to hedge against, the risk of such trading activities.

The Ministerial Decision also explains the intended scope of ‘Qualifying Activities’ and ‘Excluded Activities’, providing clarity and certainty to free zone businesses.

New corporate tax decisions support UAE’s goal to attract