Business Activities Conducted by Government Entities as Single Taxable Person

As per Decision No. 68 of 2023, businesses and business activities held by Federal Government Entities shall be treated as a single taxable person under specific conditions. This Decision aims to simplify corporate tax procedures and ensure consistency in tax treatment for government entities. It specifies the conditions that must be met for federal and local government entities to be treated as single taxable persons. Thus, Taxable Persons should consult Tax Consultants in UAE to effectively determine their taxability under the corporate tax in compliance with the statutory regulations. 

Conditions for Government Entities

For Government Entities, the following conditions must be fulfilled;

• For the petition to be treated as a Single Taxable Person, it must incorporate all Businesses and Business Activities controlled by the Federal Government Entities.
• The Businesses and Business Activities of the Federal Government Entities must be conducted under a License endowed by a Licensing Authority.
• The petition for the Authority to be recognized as a Single Taxable Person can only be made by the Representative Federal Government Entity.
• Moreover, the Representative Federal Government Entity is mandated to comply with all obligations set out in the Corporate Tax Law, and pay corporate tax accordingly, and this Decision. If there is a need to replace the Representative Federal Government Entity, an application can be made to the Authority without any discontinuation of the treatment as a single Taxable Person.

New Business or Business Activity

Any new Businesses or Business Activities that are under the control of the Federal Government Entity that meet the conditions under Clause 1 of this Article shall be directly treated as part of the single Taxable Person, and the Representative Federal Government Entity must inform the Authority within the timespan twenty business days after such an incident has occurred for the calculation of corporation tax.

Ceasing the Treatment as a Single Taxable Person

The treatment as a single Taxable Person shall cease following the acceptance by the Authority of an application made by the Representative Federal Government Entity to cease the treatment as a single Taxable Person or failure to meet the conditions under Clause 1 of this Article.

Conditions for Local Government

For Local Government Entities, the following conditions must be met;

• The petition to be treated as a Single Taxable Person shall incorporate all Businesses and Business Activities held by the Local Government Entities.
• The Businesses and Business Activities of the Local Government Entities shall be controlled under a License given by a Licensing Authority.
• The Businesses and Business Activities of the Local Government Entities shall be conducted within the same Emirate.
• The request for the Authority to be treated as a Single Taxable Person can only be made by the Representative Local Government Entity.
• The Representative Local Government Entity is also mandated to comply with all obligations set out in the Corporate Tax Law and this Decision. It is also required to pay corporate tax according to corporate tax law. Like the Federal Government Entities, an application can be made to restore the Representative Local Government Entity without any suspension of the treatment as a single Taxable Person.

New business or Business Activity

Any new Businesses or Business Activities conducted by the Local Government Entity that meet the conditions under Clause 1 of this Article shall be directly treated as part of the single Taxable Person, and the Representative Local Government Entity shall notify the Authority within twenty business days after such an incident as taken place for the calculation of company tax.

Ceasing the Treatment as a Single Taxable Person

The treatment as a single Taxable Person shall come to an end following the consent by the Authority of an application made by the Representative Local Government Entity to cease the treatment as a single Taxable Person or failure to meet the conditions under Clause 1 of this Article.

Beginning and End of Dates

Regarding the start and end dates of the treatment as a single Taxable Person, the treatment shall begin from the initiation of the Tax Period specified in the application submitted to the Authority or from the beginning of any other Tax Period determined by the Authority. The treatment as a single Taxable Person shall end from the beginning of the Tax Period specified in the application submitted to the Authority or from the beginning of any other Tax Period determined by the Authority.

In conclusion, this Decision outlines the conditions that must be met for federal and local government entities to be treated as single taxable persons. By simplifying tax procedures and ensuring consistency in tax treatment for government entities, this Decision will facilitate the compliance of government entities with tax laws and regulations.

Choose Corporate Tax Consultants in UAE

Taxable Persons are advised to consult Tax Consultants in UAE to effectively determine their taxability under the corporate tax in compliance with the statutory regulations. Thus, contact us today and we shall be glad to assist you.   

Read More: Deductible Expenditure for Corporate Tax Purposes in UAE