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

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."

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.

New rule on vehicle and driving license services in Dubai

H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of Dubai Executive Council has issued Executive Council Resolution No. (57) of 2017 pertaining to Vehicle and Driving Licence Services.

The Resolution aims to enable RTA’s Licensing Agency to develop its services and utilise applications and smart solutions to facilitate the delivery of services.

Pursuant to the Resolution, the agency is responsible for issuance and renewal of driving licences and learning permits, conducting driving tests, issuance and renewal of occupational permits, desert driving permits, heavy bus and heavy truck driving permits, and special nature driving permits, according to the terms and conditions outlined in Federal Traffic Law No. (21) of 1995 and other approved bylaws.

Pursuant to the Resolution, RTA’s Licencing Agency is responsible for specifying the locations and special procedures for driving licences and permits, issuance and renewal of examiners’ permits according to RTA’s approved procedures, establishing and approving a system for classifying examiners, approving the specification of testing vehicles, issuing licences for the drivers’ testing yard and conducting assessments, monitoring and inspections to ensure accurate implementation of this Resolution.

According to the Resolution, the RTA is authorised to collect fees for the licencing and permit services listed in Appendix (1) of this Resolution. People with disabilities and people with special needs enjoy 50 percent discount on all services included in this Resolution.

RTA’s Director-General and Chairman of the Board of Executive Directors will issue the required bylaws to implement this Resolution. These bylaws will be published in the Dubai Government’s Official Gazette.

This Resolution annuls any other legislation that contradicts or challenges its articles. The Resolution shall be published in the Official Gazette and shall be considered valid following 60 days of the date of publication.

U.A.E President Issues Federal Decree amending Emirates Identity Authority Establishment Federal Law

UA.E President His Highness Sheikh Khalifa bin Zayed Al Nahyan has issued Federal Decree No. 3 of 2017 to amend Federal Law-Decree No 2 of 2004 on the establishment of the Emirates Identity Authority.

Article 1 of the law stipulates that the term, "The Federal Authority for Identity and Nationality,"  shall replace the term "The Emirates Identity Authority," in the title of the decree of Federal Law No.2 (2004), as well as in any other article of this law or any other law.

According to Article No. 2, Article 6, Paragraph 3 of Article 8 and Article 11 of the decree of Federal Law No.2 (2004) shall be be substituted by the following text: The Authority shall be administered by a board composed of seven members, including the Board Chairman with Ministerial Capacity, and a Vice-President, and the members shall be appointed under a federal decree and shall represent all Entities concerned with the Authority’s competencies.

The Board shall have a renewable membership term of three-years, and whenever a member’s seat has become vacant, another member shall be appointed for the rest of the membership period, and the Vice-President shall replace the Chairman in his absence. The Chairman of the Board shall issue the Statutes and Internal Regulation of the Board after approval by other board members.

Paragraph 3 of Article 8 is to be substituted by the adoption and issuance of decisions and internal regulations related to the financial and technical affairs of the Authority, as well the approval of the new Organisational Structure and the Authority’s human resources department, after its submission to the Cabinet for approval and issuance.

Article 11 stipulates that a Director-General should be appointed by the Authority, with the rank of a Civil Servant Undersecretary or a Military Officer with a rank that should not be under Major General, to be appointed under a federal decree after the approval of the Cabinet, upon the nomination of the board.

According to Article 3 of Federal Law No.3 (2017), a new paragraph shall be added to Article 2 while new articles, 4 bis, 21 bis, 1 and 21 bis and 2, shall be added to Federal Law No.2 (2004).

The new paragraph shall also be added to Article 2: "The Authority is also concerned with naturalisation affairs, passports, and the entry and residence of expats in the country, and it shall be in charge of charting the related policies and ensuring their enforcement, according to the provisions of this decree, and current national laws and regulations."

According to Article 4 of the law, the decisions and regulations being implemented, which concern naturalisation affairs, passports and the entry and residence of expats, shall still be in force at the time of the issuance of this decree, as long as they do not contradict with its articles or until other regulations are issued to replace them.

Article 5 of the law states that relevant authorities are to undertake the necessary measures to implement what is included in this law according to their competencies and achieve such measures in a period that does not exceed six months as per a resolution of the cabinet of ministers