The public consultation document had mentioned UAE’s intention to align with  OECD’s BEPS Pillar 2 project which aims to tax multinational groups at a global minimum rate of 15%.

Unincorporated partnership firms would not be considered as taxable person unless it elects to do so. Each partner of the partnership firm would be considered as individual taxable person. The assets, liabilities, income, and expenditure will be allocated in proportion of each partner’s distributive shares.

Resident judicial persons would be subject to tax on their worldwide income. Resident natural persons would be subject to tax on the income that is related to business or business activity conducted in UAE.

Non-resident persons will also be taxed if they have any income attributable to a nexus in UAE

A qualifying free zone person that maintains adequate substance in UAE and which derives qualifying income (meaning of the term qualifying income is yet to be issued by Cabinet), subject to other conditions, would be subject to 0% tax rate on the qualifying income. Non-qualifying income of the free zone person to be taxed at 9%

Expenditure wholly and exclusively incurred for the purpose of business shall be tax deductible, in the year in which it is incurred. No deduction shall be allowed on expenses which are capital in nature or incurred for deriving exempt income. Further, losses not connected with taxpayers’ business would also not be deductible. Where expenditure is incurred for more than one purpose, deduction shall be available on proportionate basis.

Interest expenditure shall be deductible only up to 30% of EBITDA (earnings before interest, taxes, depreciation and amortization) for relevant tax period. Interest expenditure that is deductible includes any interest expenditure carried forward from the prior years.

UAE juridical persons will be able to form a tax group and file a single tax return and make a single tax payment. Tax Grouping will be allowed subject to following key conditions:

Parent entity holds 95% ownership, voting rights and right to the assets and profit of the group entities

Neither the parent nor the subsidiary is an exempt entity. This condition is relaxed when the subsidiaries are held by a Government Entity

Neither the parent nor the subsidiary is a qualifying free zone

 Taxable income of the Tax Group shall be determined at a consolidated level, eliminating transactions between the members of the Tax Group.

Any income in relation to a transfer of an asset or liability that was not into account in the income of the Tax Group shall be considered if the transferor or transferee leaves the Tax Group within 2 years from the date of transaction.

The CT law has introduced general anti-abuse rules to curb tax avoidance measures.  Transaction or arrangements entered without valid commercial reason to obtain a tax advantage may be disregarded and brought into the ambit of tax. Various factors will be considered to determine whether transaction or arrangement has been entered into for obtaining a tax advantage. GAAR provisions will be applicable to transactions and arrangements entered after the CT law is published in the official gazette.

The term withholding tax refers to the money that an employer deducts from an employee's gross wages and pays directly to the government.

Withholding tax is a tax imposed at the source, which means tax will be deducted at the source for certain kinds of payments and that amount will be remitted to the government. Withholding taxes are implemented in nearly all tax systems and are widely applied with respect to dividends, interest, royalties and similar tax payments. Countries reduce the rates of withholding tax using tax treaties.