UAE Ministerial Decision No. 133 of 2023 on Business Restructuring Relief

The Ministry of Finance (MoF) has issued Ministerial Decision No. 133 of 2023 on Business Restructuring Relief clarifying the conditions under which business mergers and other restructuring transactions can be undertaken without triggering a Corporate Tax liability.

Some of the key highlights of the decision:

1. The relief applies when a business or a part of it is transferred or merged into another legal entity in exchange for shares or ownership interests. The decision further clarifies that shares or ownership interests refers to direct or indirect ownership of at least 50%.
2. The Transferor must opt to apply the restructuring relief, thereby no gain or loss will be included in the calculation of Taxable Income.
3. The Transferee can carry forward unutilised Tax Losses incurred by the Transferor prior to transfer, provided the Transferee continue the same or similar Business Activity as that of Transferor
4. The relief will withdraw if the business or ownership interest are subsequently transferred within two (2) years from the date of original transfer and necessary adjustments to the Taxable Income will be required to reverse any adjustments made to the value of assets and liabilities.
5. Both Transferor and Transferee must comply with the record keeping requirements.