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The UAE has issued a new Federal Decree-Law amending key provisions of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, introducing greater clarity on how corporate tax liabilities are calculated and settled when tax credits, incentives and reliefs apply.
The amendments outline a clear, sequential mechanism for offsetting corporate tax due. Under the updated framework, tax liabilities must first be settled using any available withholding tax credit balance. If tax remains payable after this step, foreign tax credits are applied next. Any remaining liability may then be offset using other incentives or reliefs approved by the Cabinet, based on a recommendation from the Minister of Finance.
The UAE government issues a Federal Decree-Law amending certain provisions of the Law Concerning Corporate and Business Tax pic.twitter.com/v98ycRyaiw
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Should a balance of corporate tax still remain after all applicable credits and incentives are utilised, it will be settled in accordance with the existing provisions governing payment of corporate tax under Article 48 of the law.
A key change introduced by the new decree is the right for taxable persons to claim payments for unutilised tax credits arising from approved incentives or reliefs. Such claims will be subject to conditions, timeframes and procedures to be specified in a Cabinet decision issued on the recommendation of the Minister, WAM reported.
The amendments also grant the Federal Tax Authority the power to withhold amounts from corporate tax revenues, and where applicable, top-up tax revenues, in order to settle approved claims for unutilised tax credits. This authority will be exercised in line with decisions issued by the FTA’s Board of Directors.
Read: UAE’s FTA reports record corporate tax filings, cites these factors
The changes are intended to enhance certainty, improve the administration of incentives and reliefs, and strengthen the overall effectiveness of the UAE’s corporate tax framework as businesses continue to adapt to the regime.
