The UAE has introduced new tax payment rules, clarifying the amount of tax payable on intellectual property and offering a tax exemption on income earned trading selected items on registered stock exchanges. The UAE Ministry of Finance issued Cabinet Decision No. 100 and Ministerial Decision No.265 of 2023.
In light of the revised Cabinet Decision, Qualifying Income now encompasses the amount derived from the ownership or exploitation of Qualifying Intellectual Property. This calculation is carried out according to the OECD’s modified nexus approach, as detailed in Ministerial Decision No.265 of 2023.
Ministerial Decision 265 of 2023, which focuses on Qualifying Activities and Excluded Activities, also includes the trading of Qualifying Commodities as a Qualifying Activity. This means that income earned from physical trading of metals, minerals, energy, and agricultural commodities on a recognized stock exchange, along with the associated derivative trading income used for hedging purposes, can benefit from a corporate tax rate of 0% in free zones.
Furthermore, the Ministerial Decision provides clarity and certainty regarding the scope of Qualifying Activities and Excluded Activities, which is beneficial for free zone businesses.
Under-Secretary of the Ministry of Finance Younis Haji Al Khoori highlighted the importance of free zones in attracting foreign investment and fostering a favorable business environment, contributing to the UAE’s economic growth. He emphasized the UAE’s commitment to economic diversification strategies, including a competitive Corporate Tax regime and special regime for free zones, promoting sustainable development.