Disclaimer Regarding UAE Corporate Tax Status and QFZP Treatment
Important Notice Regarding Corporate Tax Positioning
The accompanying financial statements have been prepared following applicable UAE accounting standards and for compliance with the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022 and subsequent updates).
Please review the following based on your tax status:
Section A – Qualifying Free Zone Person (QFZP) Status
If your entity is currently claiming or intends to claim Qualifying Free Zone Person (QFZP) status under Article 18 of the UAE Corporate Tax Law, please note the following:
1. Applicable Tax Rates:
2. Ineligibility for Certain Benefits:
As a QFZP, your entity is not eligible to:
- Carrying forward or utilizing tax losses (Article 37).
- Group relief or forming a tax group (Articles 40–41).
- Certain deductions or reliefs otherwise available to standard taxable persons.
3. Compliance Obligations
To maintain QFZP status, your entity must continue to meet all compliance conditions, including:
- Maintaining adequate substance within the Free Zone.
- Preparing audited financial statements.
- Comply with transfer pricing and reporting obligations.
Failure to meet these conditions may result in the loss of QFZP status and reclassification as a regular taxable person at a 9% tax rate.
Section B – Entities Not Applying QFZP Status (by Election or Disqualification)
If your entity has elected not to be treated as a QFZP under Article 18(3), or has failed to meet the conditions to qualify as a QFZP, the following applies:
Standard Taxable Person Treatment:
Your entity will be treated as a standard taxable person under the UAE Corporate Tax regime.
This election or disqualification is binding for a period of four tax years, during which a 9% corporate tax rate applies to all taxable income.
Eligibility for Certain Benefits:
As a standard taxable person, your entity may be eligible for:
- Carry forward of tax losses (subject to conditions).
- Group relief and tax grouping, if applicable.
- Access to broader deductions and reliefs under the Corporate Tax Law
The accounting treatment and disclosures have been prepared on this basis, and it is your responsibility to maintain consistency and monitor compliance throughout the four-year period. Re-entry into the QFZP regime after this period is subject to approval by the Federal Tax Authority and applicable criteria at the time.
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