Consulting Agency

New Corporate Tax decisions related to free zones announced

Ministry of Finance of the UAE has issued Decision No. 100 and Decision No. 265 regarding qualifying income and qualifying/excluded activities. They emphasize the importance of free economic zones for the economic growth of the UAE and compliance with international tax standards. The scope of qualifying income has been expanded, and the trading of qualifying goods is recognized as a qualifying activity, allowing for zero percent profit tax rate. The decisions also provide clarity on qualifying and excluded activities for free economic zone enterprises.

In July, Decision No. 81 was announced, describing additional conditions for qualifying investment funds to be exempt from profit tax. This enhances the competitiveness of the UAE as an investment attraction center. Investment funds must primarily engage in investment activities, have limited ancillary activities, impose restrictions on share ownership, and be under the supervision of a qualified investment manager.

For real estate investment funds (REITs), the exemption conditions include exceeding the value of real estate (excluding land) by AED 100 million, a certain percentage of the authorized capital that must be publicly listed or owned by institutional investors, and a minimum average annual percentage of real estate assets of 70%.

The Ministry of Finance has also conducted seminars in collaboration with the Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group to improve the business environment in the UAE. These seminars brought together government representatives, businessmen, and private sector investors to discuss the financial products and services offered by MIGA.