Changing of Tax Period for the Purposes of Federal Decree law No. 47 of 2022 on Corporate and Business Taxation

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28 Apr 2023

Federal Tax Authority Decision No. 5 of 2023 outlines the conditions for changing the tax period for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. Effective 1 June 2023, the decision sets out the criteria that taxpayers must meet to apply for a change in their tax period.

The decision begins by citing relevant legislation, including Federal Decree-Law No. 13 of 2016 on the Establishment of the Federal Tax Authority, Federal Decree-Law No. 28 of 2022 on Tax Procedures, and Cabinet Decision No. 36 of 2017 on the Executive Regulation of Federal Law No. 7 of 2017 on Tax Procedures, among others. The decision further defines the terms used throughout and goes on to outline the conditions for changing the tax period.

According to the decision, taxpayers can apply to the Authority to change their tax period's start and end date or use a different tax period under certain circumstances. These include:

  • Aligning the taxpayer's financial year with that of another resident person for the purpose of forming a tax group,
  • Aligning the taxpayer's financial year with that of its head office or parent company or for a valid commercial, economic, or legal reason.

The decision also states that the taxpayer must not have filed a tax return for the period they are seeking to change and that the application must be made before the lapse of 6 months from the end of the original tax period. If the taxpayer is seeking to extend the current tax period, they may do so for a maximum of 18 months, while those seeking to shorten the next tax period may do so for between 6 and 12 months.

It is important to note that if a taxpayer has already applied to shorten a tax period, they cannot make a further application for a prior or current tax period. Any provisions contrary to or inconsistent with the provisions of this decision shall be abrogated, and the decision shall be published in the Official Gazette and come into effect as of 1 June 2023.

Overall, the decision provides clear guidelines for taxpayers seeking to change their tax period and ensures that such changes are made for valid reasons in accordance with the relevant legislation.

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