[World Tax News] UAE Releases Public Consultation on R&D Tax Incentives

Editorial Team – [2024] 161 taxmann.com 731 (Article)

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 releases public consultation on R&D tax incentives

The UAE Government, recognizing the importance of the wider benefits created by Research and Development (‘R&D’) in driving innovation and growing its knowledge base as part of creating a vibrant and diverse economy, is therefore considering possible mechanisms to achieve this objective and a support system with a broad reach across the economy through a potential R&D Tax Incentive under the Corporate Tax Law.

The Ministry of Finance is seeking inputs from stakeholders into the design process of the potential R&D Tax Incentive, and their views will help to develop the final design of the potential R&D Tax Incentive.

The consultation paper is split into the following documents and sections:

(a) Consultation questionnaire: This includes a range of questions to understand more about how R&D is currently and/or anticipated to be conducted in your business, what the potential R&D Tax Incentive should cover and how the potential R&D Tax Incentive should be delivered and administered.

(b) Guidance Paper: A separate Guidance Paper has been prepared alongside the consultation questionnaire, which provides details on the internationally recognized definition of R&D as provided in the Organisation for Economic Co-operation and Development’s (‘OECD’) Frascati Manual. The information provided in this consultation paper does not constitute tax, legal or any other professional advice as it does not represent the final policy position of the Ministry of Finance or the UAE Government.

The comments on this consultation are welcomed by 14 May 2024.

Source: Public consultation on R&D Tax Incentive

2. UAE releases corporate tax guide on ‘Business Restructuring Relief’

UAE Federal Tax Authority has released Corporate Tax Guide on Business Restructuring Relief. The guide is designed to provide general guidance on the Business Restructuring Relief available under Article 27 of the UAE Corporate Tax Law.

The guide provides the readers with an overview of the following with respect to the Business Restructuring Relief:

• transactions covered within the scope of the relief,
• conditions to be eligible for the relief,
• consequences of electing for the relief,
• circumstances when the relief will be clawed back and the consequences of clawback of the relief,
• compliance requirements, and
• interaction with other provisions of the UAE Corporate Tax Law.

The guide is helpful for any Taxable Person intending to transfer his entire Business or part of an independent Business to another Taxable Person or who will become a Taxable Person as a result of the transfer.

This guidance is not a legally binding document but is intended to assist in understanding the tax implications for Business Restructuring Relief relating to the Corporate Tax Law.

Source: Corporate Tax Guide on Business Restructuring Relief

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