The calculations of the federal royalty payments by UAE telcos for 2024 factor in their corporate tax obligations. Image Credit: e& Supplied; du Ahmed Ramzan/Gulf News

Dubai: For 2024, the UAE tech-telecom group e&’s payments as royalty to the UAE government and its corporate tax will be Dh5.7 billion and over, according to an update from the company.

e& confirmed that the annual federal royalty sum – set at 38 per cent on net profit generated from its UAE operations - will be deducted when calculating taxable income for UAE corporate tax purposes.

This is as per the new Royalty Guidelines for the local telecom sector issued by the Ministry of Finance for the financial year 2024. What’s different this year is that the UAE corporate tax aspect is also being factored in.

“As per the Corporate Tax Law, a tax rate of 9 per cent on profit will be applied from 1 January 2024 to 31 December 2026,” said the statement. "We believe the new royalty structure is more simplified and avoids complexity in the calculation. In addition, based on our initial assessment, the combined impact of royalty and corporate tax will be neutral to e&’s financials."

When should the royalty be paid?
Annual royalty and corporate tax amount to be paid within five months from the end of the fiscal year.

du's royalty outgo

For du, the aggregate royalty and corporate tax payable will not be lower than Dh1.8 billion per year. On what the new terms mean for the bottom-line, du said it 'ensures clarity and simplicity, while promoting fairness by pegging the calculationssolely to net profit.

"Based on our initial assessment, the aggregate amount of corporate tax and royalty will not be higher than the royalty under the old regime."

Does not touch international operations

As for e&, it said the 2024 royalty payment formula does not extend to what's generated from its international operations. The excluded items include:

  1. Profits generated from international controlled entities.
  2. Profits of international noncontrolled entities (associates and joint ventures).
  3. Dividends or other profit distributions received from international investments already subject to local corporate or other similar tax in the respective jurisdiction at 9% or above.
  4. Profit attributable to non-controlling interest holders of the UAE controlled entities.