Base Corporate Tax Law

Article (1) Definitions

Chapter One: General provisions

In the application of the provisions of this Decree-Law, the following words and expressions shall have meanings assigned against each, unless the context otherwise requires: State: United Arab Emirates. Federal Government: The government of the United Arab Emirates. Local Government: Any of the governments of the Member Emirates of the Federation. Ministry: Ministry of Finance. Minister: Minister of Finance. Authority: Federal Tax Authority. Corporate Tax: The tax imposed by this Decree-Law on juridical persons and Business income. Business: Any activity conducted regularly, on an ongoing and independent basis by any Person and in any location, such as industrial, commercial, agricultural, vocational, professional, service or excavation activities or any other activity related to the use of tangible or intangible properties. Qualifying Income: Any income derived by a Qualifying Free Zone Person that is subject to Corporate Tax at the rate specified in paragraph (a) of Clause (2) of Article (3) of this Decree-Law. Government Entity: The Federal Government, Local Governments, ministries, government departments, government agencies, authorities and public institutions of the Federal Government or Local Governments. Government Controlled Entity: Any juridical person, directly or indirectly wholly owned and controlled by a Government Entity, as specified in a resolution issued by the Cabinet at the suggestion of the Minister. Person: Any natural person or juridical person. Business Activity: Any transaction or activity, or series of transactions or series of activities conducted by a Person in the course of its Business. Mandated Activity: Any activity conducted by a Government Controlled Entity in accordance with the legal instrument establishing or regulating the entity, that is specified in a resolution issued by the Cabinet at the suggestion of the Minister. State's Territory: The State's lands, territorial sea and airspace above it. Natural Resources: Water, oil, gas, coal, naturally formed minerals, and other non-renewable, non-living natural resources that may be extracted from the State's Territory. Extractive Business: The Business or Business Activity of exploring, extracting, removing, or otherwise producing and exploiting the Natural Resources of the State or any interest therein as determined by the Minister. Non-Extractive Natural Resource Business: The Business or Business Activity of separating, treating, refining, processing, storing, transporting, marketing or distributing the Natural Resources of the State. Qualifying Public Benefit Entity: Any entity that meets the conditions set out in Article (9) of this Decree-Law and that is listed in a resolution issued by the Cabinet at the suggestion of the Minister. Qualifying Mutual Fund: Any entity whose principal activity is the issuing of investment interests to raise funds or pool investor funds or establish a joint mutual fund with the aim of enabling the holder of such an investment interest to benefit from the profits or gains from the entity's acquisition, holding, management or disposal of investments, in accordance with the applicable legislation and when it meets the conditions set out in Article (10) of this Decree-Law. Exempt Person: A Person exempt from Corporate Tax under Article (4) of this Decree-Law. Taxable Person: A Person subject to Corporate Tax in the State under this Decree-Law. Licensing Authority: The competent authority concerned with licensing or authorizing a Business or Business Activity in the State. License: A document issued by a Licensing Authority under which a Business or Business Activity is conducted in the State. Taxable Income: The income that is subject to Corporate Tax under this Decree-Law. Fiscal Year: The period specified in Article (57) of this Decree-Law. Tax Return: Information filed with the Authority for Corporate Tax purposes in the form and manner as prescribed by the Authority, including any schedule or attachment thereto, and any amendment thereof. Tax Period: The period for which a Tax Return is required to be filed. Related Party: Any Person associated with a Taxable Person as determined in Clause (1) of Article (35) of this Decree-Law. Revenue: The gross amount of income derived during a Tax Period. Recognized Stock Exchange: Any stock exchange established in the State that is licensed and regulated by the relevant competent authority, or any stock exchange established outside the State of equal standing. Resident Person: The Taxable Person specified in Clause (3) of Article (11) of this Decree-Law. Non-Resident Person: The Taxable Person specified in Clause (4) of Article (11) of this Decree-Law. Free Zone: A designated and defined geographic area within the State that is specified in a decision issued by the Cabinet at the suggestion of the Minister. Free Zone Person: A juridical person incorporated, established or otherwise registered in a Free Zone, including a branch of a Non-Resident Person registered in a Free Zone. Unincorporated Association: A relationship established under a contract between two or more Persons, such as a partnership or trust or any other similar association of Persons, in accordance with the applicable legislation of the State. Permanent Establishment: A place of Business or other form of presence in the State of a Non-Resident Person in accordance with Article (14) of this Decree-Law. State Sourced Income: Income accruing in, or derived from, the State as specified in Article (13) of this Decree-Law. Qualifying Free Zone Person: A Free Zone Person that meets the conditions of Article (18) of this Decree-Law and is subject to Corporate Tax under Clause (2) of Article (3) of this Decree-Law. Investment Manager: A Person who provides brokerage or investment management services that is subject to the regulatory oversight of the competent authority in the State. Corporate Tax Payable: Corporate Tax that has or will become due for payment to the Authority in respect of one or more Tax Periods. Foreign Partnership: A relationship established by contract between two or more Persons, such as a partnership or trust or any other similar association of Persons, in accordance with laws of a foreign jurisdiction. Foreign Tax Credit: Tax paid under the laws of a foreign jurisdiction on income or profits that may be deducted from the Corporate Tax due, in accordance with the conditions of Clause (2) of Article (47) of this Decree-Law. Family Foundation: Any foundation, trust or similar entity that meets the conditions of Article (17) of this Decree-Law. Interest: Any amount accrued or paid for the use of money or credit, including discounts, premiums and profit paid in respect of an Islamic financial instrument and other payments economically equivalent to interest, and any other amounts incurred in connection with the raising of finance, excluding payments of the principal amount. Accounting Income: The accounting net profit or loss for the relevant Tax Period as per the financial statements prepared in accordance with the provisions of Article (20) of this Decree-Law. Exempt Income: Any income exempt from Corporate Tax under this Decree-Law. Connected Person: Any Person affiliated with a Taxable Person as determined in Clause (2) of Article (36) of this Decree-Law. Tax Loss: Any negative Taxable Income as calculated under this Decree-Law for a given Tax Period. Qualified Business Activity: Any activity that is specified in a decision issued by the Cabinet at the suggestion of the Minister. Foreign Permanent Establishment: A place of Business or other form of presence outside the State of a Resident Person that is determined in accordance with the criteria prescribed in Article (14) of this Decree-Law. Market Value: The price which could be agreed in an arm's-length free market transaction between Persons who are not Related Parties or Connected Persons in similar circumstances. Qualifying Group: Two or more Taxable Persons that meet the conditions of Clause (2) of Article (26) of this Decree-Law. Net Interest Expense: Interest expense minus interest income as determined in accordance with the provisions of this Decree-Law. Bank: A Person licensed in the State as a bank or finance institution or an equivalent licensed activity that allows the taking of deposits and the granting of credits as defined in the applicable legislation of the State. Insurer: A Person licensed in the State as an Insurer that accepts risks by entering into or carrying out contracts of insurance, in both the life and non-life sectors, including contracts of reinsurance and captive insurance, as defined in the applicable legislation of the State. Control: The direction and influence over one Person by another Person in accordance with the conditions of Clause (2) of Article (35) of this Decree-Law Tax Group: Two or more Taxable Persons treated as a single Taxable Person according to the conditions of Article (40) of this Decree-Law. Withholding Tax Credit: The Corporate Tax amount that can be deducted from the Corporate Tax due in accordance with the conditions of Clause (2) of Article (46) of this Decree-Law. Withholding Tax: Corporate Tax to be withheld from State Sourced Income in accordance with Article (45) of this Decree-Law. Tax Registration: A procedure under which a Person registers for Corporate Tax purposes with the Authority. Tax Registration Number: A unique number issued by the Authority to each Person who is registered for Corporate Tax purposes in the State. Tax Deregistration: A procedure under which a Person is deregistered for Corporate Tax purposes with the Authority. Tax Procedures Law: The federal law that governs tax procedures in the State. Administrative Fines: Amounts imposed and collected under this Decree-Law or the Tax Procedures Law. Supplementary Tax: The supplementary tax to be imposed on multinational enterprises in accordance with this Decree-Law and the rules and regulations determined by the Cabinet in accordance with Article (3) of this Decree-Law, for the purposes of the Pillar Two Rules issued by the Organization for Economic Cooperation and Development. Multinational Enterprise: it is an entity and/or one or more of its member entities located in the State or in a foreign territory, as determined by a resolution to be issued by the Cabinet based on the proposal of the Minister.

Article (2) Imposition of Corporate Tax

Chapter Two: Imposition of Corporate Tax and Applicable Rates

Corporate Tax shall be imposed on Taxable Income, at the rates determined under this Decree-Law, and is payable to the Authority under this Decree-Law and the Tax Procedures Law.

Article (3) Corporate Tax Rate

Chapter Two: Imposition of Corporate Tax and Applicable Rates

1. Corporate Tax shall be imposed on the Taxable Income at the following rates: a. 0% (zero percent) on the portion of the Taxable Income not exceeding the amount specified by virtue of a resolution to be issued by the Cabinet at the suggestion of the Minister. b. 9% (nine percent) on Taxable Income that exceeds the amount specified by virtue of a resolution to be resolution issued by the Cabinet at the suggestion of the Minister. 2. Corporate Tax shall be imposed on a Qualifying Free Zone Person at the following rates: a. 0% (zero percent) on Qualifying Income. b. 9% (nine percent) on Taxable Income that is not Qualifying Income under Article 18 of this Decree-Law and any resolution issued by the Cabinet at the suggestion of the Minister in respect thereof. 3. Without prejudice to the provisions of Clauses (1) and (2) of this Article, and based on the Minister's proposal, the Cabinet shall issue a decision regulating all cases, terms, conditions, rules, regulations and procedures for imposing the supplementary tax on multinational enterprises and the exemption from same, so that the total percentage of the actual tax imposed on them would be (15%) fifteen percent.

Article (4) Exempt Person

Chapter Three: Exempt Person

1. The following Persons shall be exempt from Corporate Tax: a. A Government Entity. b. A Government Controlled Entity. c. A Person engaged in an Extractive Business, that meets the conditions of Article (7) of this Decree-Law. d. A Person engaged in a Non-Extractive Natural Resource Business, that meets the conditions of Article (8) of this Decree-Law. e. A Qualifying Public Benefit Entity under Article (9) of this Decree-Law. f. A Qualifying Mutual Fund under Article (10) of this Decree-Law. g. A public pension or social security fund, or a private pension or social security fund that is regulated by the competent authority in the State and that meets any other conditions that may be prescribed by the Minister. h. A juridical person incorporated in the State that is wholly owned and controlled by an Exempt Person specified in paragraphs (a), (b), (f) and (g) of Clause (1) of this Article and that: i. Undertakes part or all of the activity of the Exempt Person. ii. Is engaged exclusively in holding assets or investing funds for the benefit of the Exempt Person. iii. Only carries out activities that support those carried out by the Exempt Person. i. Any other Person as may be determined in a resolution issued by the Cabinet at the suggestion of the Minister. 2. A Person under paragraphs (a), (b), (c) and (d) of Clause (1) of this Article that is a Taxable Person insofar as it relates to any Business or Business Activity under Articles (5), (6), (7) or (8) of this Decree-Law, respectively, shall be treated as an Exempt Person for the purposes of Articles (26), (27), (38) and (40) of this Decree-Law. 3. Persons specified in paragraphs (f), (g), (h) and (i) of Clause (1) of this Article, as applicable, are required to apply to the Authority to be exempt from Corporate Tax in the form and manner and within the timeline prescribed by the Authority in this regard. 4. The exemption from Corporate Tax under paragraphs (f), (g), (h) and (i) of Clause (1) of this Article, as applicable, shall be effective from the beginning of the Tax Period specified in the application, or any other date determined by the Authority. 5. In the event that the Exempt Person fails to meet any of the conditions under the relevant provisions of this Decree-Law at any particular time during a Tax Period, such Person shall cease to be an Exempt Person for the purposes of this Decree-Law from the beginning of that Tax Period. 6. For the purposes of Clause (5) of this Article, the Minister may prescribe the conditions under which a Person may continue to be an Exempt Person, or cease to be an Exempt Person from a different date, in any of the following cases: a. Failure to meet the conditions is the result of the liquidation or termination of the Person. b. Failure to meet the conditions is of a temporary nature and will be promptly rectified, and appropriate procedures are in place to monitor the compliance with the relevant conditions of this Decree-Law. c. Any other cases as may be prescribed by the Minister.

Article (5) Government Entity

Chapter Three: Exempt Person

1. A Government Entity shall be exempt from Corporate Tax and the provisions of this Decree-Law shall not apply thereto. 2. Notwithstanding Clause (1) of this Article, a Government Entity shall be subject to the provisions of this Decree-Law if it conducts a Business or Business Activity under a License issued by a Licensing Authority. 3. Any Business or Business Activity conducted by a Government Entity under a License issued by a Licensing Authority shall be treated as an independent Business, and the Government Entity shall keep financial statements for this Business separately from the Government Entity's other activities. 4. The Government Entity shall calculate the Taxable Income for its Business or Business Activity specified in Clause (2) of this Article independently for each Tax Period, in accordance with the provisions of this Decree-Law. 5. Transactions between the Business or Business Activity specified under Clause (2) of this Article and the other activities of the Government Entity shall be considered Related Party transactions subject to the provisions of Article (34) of this Decree-Law. 6. A Government Entity may apply to the Authority for all its Businesses and Business Activities to be treated as a single Taxable Person for the purposes of this Decree-Law subject to meeting the conditions to be prescribed by the Minister.

Article (6) Government Controlled Entity

Chapter Three: Exempt Person

1. A Government Controlled Entity shall be exempt from Corporate Tax and the provisions of this Decree-Law shall not apply thereto. 2. Notwithstanding Clause (1) of this Article, a Government Controlled Entity shall be subject to the provisions of this Decree-Law if it conducts a Business or Business Activity that is not its Mandated Activities. 3. Any Business or Business Activity conducted by a Government Controlled Entity that is not its Mandated Activity shall be treated as an independent Business and the Government Controlled Entity shall keep financial statements for this Business separately from its Mandated Activity. 4. The Government Controlled Entity shall calculate the Taxable Income for its Business or Business Activity that is not its Mandated Activity independently for each Tax Period, in accordance with the provisions of this Decree-Law. 5. Transactions between the Business or Business Activity specified in Clause (2) of this Article and the Mandated Activity of the Government Controlled Entity shall be considered Related Party transactions subject to the provisions of Article (34) of this Decree-Law.

Article (7) Extractive Business

Chapter Three: Exempt Person

1. A Person shall be exempt from the Corporate tax and the provisions of this Decree-Law shall not apply to its Extractive Business if it meets all of the following conditions : a. The Person directly or indirectly holds or has an interest in a right, concession or License issued by the Local Government to undertake its Extractive Business. b. The Person is actually subject to tax under the applicable legislation of an Emirate in accordance with the provisions of Clause (6) of this Article. c. The Person has submitted a notification to the Ministry in the form and manner agreed with the Local Government. 2. If a Person that meets the conditions of Clause (1) of this Article derives income from both an Extractive Business and any other Business that is within the scope of this Decree-Law, the following shall apply: a. The income derived from the Extractive Business shall be calculated and taxed according to the applicable legislation of the Emirate. b. The income derived from the other Business shall be subject to the provisions of this Decree-Law, unless that other Business meets the conditions of being exempted from Corporate Tax under Article (8) of this Decree-Law. 3. For the purposes of Clause (2) of this Article, a Person shall not be considered to derive income from any other Business if such other Business is supporting or incidental to that Person's Extractive Business and the Revenue of such other Business in a Tax Period does not exceed 5% (five percent) of the total Revenue of that Person in the same Tax Period. 4. For the purposes of calculating the Taxable Income of the Person's other Business, the following shall apply: a. The other Business shall be treated as an independent Business, and financial statements shall be kept for this Business separately from the Extractive Business. b. Any common expenses shared between the Extractive Business and the other Businesses of the Person shall be divided pro rata their respective Revenues in the Tax Period, unless such expenses were taken into account at different percentages for the purposes of calculating the tax payable by the Person under the applicable legislation of the relevant Emirate in respect of its Extractive Business, in which case the expenses shall be divided in accordance with the latter percentage. c. The Person shall calculate the Taxable Income for its other Business independently for each Tax Period in accordance with the provisions of this Decree-Law. 5. Transactions between the Extractive Business and the other Business of the same Person shall be considered Related Party transactions subject to the provisions of Article (34) of this Decree-Law, unless such other Business is exempt from Corporate Tax under Article (8) of this Decree-Law. 6. A Person shall be considered actually subject to tax under the applicable legislation of the Emirate for the purposes of this Article if the Local Government imposes a tax on income or profits, or a tax on royalty or revenue, or any other form of taxes, duties or levy in respect of such Person's Extractive Business. 7. The exemption under this Article shall not apply to contractors, subcontractors, suppliers or any other Person used or contemplated to be used in any part of the performance of the Extractive Business that does not in its own right meet the conditions to be exempt from Corporate Tax under this Article or Article (8) of this Decree-Law.

Article (8) Non-Extractive Natural Resource Business

Chapter Three: Exempt Person

1. A Person shall be exempt from Corporate tax and the provisions of this Decree-Law shall not apply to its Non-Extractive Natural Resource Business where all of the following conditions are met: a. The Person directly or indirectly holds or has an interest in a right, concession or License issued by a Local Government to undertake its Non-Extractive Natural Resource Business in the State. b. The Person's income from its Non-Extractive Natural Resource Business is derived solely from Persons that undertake a Business or Business Activity. c. The Person is actually subject to tax under the applicable legislation of an Emirate in accordance with the provisions of Clause (6) of this Article. d. The Person has made a notification to the Ministry in the form and manner agreed with the Local Government. 2. If a Person that meets the conditions of Clause (1) of this Article derives income from both a Non-Extractive Natural Resource Business and any other Business that is within the scope of this Decree-Law, the following shall apply: a. The income derived from the Non-Extractive Natural Resource Business shall be calculated and taxed according to the applicable legislation of the Emirate. b. The income derived from the other Business shall be subject to this Decree-Law, unless that other Business meets the conditions to be exempt from Corporate Tax under Article (7) of this Decree-Law. 3. For the purposes of Clause (2) of this Article, a Person shall not be considered to derive income from any other Business where such other Business is ancillary or incidental to that Person's Non-Extractive Natural Resource Business and the Revenue of such other Business in a Tax Period does not exceed 5% (five percent) of the total Revenue of that Person in the same Tax Period. 4. For the purposes of calculating the Taxable Income of the Person's other Business, the following shall apply: a. The other Business shall be treated as an independent Business, and financial statements shall be kept for this Business separately from the Non-Extractive Natural Resource Business. b. Any common expenses shared between the Non-Extractive Natural Resource Business and the other Businesses of the Person shall be divided pro rata their respective Revenues in the Tax Period, unless such expenses were taken into account at a different percentages for the purposes of calculating the tax payable by the Person under the applicable legislation of the relevant Emirate in respect of its Non-Extractive Natural Resource Business, in which case the expenses shall be divided in accordance with the latter percentage. c. The Person shall calculate the Taxable Income for the other Business independently for each Tax Period in accordance with the provisions of this Decree-Law. 5. Transactions between the Non-Extractive Natural Resource Business and any other Business of the same Person shall be considered Related Party transactions subject to the provisions of Article (34) of this Decree-Law, unless such other Business is exempt from Corporate Tax under Article (7) of this Decree-Law. 6. A Person shall be considered actually subject to tax under the applicable legislation of the Emirate, for the purposes of this Article if the Local Government imposes a tax on income or profits, a royalty or revenue tax, or any other form of tax, charge or levy in respect of such Person's Non-Extractive Natural Resource Business. 7. The exemption under this Article shall not apply to contractors, subcontractors, suppliers or any other Person used or contemplated to be used in any part of the performance of the Non-Extractive Natural Resource Business that does not in its own right meets the conditions of being exempt from Corporate Tax under this Article or Article (7) of this Decree-Law.

Article (9) Qualifying Public Benefit Entity

Chapter Three: Exempt Person

1. A Qualifying Public Benefit Entity shall be exempt from Corporate Tax if all of the following conditions are met: a. It is established and operated for any of the following: I. Exclusively for religious, charitable, scientific, artistic, cultural, athletic, educational, healthcare, environmental, humanitarian, animal protection or other similar purposes. II. As a professional entity, chamber of commerce, or a similar entity operated exclusively for the promotion of social welfare or public benefit. b. It does not conduct a Business or Business Activity, except for such activities that directly relate to or are aimed at fulfilling the purpose for which the entity was established. c. Its income or assets are used exclusively in the furtherance of the purpose for which it was established, or for the payment of any associated necessary and reasonable expenses incurred. d. No part of its income or assets is payable to, or otherwise available, for the personal benefit of any shareholder, member, trustee, founder or settlor that is not itself a Qualifying Public Benefit Entity, Government Entity or Government Controlled Entity. e. Any other conditions as may be prescribed in a resolution issued by the Cabinet at the suggestion of the Minister. 2. The exemption under Clause (1) of this Article shall be effective from the beginning of the Tax Period in which the Qualifying Public Benefit Entity is listed in the Cabinet decision issued at the suggestion of the Minister or any other date determined by the Minister. 3. For the purposes of monitoring the continued compliance by a Qualifying Public Benefit Entity with the conditions of Clause (1) of this Article, the Authority may request any relevant information or records from the Qualifying Public Benefit Entity within the timeline specified by the Authority.

Article (10) Qualifying Mutual Fund

Chapter Three: Exempt Person

1. A mutual fund may apply to the Authority to be exempt from Corporate Tax as a Qualifying Mutual fund where all of the following conditions are met: a. The mutual fund or the mutual fund's manager is subject to the regulatory oversight of a competent authority in the State, or a foreign competent authority recognized for the purposes of this Article. b. Shares in the mutual fund are traded on the Recognized Stock Exchange, or are marketed and made available sufficiently and widely to investors. c. The main or principal purpose of the mutual fund is not to avoid corporate tax. d. Any other conditions as may be prescribed in a decision issued by Cabinet at the suggestion of the Minister. 2. For the purposes of monitoring the continued compliance by a Qualifying Mutual Fund with the conditions of Clause (1) of this Article, the Authority may request any relevant information or records within the timeline prescribed by the Authority.

Article (11) Taxable Person

Chapter Four: Taxable Person and Corporate Tax Base

1. Corporate Tax shall be imposed on a Taxable Person at the rates determined under this Decree-Law. 2. For the purposes of this Decree-Law, a Taxable Person shall be either a Resident Person or a Non-Resident Person. 3. A Resident Person is any of the following Persons: a. A juridical person that is incorporated, established or otherwise recognized under the applicable legislation of the State, including a Free Zone Person. b. A juridical person that is incorporated, established or otherwise recognized under the applicable legislation of a foreign jurisdiction and is effectively managed and controlled in the State. c. A natural person who conducts a Business or Business Activity in the State. d. Any other Person as may be determined in a resolution issued by the Cabinet at the suggestion of the Minister. 4. A Non-Resident Person is a Person who is not considered a Resident Person under Clause (3) of this Article and that: a. Has a Permanent Establishment in the State as under Article (14) of this Decree-Law; b. Derives State Sourced Income as under Article (13) of this Decree-Law; or c. Has a nexus in the State as specified in a resolution issued by the Cabinet at the suggestion of the Minister. 5. A branch in the State of a Person referred to in Clause (3) of this Article, shall be treated as one and the same Taxable Person. 6. The Cabinet shall, upon a suggestion of the Minister and in coordination with the relevant competent authorities, issue a decision specifying the categories of Business or Business Activity conducted by a resident or non-resident natural person that are subject to Corporate Tax under this Decree-Law.

Article (12) Corporate Tax Base

Chapter Four: Taxable Person and Corporate Tax Base

1. A Resident Person, which is a juridical person, is subject to Corporate Tax on its Taxable Income derived from the State or from outside the State, in accordance with the provisions of this Decree-Law. 2. The Taxable Income of a Resident Person, who is a natural person, is the income derived from the State or from outside the State insofar as it relates to the Business or Business Activity conducted by the natural person in the State as set out in Clause (6) of Article (11) of this Decree-Law. 3. A Non-Resident Person is subject to Corporate Tax on the following: a. The Taxable Income that is attributable to the Permanent Establishment of the Non-Resident Person in the State. b. State Sourced Income that is not attributable to a Permanent Establishment of the Non-Resident Person in the State. c. The Taxable Income that is attributable to the nexus of the Non-Resident Person in the State as determined in a resolution issued by the Cabinet pursuant to paragraph (c) of Clause (4) of Article (11) of this Decree-Law.

Article (13) State Sourced Income

Chapter Four: Taxable Person and Corporate Tax Base

1. Income shall be considered a State Sourced Income in any of the following cases: a. Where it is derived by a Resident Person. b. Where it is derived by a Non-Resident Person and the income received has been paid or accrued in connection with, and attributable to, a Permanent Establishment of that Non-Resident Person in the State. c. Where it is otherwise accrued in or derived from activities performed, assets located, capital invested, rights used, or services performed or benefitted from in the State. 2. Subject to any conditions and limitations that the Minister may determine, State Sourced Income shall include, without limitation: a. Income from the sale of goods in the State. b. Income from the provision of services that are rendered or used or benefitted from in the State. c. Income from a contract insofar as it has been wholly or partly performed or benefitted from in the State. d. Income from movable or immovable property in the State. e. Income from the disposal of shares or capital of a Resident Person. f. Income from the use or the right to use any intellectual or intangible property in the State, or from granting a permission to use them in the State. g. Interest that meets any of the following conditions: i. The loan is secured by movable or immovable property located in the State. ii. The borrower is a Resident Person. iii. The borrower is a Government Entity. h. Insurance or reinsurance premiums in any of the following cases: i. The insured asset is located in the State. ii. The insured Person is a Resident Person. iii. The insured activity is conducted in the State.

Article (14) Permanent Establishment

Chapter Four: Taxable Person and Corporate Tax Base

1. A Non-Resident Person shall be deemed to have a Permanent Establishment in the State in any of the following cases: a. If it has a fixed or permanent place in the State through which the Business of the Non-Resident Person, or any part thereof, is conducted. b. If a Person has and habitually exercises an authority to conduct a Business or Business Activity in the State on behalf of the Non-Resident Person. c. If it has any other form of nexus in the State as specified in a resolution issued by the Cabinet at the suggestion of the Minister. 2. For the purposes of paragraph (a) of Clause (1) of this Article, a fixed or permanent place in the State includes: a. A place of management where management and commercial decisions that are necessary for conducting the Business are, in substance, made. b. A branch. c. An office. d. A factory. e. A workshop. f. Land, buildings and other real property. g. Installations or platforms for the exploration of renewable or non-renewable natural resources. h. A mine, an oil or gas well, a quarry or any other place of extraction of natural resources, including vessels and platforms used for the extraction of such resources. i. A building site, a construction project, or place of assembly or installation, or supervisory activities in connection therewith, but only if such site, project or activities, whether separately or together with other sites, projects or activities, last more than (6) six months, including connected activities that are conducted at the site or project by one or more Related Parties of the Non-Resident Person. 3. Notwithstanding Clauses (1) and (2) of this Article, a fixed or permanent place in the State shall not be considered a Permanent Establishment of a Non-Resident Person if it is used solely for any of the following purposes: a. Storing, displaying or delivering goods or merchandise belonging to that Person. b. Keeping a stock of goods or merchandise belonging to that Person for the sole purpose of processing by another Person. c. Purchasing goods or merchandise or collecting information for the Non-Resident Person. d. Conducting any other activity of a preparatory or supporting nature for the Non- Resident Person. e. Conducting any combination of activities mentioned in paragraphs (a), (b), (c)and (d) of Clause (3) of this Article, provided that the overall activity is of a preparatory or supporting nature. 4. Clause (3) of this Article shall not apply to a fixed or permanent place in the State that is used or maintained by a Non-Resident Person if the same Non-Resident Person or its Related Party carries on a Business or Business Activity at the same place or at another place in the State where all of the following conditions are met: a. Where the same place or the other place constitutes a Permanent Establishment of the Non-Resident Person or its Related Party. b. The overall activity resulting from the combination of the activities carried out by the Non-Resident Person and its Related Party at the same place or at the two places is not of a preparatory or supporting nature and together would form a cohesive Business operation, had the activities not been fragmented. 5. For the purposes of paragraph (b) of Clause (1) of this Article, a Person shall be considered as having and habitually exercising an authority to conduct a Business or Business Activity in the State on behalf of a Non-Resident Person if any of the following conditions are met: a. The Person habitually concludes contracts on behalf of the Non-Resident Person. b. The Person habitually negotiates contracts that are concluded by the Non-Resident Person without the need for material modification by the Non-Resident Person. 6. The provisions of Paragraph (b) of Clause (1) of this Article shall not apply if the person conducts a Business or Business Activity in the State as an independent agent and acts for the Non-Resident Person in the ordinary course of that Business or Business Activity, unless the Person acts exclusively or almost exclusively on behalf of the Non-Resident Person, or if that Person cannot be considered legally or economically independent from the Non-Resident Person. 7. For the purposes of Clause (3) of this Article, the Minister may prescribe the conditions under which the mere presence of a natural person in the State does not create a Permanent Establishment for a Non-Resident Person in any of the following cases: a. If such presence is a consequence of a temporary and exceptional situation. b. Where the natural person is employed by the Non-Resident Person, and all of the following conditions are met: i. The activities being conducted in the State by the natural person are not part of the core income-generating activities of the Non-Resident Person or its Related Parties. ii. The Non-Resident Person does not derive State Sourced Income.

Article (15) Investment Manager Exemption

Chapter Four: Taxable Person and Corporate Tax Base

1. For the purposes of Clause (6) of Article (14) of this Decree-Law, an Investment Manager shall be considered an independent agent when acting on behalf of a Non-Resident Person, if all of the following conditions are met: a. The Investment Manager is engaged in the business of providing investment management or brokerage services. b. The Investment Manager is subject to the regulatory oversight of the competent authority in the State. c. The transactions are carried out in the ordinary course of the Investment Manager's Business. d. The Investment Manager acts in relation to the transactions in an independent capacity. e. The Investment Manager transacts on an arm's length basis with the Non-Resident Person and receives due compensation for the provision of services. f. The Investment Manager is not the Non-Resident Person's representative in the State in relation to any other income or transaction that is subject to Corporate Tax for the same Tax Period. g. Any such other conditions as may be prescribed in a resolution issued by the Cabinet at the suggestion of the Minister. 2. For the purposes of Clause (1) of this Article, "transactions" means any of the following: a. Transactions in commodities, real property, bonds, shares, derivatives or securities of all kinds. b. Transactions of buying or selling any foreign currency or placement of funds against interest. c. Such other transactions permissible to be carried out by the Investment Manager on behalf of a Non-Resident Person under the applicable legislation of the State.

Article (16) Partners in an Unincorporated Association

Chapter Four: Taxable Person and Corporate Tax Base

1. For the purposes of this Decree-Law, unless an application is made under Clause (8) of this Article, and subject to any conditions the Minister may prescribe, the Unincorporated Association itself shall not be considered a Taxable Person, and Persons conducting a Business as an Unincorporated Association shall be treated as individual Taxable Persons. 2. Where Clause (1) of this Article applies, a Person who is a partner in an Unincorporated Association shall be treated as: a. Conducting the Business of the Unincorporated Association. b. Having a status, intention, and purpose of the Unincorporated Association. c. Holding assets that the Unincorporated Association holds. d. Being party to any arrangement to which the Unincorporated Association is a party. 3. For the purposes of Clause (1) of this Article, the assets, liabilities, income and expenses of the Unincorporated Association shall be allocated to each partner pro rata their distributive shares in that Unincorporated Association, or in the manner prescribed by the Authority where the distributive share of a partner cannot be identified. 4. The Taxable Income of a partner in an Unincorporated Association shall take into account the following: a. Expenses incurred directly by the partner in conducting the Business of the Unincorporated Association. b. Interest Expense incurred by the partner in relation to contributions made to the capital account of the Unincorporated Association. 5. Interest paid by an Unincorporated Association to a partner on their capital account shall be treated as an allocation of income to the partner and is therefore not a deductible expenses for the purpose of calculating the Taxable Income of that partners incorporated Association. 6. For the purposes of calculating and settling the Corporate Tax Payable of a partner in an Unincorporated Association under Chapter Thirteen of this Decree-Law, any foreign tax incurred by the Unincorporated Association shall be allocated as a Foreign Tax Credit to each partner pro rata their distributive share in the Unincorporated Association. 7. A Foreign Partnership shall be treated as an Unincorporated Association for the purposes of this Decree-Law if all of the following conditions are met: a. The Foreign Partnership is not subject to tax under the laws of the foreign jurisdiction. b. Each partner in the Foreign Partnership is individually subject to tax with regards to their distributive share of any income of the Foreign Partnership as and when the income is received by or accrued to the Foreign Partnership. c. Any other conditions as may be prescribed by the Minister. 8. The partners in an Unincorporated Association can make an application to the Authority for the Unincorporated Association to be treated as a Taxable Person. 9. Where an application under Clause (8) of this Article is approved: a. The provisions of Clauses (1) to (6) of this Article shall no longer apply to the partners in the Unincorporated Association in respect of the Business conducted by the Unincorporated Association. b. Each partner in the Unincorporated Association shall remain jointly and severally liable for the Corporate Tax Payable by the Unincorporated Association for those Tax Periods when they are partners in the Unincorporated Association. c. One partner in the Unincorporated Association shall be appointed as the partner responsible for any obligations and proceedings in relation to this Decree-Law on behalf of the Unincorporated Association. 10. Where the application under Clause (8) of this Article is approved, the Unincorporated Association shall be treated as a Taxable Person effective from the commencement of the Tax Period during which the application is made, or from the commencement of a future Tax Period, or any other date determined by the Authority.

Article (17) Family Foundation

Chapter Four: Taxable Person and Corporate Tax Base

1. A Family Foundation may submit an application to the Authority to be treated as an Unincorporated Association for the purposes of this Decree-Law if all of the following conditions are met: a. The Family Foundation was established for the benefit of identified or identifiable natural persons and/or for the benefit of a public benefit entity. b. The principal activity of the Family Foundation is to receive, hold, invest, spend funds, or dispose of the assets associated with savings or investment, or otherwise manage them. c. The Family Foundation does not conduct any activity that would have constituted a Business or Business Activity under Clause (6) of Article (11) of this Decree-Law had the activity been carried out or its assets been held directly by its founder, settlor, or any of its beneficiaries. d. The main or principal purpose of the Family Foundation is not the avoidance of Corporate Tax. e. Any other conditions as may be prescribed by the Minister. 2. Where the application under Clause (1) of this Article is approved, the Family Foundation shall be treated as an Unincorporated Association effective from the commencement of the Tax Period during which the application is made, or from the commencement of a future Tax Period, or any other date determined by the Authority. 3. For the purposes of monitoring the continued compliance by a Family Foundation with the conditions of Clause (1) of this Article, the Authority may request any relevant information or records from the Family Foundation within the timeline specified by the Authority.

Article (18) Qualifying Free Zone Person

Chapter Five: Free Zone Person

1. A Qualifying Free Zone Person is a Free Zone Person that meets all of the following conditions: a. Maintains actual and sufficient existence in the State. b. Derives Qualifying Income as specified in a resolution issued by the Cabinet at the suggestion of the Minister. c. Has not elected to be subject to Corporate Tax under Article (19) of this Decree-Law. d. Complies with Articles (34) and (55) of this Decree-Law. e. Meets any other conditions as may be prescribed by the Minister. 2. A Qualifying Free Zone Person that fails to meet any of the conditions under Clause (1) of this Article at any particular time during a Tax Period shall cease to be a Qualifying Free Zone Person from the beginning of that Tax Period. 3. Notwithstanding Clause (2) of this Article, the Minister may prescribe the conditions or circumstances under which a Person may continue to be a Qualifying Free Zone Person, or cease to be a Qualifying Free Zone Person from a different date. 4. The application of paragraph (a) of Clause (2) of Article (3) of this Decree-Law to a Qualifying Free Zone Person shall apply for the remainder of the tax incentive period stipulated in the applicable legislation of the Free Zone in which the Qualifying Free Zone Person is registered, such period may be extended in accordance with any conditions as may be determined in a resolution issued by the Cabinet at the suggestion of the Minister, but any one period shall not exceed (50) fifty years.

Article (19) Election to be Subject to Corporate Tax

Chapter Five: Free Zone Person

1. A Qualifying Free Zone Person may elect to be subject to Corporate Tax at the rates specified under Clause (1) of Article (3) of this Decree-Law. 2. The election under Clause (1) of this Article shall be effective from either of: a. The commencement of the Tax Period during which the election is made. b. The commencement of the Tax Period following the Tax Period during which the election was made.

Article (20) General Rules for Determining Taxable Income

Chapter Six: Calculating Taxable Income

1. The Taxable Income of each Taxable Person shall be determined separately, on the basis of adequate, standalone financial statements prepared for financial reporting purposes in accordance with the accounting standards accepted in the State. 2. The Taxable Income for a Tax Period shall be the Accounting Income for that period, which was adjusted, as may be required, according to the following: a. Any unrealized gain or loss under Clause (3) of this Article. b. Exempt Income as specified in Chapter Seven of this Decree-Law. c. Reliefs as specified in Chapter Eight of this Decree-Law. d. Deductions as specified in Chapter Nine of this Decree-Law. e. Transactions with Related Parties and Connected Persons as specified in Chapter Ten of this Decree-Law. f. Tax Loss relief as specified in Chapter Eleven of this Decree-Law. g. Any incentives or special reliefs for a Qualifying Business Activity as specified in a resolution issued by the Cabinet at the suggestion of the Minister. h. Any income or expenses that has not otherwise been taken into account in determining the Taxable Income under the provisions of this Decree-Law as may be specified in a resolution issued by the Cabinet at the suggestion of the Minister. i. Any other adjustments as may be specified by the Minister. 3. For the purposes of calculating the Taxable Income for the relevant Tax Period, and subject to any conditions that the Minister may prescribe, a Taxable Person that prepares financial statements on an accrual basis may elect to take into account gains and losses on a realization basis in relation to: a. all assets and liabilities that are subject to accounting for fair value or impairment under the applicable accounting standards; or b. all assets and liabilities held on capital account at the end of a Tax Period, whilst taking into account any unrealized gain or loss that arises in connection with the assets and liabilities held on revenue account at the end of that period. 4. For the purposes of paragraph (b) of Clause (3) of this Article: a. "Assets held on capital account" refers to assets that the Person does not trade, assets that are eligible for depreciation, or assets treated under applicable accounting standards as property, plant and equipment, investment property, intangible assets, or other non-current assets. b. "Liabilities held on capital account" refers to liabilities, the incurring of which does not give rise to deductible expenses under Chapter Nine of this Decree-Law, or liabilities treated under applicable accounting standards as non- current liabilities. c. "Assets and liabilities held on revenue account" refers to assets and liabilities other than those held on a capital account. d. An "unrealized gain or loss" includes an unrealized foreign exchange gain or loss. 5. Notwithstanding Clauses (1) and (3) of this Article, the Minister may prescribe any of the following for the purposes of this Decree-Law: a. The circumstances and conditions under which a Person may prepare financial statements using the cash basis accounting. b. Any adjustments to the accounting standards to be applied for the purposes of determining the Taxable Income for a Tax Period. c. A different basis for determining the Taxable Income of a Qualifying Business Activity. 6. Subject to any conditions prescribed under Clause (5) of this Article, a Taxable Person may submit an application to the Authority to change its method of accounting from cash basis to accrual basis from the commencement of the Tax Period in which the application is made or from the commencement of a future Tax Period. 7. In the case of any conflict between the provisions of this Decree-Law and the applicable accounting standards, the provisions of this Decree-Law shall prevail to that extent.

Article (21) Small Business Relief

Chapter Six: Calculating Taxable Income

1. A Taxable Person that is a Resident Person may elect to be treated as not having derived any Taxable Income for a Tax Period where: a. the Revenue of the Taxable Person for the relevant Tax Period and previous Tax Periods does not exceed a threshold to be set by the Minister; and b. the Taxable Person meets all other conditions prescribed by the Minister. 2. Where Clause (1) of this Article applies to a Taxable Person, the following provisions of this Decree-Law shall not apply: a. Exempt Income as specified in Chapter Seven of this Decree-Law. b. Reliefs as specified in Chapter Eight of this Decree-Law. c. Deductions as specified in Chapter Nine of this Decree-Law. d. Tax Loss relief as specified in Chapter Eleven of this Decree-Law. e. Article (55) of this Decree-Law. 3. The Authority may take the necessary measures to verify the compliance with the conditions of Clause (1) of this Article, and may request any relevant information or records from the Taxable Person within the timeline prescribed by the Authority.

Article (22) Exempt Income

Chapter Seven: Exempt Income

The following income and related expenses shall not be taken into account in determining the Taxable Income: 1. Dividends and other profit distributions received from a juridical person that is a Resident Person. 2. Dividends and other profit distributions received from an Equity participation in a foreign juridical person as specified in Article (23) of this Decree-Law. 3. Any other income from an Equity participation as specified in Article (23) of this Decree-Law. 4. Income of a Foreign Permanent Establishment that meets the condition of Article (24) of this Decree-Law. 5. Income derived by a Non-Resident Person from operating aircraft or ships in international transportation that meets the conditions of Article (25) of this Decree-Law.

Article (23) Participation Exemption

Chapter Seven: Exempt Income

1. Income from an equity participation shall be exempt from Corporate Tax, subject to the conditions of this Article. 2. A Equity participation means, owning equity at 5% (five percent) or more of the shares or capital of a juridical person, referred to as a "Participation" for the purposes of this Chapter if all of the following conditions are met: a. The Taxable Person has held, or has the intention to hold, the Equity participation for an uninterrupted period of at least (12) twelve months. b. The Participation is subject to Corporate Tax or any other tax imposed under the applicable legislation of the country or territory in which the juridical person is a resident, which is of a similar character to Corporate Tax at a rate not less than the rate specified in paragraph (b) of Clause (1) of Article (3) of this Decree-Law. c. The ownership interest in the Participation entitles the Taxable Person to receive not less than 5% (five percent) of the profits available for distribution by the Participation, and not less than 5% (five percent) of the liquidation proceeds on cessation of the Participation. d. Not more than (50%) (fifty percent) of the direct and indirect assets of the Participation consist of ownership interests or entitlements that would not have qualified for an exemption from Corporate Tax under this Article if held directly by the Taxable Person, subject to any conditions that may be prescribed under paragraph (e) of this Clause. e. Any other conditions as may be prescribed by the Minister. 3. A Participation shall be treated as having met the condition under paragraph (b) of Clause (2) of this Article where all of the following conditions are met: a. The principal objective and activity of the Participation is the acquisition and holding of shares or equitable interests that meet the conditions of Clause (2) of this Article. b. The income of the Participation derived during the relevant Tax Period or Tax Periods substantially consists of income from an equity participation. 4. A Participation in a Qualifying Free Zone Person or an Exempt Person shall be treated as having met the condition under paragraph (b) of Clause (2) of this Article, subject to any conditions that may be prescribed by the Minister. 5. Where the conditions of Clause (2) of this Article continue to be met, the following income shall not be taken into account in determining Taxable Income: a. Dividends and other profit distributions received from a foreign Participation that is not a Resident Person under paragraph (b) of Clause (3) of Article (11) of this Decree-Law. b. Gains or losses on the transfer, sale, or other disposition of Equity participation (or part thereof) derived after the expiry of the time period specified in paragraph (a) of Clause (2) or Clause (9) of this Article. c. Foreign exchange gains or losses in relation to Equity participation. d. Impairment gains or losses in relation to Equity participation. 6. The exemption under this Article shall not apply to income derived by the Taxable Person from an Equity participation insofar as: a. the Participation may claim a deduction for the dividend or other distributions made to the Taxable Person under the applicable tax legislation; b. the Taxable Person has recognized a deductible impairment loss in respect of the Equity participation prior to the Equity participation meeting the conditions of Clause (2) of this Article; c. the Taxable Person or its Related Party who is subject to Corporate Tax under this Decree-Law has recognized a deductible impairment loss in respect of a loan receivable from the Participation. 7. Where the impairment loss referred to in paragraph (c) of Clause (6) of this Article is reflected in a subsequent Tax Period, the associated income of the Taxable Person shall be exempt from Corporate Tax in that Tax Period up to the amount of income from the Equity participation that was not exempted under paragraph (C) of Clause (6) of this Article. 8. The exemption under this Article does not apply to a loss realized on the liquidation of a Participation. 9. The exemption under this Article shall not apply for a period of (2) two years where a Participation was acquired in exchange for the transfer of an ownership interest that did not meet the conditions of Clause (2) of this Article or a transfer that was exempted under Article (26) or (27) of this Decree-Law. 10. Where a Taxable Person fails to hold a 5% (five percent) or greater ownership interest in the Participation for an uninterrupted period of at least (12) twelve months, any income previously not taken into account under this Article shall be included in the calculation of the Taxable Income in the Tax Period in which the ownership interest in the Participation falls below (5%) (five percent). 11. The Minister may prescribe that an ownership interest in the shares or capital of a juridical person meets the minimum ownership requirement under Clause (2) of this Article where the acquisition cost of that ownership interest exceeds a threshold specified by the Minister.

Article (24) Foreign Permanent Establishment Exemption

Chapter Seven: Exempt Income

1. A Resident Person may elect to not take into account the income, and associated expenses, of its Foreign Permanent Establishments in determining its Taxable Income. 2. Where Clause (1) of this Article applies, a Resident Person shall not take into account the following in determining its Taxable Income or Corporate Tax Payable for a Tax Period: a. losses in any of its Foreign Permanent Establishments, calculated as if the relevant Foreign Permanent Establishments were a Resident Person under this Decree-Law; b. positive income and associated expenses in any of its Foreign Permanent Establishments, calculated as if the relevant Foreign Permanent Establishment were a Resident Person under this Decree-Law; and c. any Foreign Tax Credit that would have been available under Article (47) of this Decree-Law had the election under Clause (1) of this Article not been made. 3. For the purposes of this Article, "income and associated expenses" of a Taxable Person's Foreign Permanent Establishments for a Tax Period is the aggregate of the income and associated expenses in each of the relevant foreign jurisdictions. 4. In determining the income and associated expenses of a Foreign Permanent Establishment, a Resident Person and each of its Foreign Permanent Establishments shall be treated as separate and independent Persons. 5. For the purposes of Clause (4) of this Article, a transfer of assets or liabilities between a Resident Person and its Foreign Permanent Establishment shall be treated as having taken place at Market Value at the date of the transfer for the purposes of determining the Taxable Income of that Resident Person. 6. The exemption under Clause (1) of this Article shall apply to all Foreign Permanent Establishments of the Resident Person that meet the condition specified in Clause (7) of this Article. 7. The exemption under Clause (1) of this Article shall only apply to a Foreign Permanent Establishment that is subject to Corporate Tax or a tax of a similar character under the applicable legislation of the relevant foreign jurisdiction at a rate not less than the rate specified in paragraph (b) of Clause (1) of Article (3) of this Decree-Law.