11 Jul 2023
The recently published Ministerial Decision No. 139 of 2023 Regarding Qualifying Activities and Excluded Activities for the Purposes of Federal Decree Law No. 47 of 2022 on the Taxation of Corporations and Businesses provides guidelines for Qualifying Free Zone Persons. This decision relates to Cabinet Decision No. 55 of 2023 on Determining Qualifying Income for Qualifying Free Zone Person.
The following article aims to shed light on the qualifying and excluded activities defined by this decision, along with the de minimis requirements and additional conditions Qualifying Free Zone Persons must meet.
1. The following activities conducted by a Qualifying Free Zone Person are considered Qualifying Activities:
2. Unless stated otherwise in this Decision or other relevant regulations, the activities mentioned above should be interpreted as per the respective laws governing them.
3. The distribution of goods or materials must occur within a Designated Zone, and the goods or materials entering the State must be imported through the Designated Zone.
4. Ancillary activities refer to activities that do not have an independent function but are necessary to perform the primary Qualifying Activity.
1. The following activities are considered Excluded Activities for Qualifying Free Zone Persons:
2. Ancillary activities do not have an independent function but are necessary to perform the primary Excluded Activity.
3. Unless specified otherwise, the activities mentioned above should be understood according to the relevant laws governing them.
De Minimis Requirements:
2. Failure to meet any of the conditions specified in Clause (1) of Article (18) of the Corporate Tax Law, this Decision, or other prescribed conditions will result in the cessation of Qualifying Free Zone Person status from the beginning of the relevant Tax Period and for the subsequent four Tax Periods.
Understanding the qualifying and excluded activities, de minimis requirements, and additional conditions for Qualifying Free Zone Persons is crucial for compliance with Cabinet Decision No. 55 of 2023. By adhering to these guidelines, Free Zone entities can ensure their eligibility for benefits and exemption.