In September 2023, the Ministry of Finance(MOF) has published new Frequently asked Questions(FAQ) on Corporate Tax Law which clarifies the following:
- Wholesale Distribution of goods or material shall be considered as Qualifying activity.
- Free Zone Corporate Tax regime for availing benefit of 0% will apply automatically. There is no need to make an election or submit an application to the FTA for electing the same.
- Adequate substance varies depending on the particular circumstances of the Qualifying Free Zone Person and will be assessed on a case-by-case basis.
- There are no specific adjustments to be made in relation to the release of a provision that was created prior to the effective Corporate Tax date. Therefore, the relevant credit to the Profit &Loss will be subject to Corporate Tax.
- Taxable Person that has Net Interest Expenditure greater than the de minimis of AED 12 million and has negative adjusted EBITDA for a Tax Period would be able to deduct AED 12 million of Net Interest Expenditure.
Please refer to our separate communication in this regard for further details.