With everyone back from the summer break, the month of September has been exceptionally busy. Not only has it been a long time since we witnessed such heavy traffic in Dubai, the entire UAE has been buzzing with business activity and with constant developments in the space of taxation. We were particularly happy to see many of our key clients at our Dubai office’s UAE Corporate Income Tax (CIT) and Transfer Pricing seminar on 26 September. From a CIT perspective, we zoomed in on the recent public consultation on the Free Zone Tax regime by the UAE Ministry of Finance (MOF). The business community is eagerly awaiting the outcome of this consultation, given its potential significant implications in determining the scope of the Qualifying and Excluded Activities under the Free Zone Tax regime. It is also becomes increasingly evident that transfer pricing is emerging as an crucial factor in relation to various aspects of the new CIT regime, both from a planning and compliance perspective.
In this month’s update, we have included the important approval from the Saudi Arabian tax authorities for the reduction of withholding tax for cross-border technical or consulting service payments between related parties. Saudi Arabia continues adapting its tax regime and this particular change in its CIT legislation will be welcomed by international business groups with service activities in Saudi Arabia.
In the UAE, the MOF announced during a Regional Forum, held jointly with the OECD, that the UAE will not implement Pillar Two rules before 2025. The MOF also announced that a public consultation on Pillar Two will be conducted in the first half of 2024. Other UAE tax developments include the introduction of a VAT reverse charge mechanism for electronic devices with effect from 29 October 2023, and the Federal Tax Authority’s publication of a CIT guide on Small Business Relief.
Finally, as regards our updates on the international tax front, the GCC member states continue to expand their Double Tax Treaty networks with various other jurisdictions.
We hope you enjoy this month’s newsletter, and as always, your comments and feedback are highly appreciated.
