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UAE Ministerial Decision No. 132 of 2023 on Transfer Within a Qualifying Group
UAE Ministerial Decision No. 132 of 2023 on Transfer Within a Qualifying Group
The Ministry of Finance (MoF) has issued Ministerial Decision No. 132 of 2023 on Transfer within a Qualifying Group for the purpose of Federal Decree-Law No.47 of 2022 on Taxation of Corporations and Businesses (“Corporate Tax Law”)
Some of the key highlights of the decision:
Application of Relief for Transfers
The decision clarifies that an entity must choose in their Tax Return to apply the relief for transfers within a Qualifying Group. The election to apply the relief is irrevocable and will apply to all future Tax Periods. Further, the relief from CT Law on transfers within the Qualifying Group will apply to all the qualifying assets and liabilities.
Exchange of Assets and Liabilities
Where the consideration paid for the transfer of an asset or liability is in the form of another asset or liability, the transfer shall be treated as two separate transfers.
Tax Implications on Subsequent Transfer
Relief on transfers will be unavailable if there is a subsequent transfer of the asset or liability outside the qualifying group or if the transferor or transferee ceases to be a member of the same Qualifying Group. Further, any gain or loss as a result of the transfer will be included while calculating the taxable income of the transferor and included in their Tax Return.
Further, the decision explains that if the transferor is no longer a taxable person, the gain or loss will be attributed to the transferee. The transferee should also include any gain or loss in their tax return if there is a subsequent transfer outside the qualifying group or if the taxable persons cease to be members of the same qualifying group.
Moreover, the transferee must make necessary adjustments to its Taxable Income to reverse any previous changes in the value of assets or liabilities.
Record Keeping Rules
The decision specifies that both Transferor and Transferee must comply with the record-keeping requirements and maintain records of the transfer agreement.
