2023 UAE corporation tax plan

Companies in the UAE can plan for a corporate tax regime to be implemented in 2023, while the Trump Organization was found guilty of 17 counts of tax evasion.

Today, December 9, the UAE published a federal directive on corporate and company taxation to lay the framework for a 9% rate on taxable profits of more than Dh375,000 ($102,000).

The legislation will take effect on June 1, 2023. Profits under Dh375,000 will be taxed at zero percent to assist small firms and start-ups. Smaller firms may still be able to get money back from the tax administration as a result of this.

Simultaneously, the federal corporation tax framework will continue to provide targeted exclusions for extractive industries, pension funds, and investment funds. Qualifying income earned in free trade zones will be taxed at zero percent.

The corporate tax regime was created by the Ministry of Finance to normalise UAE tax policy after the Arab Gulf nation was blacklisted by the EU as a non-cooperative tax jurisdiction. However, the headline rate of 9% is lower than the OECD's worldwide minimum rate of 15%.

Nonetheless, the UAE government has stated that it supports the global minimum corporate rate, therefore the 9% may be raised to 15% if the world approves pillar two.

According to the European Commission, Airbnb and Uber must collect VAT from its users.

The European Commission said yesterday, December 8, that transportation and lodging companies such as Airbnb and Uber will be required to collect VAT paid by its users.

The Commission unveiled the adjustments as part of the long-awaited legislative changes to the EU VAT system known as 'VAT in the Digital Age.'

When the underlying vendors on their platforms fail to pay the charge, ride-sharing and hospitality apps will be compelled to collect and remit VAT to tax authorities. Due to the varying sizes of firms on online marketplaces, service providers may have forgotten to pay VAT.

"It will also make life easier for SMEs, which would otherwise have to learn and comply with VAT legislation in all [EU] member states where they do business," the Commission said in a statement.

The VAT adjustments are aimed to minimise the compliance burden on SMEs while also levelling the playing field in the sectors between online and traditional suppliers.

These proposed reforms are part of a larger package of VAT changes aimed at helping EU member states collect an additional €18 billion ($19 billion) per year.

Before the measures may become EU law, they must be approved by the Council of Ministers unanimously.

Sumitomo risks an Indian tax obligation as a result of the transaction.

Sumitomo Mitsui Financial Group is facing a tax obligation of $55 billion ($670 million) in India as a result of its acquisition of nearly 75% of Fullerton India Credit from its former owner.

According to The Economic Times on Wednesday, December 7, India's Income Tax Department has asked SMFG to pay on behalf of the seller, Fullerton Financial Holdings. SMFG only deducted $170 million from the $2 billion transaction, but the IRS claims it should have withheld $500 million more.

The transaction was finalised in 2021 by SMFG and Fullerton, a Singapore-based corporation that still controls 25% of Fullerton India Credit. According to reports, the Indian tax department submitted its demand in late November.

A SMFG representative declined to comment on the acquisition, but highlighted that the Japanese financial institution is taking steps to ensure compliance with local laws and regulations.

Negotiation was previously used by the Indian government to resolve long-standing tax issues with international corporations Cairn Energy and Vodafone Group. SMFG and Fullerton are negotiating a deal with officials.

EU leaders are concerned about the Inflation Reduction Act.

Following the passage of the Inflation Reduction Act in August, European Parliament President Roberta Metsola advised EU leaders on Wednesday, December 7, against engaging in a trade war with the United States.

According to Politico, Metsola stated that the EU should avoid a race to the bottom on protectionist policies. European policymakers are concerned that the IRA's subsidies and tax incentives will hinder EU investment in green technology and auto manufacture.

Ursula von der Leyen, President of the European Commission, shares these concerns. She has urged the EU to remove the IRA's distortions and to revise the bloc's regulations on state aid in order to stimulate investment.

"There is a risk that the IRA may lead to unfair competition, shut markets, and divide the exact same key supply networks that COVID-19 has already tested," von der Leyen added.

She also raised three major worries about the US legislation: 1) the IRA's 'buy American' philosophy, 2) tax incentives that could lead to discrimination, and 3) production subsidies that could culminate in a subsidy race.

US Vice President Joe Biden noted European leaders' concerns over the law, particularly remarks conveyed to him by French President Emmanuel Macron. Biden noted that changes to the IRA may be made to assist European businesses as well.

Two Trump subsidiaries were found guilty of tax evasion.

On Tuesday, December 6, a New York jury found two Trump Organization companies guilty of 17 counts of tax fraud.

Trump Corporation and Trump Payroll Corporation were found guilty on all counts of tax evasion and fabricating company records. These corporations will be fined $1.6 million, and the verdict may make future funding for the Trump Organization more difficult.

Allen Weisselberg, the former chief financial officer of the Trump Organization, will be sentenced in January 2023. In an August plea agreement with New York authorities, Weisselberg acknowledged to the accusations. He is only scheduled to serve five months in prison.

Former President Donald Trump has stated that he will appeal the conviction. Though Trump was not directly charged, the case comes as he is facing a civil lawsuit over allegations of estate tax evasion. If Trump loses the civil action, he may be barred from doing business in New York.

By fLEXI tEAM