The official gazette has published amendments to Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. The amendments were introduced by Federal Decree-Law No. 40 of 2024.
Key Changes:
1. Article 45 — Withholding Tax*
-The conditions for taxing income earned by non-residents in the state have been clarified. The tax now applies only to income not related to a permanent establishment. References to other articles have been added to specify the income categories.
-The Cabinet is granted the authority to define categories of income subject to withholding tax and set the applicable rates. Additionally, the Federal Tax Authority (FTA) can now impose additional conditions for tax payment.
* Withholding Tax is a tax deducted from income at the time of payment to a non-resident. For instance, when a UAE company pays income to a foreign entity, the tax is withheld at the source and remitted to the government, rather than being paid directly to the recipient.
2. Article 46 — Withholding Tax Credit
-It has been clarified that corporate tax can be reduced by the amount of withholding tax for the corresponding tax perio...