U.A.E Ministry of Finance issue decision on small business relief on Corporate Tax

The Ministry of Finance (MoF) has issued Ministerial Decision No. 73 of 2023 on Small Business Relief for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (Corporate Tax Law).

The decision is issued in accordance with Article 21 of the Corporate Tax Law, which treats the taxable person as not having derived any taxable income in a given tax period where the revenue did not exceed a certain threshold.

Small Business Relief is intended to support start-ups and other small or micro businesses by reducing their Corporate Tax burden and compliance costs. The Ministerial Decision on Small Business Relief specifies the revenue threshold and conditions for a taxable person to elect for Small Business Relief and clarifies the provisions of the carried forward Tax Losses and disallowed Net Interest Expenditure under the Small Business Relief scheme.

The Ministerial Decision on Small Business Relief stipulates the following:

1. Taxable persons that are resident persons can claim Small Business Relief where their revenue in the relevant tax period and previous tax periods is below AED3 million for each tax period. This means that once a taxable person exceeds the AED3 million revenue threshold in any tax period, then the Small Business Relief will no longer be available.

2. The AED3 million revenue threshold will apply to tax periods starting on or after 1st June 2023 and will only continue to apply to subsequent tax periods that end before or on 31st December 2026.

3. Revenue can be determined based on the applicable accounting standards accepted in the UAE.

4. Small Business Relief will not be available to Qualifying Free Zone Persons or members of Multinational Enterprises Groups (MNE Groups) as defined in Cabinet Decision No. 44 of 2020 on Organizing Reports Submitted by Multinational Companies. MNE Groups are groups of companies with operations in more than one country that have consolidated group revenues of more than AED3.15 billion.

5. In tax periods defined in the decision where businesses do not elect to apply for Small Business Relief, they will be able to carry forward any incurred Tax Losses and any disallowed Net Interest Expenditure from such tax periods, for use in future tax periods in which the Small Business Relief is not elected.

6. With regard to the artificial separation of business, the Ministerial Decision specifies that where the Federal Tax Authority (FTA) establishes that taxable persons have artificially separated their business or business activity and the total revenue of the entire business or business activity exceeds AED3 million in any tax period and such persons have elected to apply for Small Business Relief, this would be considered an arrangement to obtain a Corporate Tax advantage under Clause (1) of Article 50 regarding the general anti-abuse rules of the Corporate Tax Law.

All Cabinet Decisions and Ministerial Decisions issued relating to the Corporate Tax Law are available on the Ministry of Finance's website: www.mof.gov.ae

The UAE Announces Changes to Guarantees System for Domestic Workers

In the UAE, domestic workers can now be replaced or the hiring fees fully or partially refunded within the entire period of the two-year recruitment contract, a senior official said.

The guarantee period for domestic workers hired through Tadbeer or other firms has been extended to two years, in keeping with the executive rules of the Domestic Workers’ law, Khalil Ebrahim Khouri, assistant under-secretary of the Ministry of Human Resources and Emiratisation for domestic workers affairs.

Initially, the Domestic Workers Law set six months as a guarantee period, during which an employer can get the hiring fees refunded or a worker replaced. Khouri said licensed firms are now obliged to refund all or part of the hiring fees of domestic workers, as per the remaining period of the contract.

Under the new rules that took effect recently, full hiring fees will be refunded, or the worker is replaced as the employer wishes, during the first six months of the contract (probationary period) in the event of termination of the contract by the worker without a legal reason, quitting work without an acceptable reason, the worker’s lacking fitness or inability to carry out his duties as required and agreed upon.

After the probationary period and up to the end of the recruitment contract, a part of the hiring fees will be refunded if the worker terminates the contract without a legal reason or quits work without an acceptable reason, Khouri said.

The amount refunded will be calculated on the basis of the remaining period of the contract. “For example, if an employer paid to a recruitment firm Dh15,000 as hiring fees and the work quit after 15 months of the two-year contract, the employer has the right to refund Dh5,625 for the remaining nine months of the contract,” Khouri said.

Khouri added recruitment firms are obliged to refund the fees to the employer within a month of the date the employer returns the worker or reports his absence from work.

Khouri explained that in the case of an employer specifically named a domestic worker to be recruited and the recruiting firm so did, no hiring fees will be refunded.

The ministry recently launched its new app Tadbeer, which allows users to access Tadbeer centres’ services and related information around the clock from any location, using smart devices. The app is in line with the ministry’s strategy to facilitate access to its services 24/7 from any location, using smartphone apps. It is also part of the ministry’s commitment to ensuring customer happiness

UAE announces new family sponsorship policy for expats

The UAE Cabinet has adopted a decision to amend provisions of the resolution on sponsoring of foreign workers to their families in the country.

Income sufficient to support their families will be the only requirement for UAE expatriates to sponsor their family members as opposed to the previously listed 'professions', the UAE Cabinet has announced.

As per prevailing requirements, male residents who are employed in the UAE can sponsor their immediate family members such as wife and children if he earns a monthly salary of Dh4,000 or Dh3,000 plus accommodation provided by his company. He also had to be employed in certain categories for him to be eligible to sponsor his family. For example, domestic helpers and certain other categories were not entitled to sponsor their families irrespective of their monthly income.

Similarly, a female resident could sponsor her family only if she was a teacher, engineer or a health professional and earned Dh4,000 per month. If she worked in any other sector, she needed to have a minimum monthly salary of Dh10,000 and special approval from the General Directorate of Residency and Foreigners Affairs.

With the latest Cabinet announcement, the requirement for residents to have certain professions has been done away with. It was not immediately clear if there are any changes to the salary requirements.

The amendment is in line with "international developments and in accordance with best practices", the UAE Cabinet said in a statement. "The decision aims at enhancing family stability of foreign workers and social cohesion, as well as attracting highly skilled workers while maintaining a healthy balance between professional and personal lives," it added.

The Cabinet decision, the statement explained, called on relevant government entities to conduct studies to assess and enhance the services provided to residents. This includes aspects of education and health and encouraging the "active participation" of the residents' family members in the job market as an alternative to recruiting new workers from abroad, within the existing policies and regulations.

Welcoming the announcement, Nasser bin Thani Juma Al Hamli, Minister of Human Resources and Emiratisation, said the decision will strengthen "family ties of workers" and boost the labour market.

"It will also improve the workers' productivity and create a suitable work environment for them. This, in turn, will improve the national economy," the minister said.

"The UAE is home to more than 200 nationalities. The country always works towards ensuring residents' rights by providing them with suitable regulations that are in line with international standards. We think of residents as our partners in development."

Ali Mohammad bin Hammad Al Shamsi, chairman of the Federal Authority for Identity and Citizenship, said the UAE has become an "attractive destination for those who want to achieve their goals".

Equal Wages for Women and men approved by UAE Cabinet

His Highness Sheikh Mohammed bin Rashid Al Maktoum

The United Arab Emirates’ cabinet approved a bill guaranteeing equal pay for men and women as the Gulf nation strives to bring more females into its workforce.

The 'law on equal wages and salaries for men and women' will ensure that women have equal opportunities as partners in the UAE's development. It will also empower women to lead future national strategies and ambitious projects, it was announced on Tuesday.

Announcing the law on Twitter, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, said the country's constitution guarantees impartiality between men and women as a fundamental right.

"Our Constitution calls for equal rights and duties of the genders, and we seek to elaborate, enforce and guarantee this constitutional right through the new law," he tweeted. "We do not want any exception when it comes to providing equal opportunities for both genders."

He said the late Sheikh Zayed bin Sultan Al Nahyan had recognised the importance of establishing gender balance and its long-term positive social and economic effects.

Hailing the law, Sheikha Fatima bint Mubarak, Chairwoman of the General Women's Union, noted that the UAE has achieved gender balance "in all fields". "The decision encourages women to devote themselves to work and make greater efforts to achieve the state's goals," she said.

The UAE government has been consolidating efforts to narrow the gender gap. In 2015, the UAE Council for Gender Balance was established to position UAE among the leading countries in the world in terms of gender balance. The UAE continues to champion the involvement of women in the development process through the issuance of the new law.

The Cabinet's approval of the law is in line with the government's objective to ensure the protection of women's rights and support their role in the national development process. It is part of the Strategy for the Empowerment of Emirati Women launched by Sheikha Fatima, who is also the President of the Supreme Council for Motherhood and Childhood and Supreme Chairwoman of the Family Development Foundation.

Empowering women in UAE

• 66% of public sector employees are women, with 30% in leadership roles
• 70% of school and university students are women
• 65% of total higher education graduates are women
• 8 women in the UAE Cabinet
• 8 women in the Federal National Council 2nd in the Arab world in World Economic Forum's Global Gender Gap Report 2017
• The Federal National Council's speaker is a woman
• The second country in the world after Norway to impose women's representation on boards of directors of companies
• Gender Balance Guide for the workplace in the UAE is the world's first of its kind for workplaces
• The country aims to be among the top 25 nations worldwide excelling in the field of women's empowerment

UAE and India sign agreement for direct trade in Dirham and Rupee

The UAE and India have reached a historic agreement which will enable businesses on both sides to bypass the US Dollar or any other foreign currency and trade directly in UAE Dirhams and the Indian Rupee.

The agreement will mean large savings for business communities on both sides as trade between the UAE and India soars to new highs.

India’s Ambassador to the UAE, Navdeep Suri, said that this is in addition to the agreements and memoranda of understanding which were signed during Prime Minister Narendra Modi’s just-concluded two-day visit to Abu Dhabi and Dubai.

"There were two other agreements that have been finalised. One is a currency swap agreement where India and UAE – it is an agreement between the two Central Banks – and the agreement has been completed and it is going to be exchanged through letters. Under this, businesses from the two sides will be able to trade directly in Rupees and in Dirhams and not have to go through US Dollars which means that there is a saving for the business community. It makes trade between the two countries more competitive," Suri said while reviewing Modi’s visits to the UAE, Jordan and Palestine along with India’s new Foreign Secretary, Vijay Gokhale, for Indian reporters.

Although the Dirham has a fixed peg to the US Dollar, the currency swap agreement between the UAE and India could favourably impact trade between the two countries as the Trump Administration in the US cements further an expansionary fiscal policy and the US Federal Reserve considers rate hikes.

The impact of US policies on the Indian Rupee would be greater and favourable to trade with the UAE since the Indian currency’s value is not pegged to the US Dollar but is determined by a basket of currencies.

The rationale for the currency swap agreement is evident from UAE-India trade figures. From a mere $182 million in 1982, the current level of bilateral trade amounted to about USD 53 billion, according to a joint statement released at the end Modi’s visit.

Another agreement which has been finalised and will be signed this week is "between the Financial Intelligence Units which commits both countries to work more closely together in money laundering, in preventing money laundering that takes place," Suri said.

About this agreement, the joint statement said: "the two sides welcomed the finalisation of an MOU on cooperation in the exchange of financial intelligence related to money laundering, associated predicate offences and terrorist financing."

UAE's Federal Tax Authority confirm companies only need Tax Registration Number to carry out business

The Federal Tax Authority, FTA, has confirmed that businesses are not required to present a tax certificate in order to conduct their commercial activities and can simply use their Tax Registration Number, TRN.

In a statement issued on Saturday, the Authority called on all businesses and stakeholders in the UAE to carry out commercial or other transactions using TRNs provided by businesses, urging them not to require tax certificates in order to ensure smooth operations and minimise disruption of work.

The Authority stressed that tax registration certificate cannot be printed or downloaded using provisional Tax Registration Number. However, businesses that have acquired their TRN can conduct their business activities normally. The FTA website allows individuals to verify the TRN of any company registered with the FTA for Value Added Tax, VAT, purposes.

The Federal Tax Authority noted that businesses that submitted their registration applications after the deadline set by the Authority last December were given provisional TRNs to allow them to conduct business and comply with their tax obligations. These businesses, however, are required to complete their tax registration and provide the authority with all required documents and rectify any pending errors.

The provisional TRNs are sufficient for conducting business and verifying the legal status and compliance of taxable persons. They do not, however, allow for issuing the tax certificate, which becomes available once the final TRN has been issued. The Authority had issued these provisional TRNs to help businesses comply with tax regulations and to ensure operations are not disrupted.

Good conduct Certificate mandatory for UAE work visa from Feb 4th 2018

Expatriates applying for a job in the UAE must first obtain a certificate of good conduct in order to be issued a work permit, a UAE government body has announced. The new rule will take effect from February 4, 2018.

The official news agency WAM reported on Monday that the UAE Coordination Committee approved a Cabinet Resolution issued in 2017 stipulating that expatriates who apply for work visa in the UAE must first obtain a certificate of good conduct — issued by either by his home country or the country where he lived for five years.

The certificate must then be attested by UAE diplomatic missions, or oversees Customer Happiness Centers at the Ministry of Foreign Affairs and International Cooperation.

The committee, which consists of members representing relevant UAE government bodies, said the move comes as part of efforts to create a safer society.

The rule also stems from the UAE’s belief in the importance of protecting community members and ensuring that they enjoy a safe life, making the UAE as one of the most secure countries in the world.

The committee clarified that the certificate is not required from those who come to the country on a visit or tourist visa.