[World Tax News] UAE Notifies Persons Exempted from Obtaining Corporate Tax Registrations and More

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. UAE notifies the list of persons exempted from obtaining corporate tax registrations

The Ministry of Finance has issued Ministerial Decision No. 43 of 2023 to grant exemption from tax registration to comply with the Corporate Tax Law (Federal Decree-Law No. 47 of 2022) that will take effect for tax periods beginning on or after 01-06-2023.

The decision is issued in accordance with Article 51 of the Corporate Tax Law, which requires taxable persons to register for Corporate Tax with the Federal Tax Authority, except in certain circumstances.

According to the decision, the following persons shall not be required to register with the Federal Tax Authority:

(a) A Government Entity;

(b) A Government Controlled Entity;

(c) A Person engaged in an Extractive Business that meets the conditions of Article 7 of the Corporate Tax Law;

(d) A Person engaged in a Non-Extractive Natural Resource Business that meets the conditions of Article 8 of the Corporate Tax Law;

(e) A Non-Resident Person that derives only State Sourced Income under Article 13 of the Corporate Tax Law and that does not have a Permanent Establishment in the State according to the provisions of the Corporate Tax Law.

The exception stipulated in the decision is in line with international best practices, whereby persons exempted from Corporate Tax, such as the federal government, UAE government departments and authorities, etc. The exemption shall be applicable as long as they continue to meet the exemption conditions noted in the relevant articles of the Decree-Law.

Source: Ministerial Decision No. 43 of 2023

2. Sri Lanka notifies steps to obtain Tax Residency Certificate

Sri Lanka’s Inland Revenue Department has released a notice stating the following steps to be taken by a person to obtain Tax Residency Certificate (TRC):

(a) A request for TRC should be made to Commissioner (International Tax Policy)via e-mail at itp@ird.gov.lk or niwunhella.soacr@ird.gov.lk

(b) The person should provide the following details:

• • Name of the person
  • Type of person (Individual/Company/Partnership)
  • Taxpayer Identification Number (TIN) (If available)
  • Current address
  • Contact number and official e-mail address
  • Business activity of the person
  • Reasons for applying for TRC
  • Scanned copies of the National Identity Card, Front page of the Passport with all Visa-issued pages
  • Countries for which TRC is required

(c) If a TRC has already been issued for a previous year, a scanned copy of that certificate.

Source: Notice to Taxpayer

3. Saudi Arabia extends transfer pricing provisions to Zakat Payers

The Board of Directors of the Saudi Zakat, Tax, and Customs Authority (ZATCA) has announced the approval of Decision No. 8-2-23 of 20 March 2023, which extends the transfer pricing requirements by laws to Zakat payers.

The Kingdom of Saudi Arabia has a very liberal tax system. Few taxes are imposed on individuals and companies, subject to very low rates. These include:

(a) Zakat,

(b) Personal income tax, and

(c) Tax on Business Income.

Zakat is levied on certain types of assets, such as money, gold, and livestock. The Zakat is an annual flat rate of 2.5% of the assessable amount.

Currently, Zakat payers are generally not subject to the transfer pricing rules, except if required to comply with CbC reporting obligations.

As amended by Decision No. 8-2-23, the transfer pricing provisions that apply to income taxpayers shall also apply to Zakat payers, including Local file and Master file transfer pricing documentation requirements.

In addition to extending the transfer pricing requirements, the Advance Pricing Agreement (APA) provisions have also been introduced for both tax and Zakat payers. Detailed procedures for APAs are to be released by ZATCA.

Source: Official Website