UAE Corporate Tax: Free zone businesses in distribution to get new guidance

Dubai: UAE businesses that are into the distribution of goods in or from a designated free zone will soon be getting more clarity on where they stand on corporate tax.

The FTA will soon be issuing guidance to ‘ensure distribution businesses are able to enjoy the benefits of the corporate tax free zone regime with certainty’.

Businesses that generate qualifying income from designated free zones can avail of the 0% corporate tax benefit. But within this framework, distribution focused businesses were awaiting further clarity.

The UAE Ministry of Finance has issued an updated Ministerial Decision that introduces ‘clarifying procedures for qualifying free zone’ businesses.

This clarifies the requirements for the preparation and maintenance of audited financial statements in line with the corporate tax laws.

The update ‘sets out clear requirements for tax groups to prepare audited financial statements’.

“All tax groups will be required to prepare audited special purpose aggregated financial statements,” said the Ministry statement.

“However, to mitigate the compliance burden on tax groups and in line with the UAE’s commitment as a business-friendly jurisdiction, the underlying members of the tax group will not be required to prepare audited stand-alone financial statements.

“The FTA will issue further guidance on the framework for preparation of special purpose aggregated financial statements for corporate tax purposes.”