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Ministry of Finance Issues Decision on Corporate Tax Exemption: Conditions and Implications

The Ministry of Finance announced today the issuance of Ministerial Decision No. (105) of 2023, which specifies the conditions that allow a person to continue to be exempt from corporate tax or cease to be exempt. This decision aims to clarify the implementation of the law and enhance business growth in various sectors in the country.


The decision outlines the necessary conditions for businesses to remain eligible for exemption from corporate tax if they do not meet the relevant exemption criteria in the decree. This applies to specific cases such as companies under liquidation or closure, if they notify the Federal Tax Authority within 20 working days from the start of the liquidation or closure procedures.


Regarding the importance of the decision and its role in supporting the tax system, Younis Haji Al Khouri, Undersecretary of the Ministry of Finance, emphasized that the decision ensures the existence of a fair and efficient tax system that promotes business growth in the country.


Al Khouri stated, “The new ministerial decision clarifies the conditions under which a person may be considered exempt or cease to be exempt from a different date, as well as other cases that allow the continuation of the exemption status. This includes the presence of an unforeseen or exceptional circumstance beyond the control of the exempt person that could not have been reasonably anticipated or avoided.”


In such cases, the exempt person must submit a request to the Federal Tax Authority within 20 working days from the date of non-compliance with the exemption conditions. They are also required to rectify the situation within 20 working days from the date of submitting the request.


The decision allows for an additional extension of 20 working days to rectify non-compliance if the reason is beyond the control of the person.


Furthermore, the ministerial decision states that if it is determined that one of the main purposes of ceasing the exemption is to intentionally obtain a tax advantage, which constitutes an abuse of the tax system, the person will cease to be exempt from the day they no longer meet the exemption conditions.


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