The Ministry of Finance (MoF) and Federal Tax Authority (FTA) have recently released several publications supplementing and amending various Corporate Tax, VAT, and Tax Procedure Laws in the UAE. Below we provide a brief update on select changes affecting taxpayers in the region, including:
- New FTA Guides on
- the Raqeeb Whistle Blower Program
- Private Clarifications
- The Corporate Tax Return - FTA Public Clarifications on
- Tax Assessment Reviews
- VAT rules for cryptocurrency mining - Ministerial Decisions amending the rules pertaining to Tax Groups, the Participation Exemption and Foreign Permanent Establishments
- The MOF’s anticipated introduction of the OECD’s Pillar Two rules
FTA Guide on the Raqeeb Whistle Blower Program
The FTA issued a newly updated guide on the Reqeeb Whistleblower Program for Tax Violations and Evasions (the Raqeeb Guide) (previously issued April 2022). The guide has been published to assist informants with successfully submitting information and leads relating to individuals and businesses who are non-compliant with UAE tax legislation.
The Raqeeb Guide outlines the application process to be completed on the EmaraTax Portal in detail and provides further guidance on how eligible informants can claim a monetary reward for their efforts.
Informants may be eligible for a monetary reward if the submission meets the following requirements, (amongst others):
- the provided information is credible, accurate, and has not been obtained by the FTA previously
- the whistleblowing form is filled out accurately, completely, and sufficiently
- the FTA collected tax amounts that exceed AED 50,000
- the reported person has exhausted all forms of objection and appeal.
Notably, informants must identify themselves to the FTA as part of their submission under the Raqeeb Whistleblower Program or else their submission may not be considered.
FTA Guide on Private Clarifications
In November 2024 the FTA issued a guide on Private Clarifications (the Private Clarification Guide).
The Private Clarification Guide explains the process by which eligible persons can apply to get clarity from the FTA on how certain tax laws apply to the person’s specific set of facts. The clarification issued by the FTA will only be applicable to the transaction(s) for which clarification is sought and aims to provide guidance on how the FTA interprets certain tax legislation.
Importantly, the FTA has outlined that private clarifications do not constitute precedents which can apply to other persons or to the applicant for materially different transactions.
The FTA has also outlined that they will not provide a clarification in the following instances (among others):
- where the facts have not been clearly stated
- where no tax technical analysis has been provided
- the clarification request relates to transactions which the FTA believes are for the purposes of avoiding tax or constitutes tax planning advice
- a previous clarification has already been issued to the person on the same matter
In most cases the FTA may take up to 50 business days to issue a clarification in relation to Excise Tax and VAT and within 60 days in the case of Corporate Tax, but this timeframe may be extended in cases where additional information is needed or where the nature of the clarification is complex.
FTA Guide on the Corporate Tax Return
With taxpayers gearing up to file their first CT return this year, the FTA has published a Corporate Tax Return Guide (the CT Return Guide) which provides substantial information on how to file and submit corporate tax returns.
The CT Return Guide lays out the self-assessment process and addresses a variety of topics related to the completion of the CT Return, including:
- required information on taxable persons
- elections to be made
- accounting schedules
- accounting adjustments and exempt income
- reliefs
- adjustments for non-deductible expenditure, interest expenditure, transfer pricing and income/expenditure from Qualifying Investment Funds
- tax liability and tax credits
- the different schedules to be attached to the CT Return
The CT Return Guide also contains information on transfer pricing disclosures required to be made for Related Party and Connected Person transactions. In this regard the CT Return will contain a Related Party Schedule and a Connected Person Schedule.
Notably the Related Party Schedule should only be completed by all Taxable Persons who have transactions with Related Parties in the tax period where the aggregate value of all transactions with all Related Parties recorded in the Financial Statements or at Market Value exceeds AED 40 million (thereafter all transactions exceeding AED 4 million must also be included). Dividends declared between Related Parties do not need to be disclosed in this schedule and should not be taken into account when determining the monetary thresholds required for disclosure in the schedule.
For the Connected Persons Schedule, the Schedule should only be completed if the aggregate value of transactions with Connected Persons (including their Related Parties) exceeds AED 500,000. However, not all Connected Persons are required to be disclosed in the schedule. The schedule should only be completed for each Connected Person where the aggregate payment or benefit exceeds AED 500,000 per Connected Person (together with its Related Parties).
The CT Return Guide also provides general information on how to navigate the EmaraTax portal when submitting CT Returns.
FTA Tax Procedures Public Clarification on Tax Assessment Reviews
The FTA’s Public Clarification on Tax Assessment Reviews outlines the instances in which a person may submit a request for a tax assessment review prior to submitting a request for reconsideration. This dispute resolution process allows for applicants to request a review of their tax assessment and related administrative penalties by a separate independent team of FTA officials based on the facts and evidence provided by the person, as well as the audit procedures conducted during the audit by the FTA.
In summary, a person can request a tax assessment review if the person has reasonable grounds to believe that there were technical errors relating to the application of relevant tax laws or treaties, calculation errors or errors in audit procedures that led to an incorrect determination of tax differences and administrative penalties.
Importantly, the FTA has clarified that:
- If a person wishes to introduce new information or additional documentary evidence/facts that were not presented to the FTA auditors during the audit process, they may apply for a reconsideration request instead as the tax assessment review is not an appropriate dispute channel for such circumstances.
- It is not permitted to submit a tax assessment review request in respect of matters for which the person has already applied for a reconsideration.
- A request may be rejected if the procedural requirements are not met (e.g. if the request was not submitted within 40 business days after the person was notified of the tax assessment and administrative penalties assessment, or where new information was presented).
- If the person does not agree with the outcome of the tax assessment review, or if the decision is not issued within 40 business days (or for a longer period where the person is notified of an extension), the person may submit a reconsideration request.
Additionally, the public clarification makes clear that a person may opt to forego the option to request a tax assessment review and submit a reconsideration request if the person wants to dispute the tax and/or administrative penalties assessment.
FTA Public Clarification for VAT on Crypto Currency Mining
The FTA recently released its VAT Public Clarification on cryptocurrency mining. In this Public Clarification, the FTA clarifies the VAT treatment of cryptocurrency mining using the proof-of-work mechanism.
In brief, the clarification outlines that cryptocurrency mining by a person for his own account is not considered a taxable supply and falls outside the scope of VAT. However, where cryptocurrency is mined on behalf of another person (i.e. supplying computational power to do so), this is considered to be a taxable supply of services.
If the services are supplied by a taxable person to a customer in the UAE, the supply of services will be subject to the standard rate of 5%. Where the supply is made to a non-resident and all the requirements for zero-rating are met, such supply can be zero-rated.
Where a UAE business receives mining services from a non-resident person such supply would be subject to VAT in the UAE. If the recipient of these services is registered for VAT in the UAE, they must account for the tax using the reverse charge mechanism on these concerned services. Conversely, if the customer is a UAE resident business and not a taxable person, the non-resident supplier is required to register for and charge VAT on the services provided.
The Public Clarification also explains instances where input tax may be recovered for cryptocurrency mining activities.
Ministerial Decision No. 301 of 2024 on Tax Groups and 302 of 2024 on the Participation Exemption and Foreign Permanent Establishment Exemption
Towards the end of 2024, the Ministry of Finance announced a number of amendments to existing Ministerial Decisions, namely Ministerial Decisions No. 301 and 302.
Ministerial Decision No. 301 on Tax Groups introduces amended provisions applicable to situations where Tax Groups must calculate taxable income attributed to a tax group member in line with transfer pricing principles. One major change introduced by the Decision is the ability for a Tax Group to forfeit a member’s pre-grouping tax losses and/or carried forward net interest expenditure to avoid having to determine the taxable income attributable to each member of the Tax Group, thereby reducing the administrative burden and transfer pricing requirements that would otherwise have been imposed on the Tax Group.
Notable changes introduced under Ministerial Decision No. 302 on the Participation Exemption and Foreign Permanent Establishment Exemption include:
- The application of the asset test, which now applies only where the Participation is a Related Party of the Taxable Person availing the Participation Exemption
- Clarifying that where a taxable person meets the minimum ownership requirement on the basis of meeting the aggregated acquisition cost threshold of AED 4 million, such taxable person would be deemed to also meet the profit distribution requirement under Article 23(2)(c) of the CT Law
- Prescribed adjustments to the determination of losses arising from the liquidation of a Participation
- Clarification on the applicability of the Participation Exemption in relation to assets/liabilities transferred from a taxable person’s Foreign Permanent Establishment to a Participation
The amendments introduced under both Ministerial Decisions came into effect for tax periods commencing on or after 1 January 2025.
Decision No. 127 of 2025 on the Reverse Charge Mechanism for Precious Metals and Stones
Cabinet Decision No. (127) of 2024 expands the application of the Reverse Charge Mechanism to include a broader category of precious metals and stones for VAT registered businesses in the UAE. This decision repeals the earlier Cabinet Decision No. (25) of 2018, which only applied to gold and diamonds.
In terms of the decision, suppliers of precious metals and stones will not be required to charge VAT on their business-to-business transactions or remit VAT to the FTA. Instead, buyers will have to account for the VAT on both the sale and purchase of goods in their VAT returns, provided that both parties are registered for VAT in the UAE. The decision also imposes certain administrative obligations on both the supplier and recipient before they are allowed to apply the reverse charge mechanism to such supply.
Our Tax Services
Our Tax Team are able to assist you in better understanding the impact of these recent changes on your personal tax affairs and provide you with tailored advice to ensure optimal tax structuring. We provide clients with specialist tax advice, planning and implementation support to achieve optimal tax outcomes for their personal and business interests in the UAE. Should you require such support, please feel free to contact Theunis Claassen, our Head of Tax, to arrange an initial discussion regarding your taxes.