Tag: exemptions

UAE announces tax exemptions for public benefit entities

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Abu Dhabi: The Ministry of Finance has announced a new UAE Cabinet decision relating to ‘qualifying public benefit entities’, whereby Public benefit entities are exempted from the corporate tax.
It’s noteworthy that the Corporate Tax Law provides the legislative basis for the introduction and implementation of a Federal Corporate Tax in the UAE and is effective for financial years starting on or after 1 June 2023. The Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses was issued by the United Arab Emirates on 09 December 2022.
The exemption is designed to reflect the significant role played by public benefit entities, which often include organisations with a focus on areas of religion, charity, science, education and culture.

These entities must continue to comply with all pertinent local, state, and federal laws and notify the Ministry of Finance of any changes that may affect their status as Qualifying Public Benefit Entities in order to be eligible for UAE Corporate Tax exemption. These entities must also meet the requirements under Article (9) of the Corporate Tax Law.
On the Finance Minister’s recommendation, the Cabinet may change, add, or remove entities from the list of Qualifying Public Benefit Entities.
Any change that affects the business’s ability to continue meeting the requirements outlined in this Decision and the Corporate Tax Law must be reported by an entity that is identified in the schedule attached to the decision.
Qualifying public benefit entities are subject to a number of reporting requirements, mostly to ensure that they continue to meet the requirements for approval.
With regard to their deductible expenses under Article 33 of the Corporate Tax Law, taxpayers now have more clarity and transparency thanks to the Cabinet’s decision, as donations and gifts will be recognised as deductible expenses for corporate tax purposes if they are given to one of a qualifying public benefit entity listed in the Cabinet Decision.

(Except for the headline, the story has not been edited by Siasat staff and is published from a syndicated feed.)
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( With inputs from www.siasat.com )

April 24, 2023
UAE announces corporate tax registration exemptions

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Abu Dhabi: The United Arab Emirates (UAE) has announced that certain businesses are exempt from registering for corporate tax that will be introduced in June this year, the Emirates News Agency (WAM) reported.
The Ministry of Finance has issued Ministerial Decision No. 43 of 2023 on the exception from tax registration on Monday, April 9.
Here are the UAE corporate tax registration exemptions.
Those exempt include government entities, government-controlled entities, extractive companies, and non-extractive natural resource companies that meet the necessary requirements under the corporate tax law.

In addition, non-residents who earn income from UAE sources only and do not have a permanent establishment in the UAE are exempt from registering for corporate tax.
Other exemptions are available for organizations such as pension or investment funds and public benefit organizations.
The decision is in line with international best practices, as people are exempted from corporate tax such as the federal government, government departments and agencies in the UAE, public institutions and other categories.
As long as these entities continue to meet the exemption conditions specified in the relevant articles of the Decree-Law, there is no need to register with the Federal Tax Authority.

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( With inputs from www.siasat.com )

April 11, 2023
FM proposes to do away with tax exemptions on high value life insurance policies

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New Delhi: Maturities of life insurance policies with an annual premium of Rs 5 lakh and above taken after April 2023 will now be taxed after Finance Minister Nirmala Sitharaman removed the tax exemptions on them.
For better targeting of tax concessions and exemptions, Sitharaman in her Budget on Wednesday proposed to cap deduction from capital gains on investment in the residential house to Rs 10 crore.
“Another proposal with similar intent is to limit income tax exemption from proceeds of insurance policies with very high value,” she said.
The proposal is “to provide that where aggregate of premium for life insurance policies (other than ULIP) issued on or after 1st April 2023, is above Rs 5 lakh, income from only those policies with aggregate premium up to Rs 5 lakh shall be exempt”.
This will not affect the tax exemption provided to the amount received on the death of a person insured. It will also not affect insurance policies issued till March 31, 2023, the minister said.
Nidhi Manchanda, Certified Financial Planner, Head of Training, Research & Development at Fintoo, said that one of the major setbacks that are given in the finance bill is related to the taxability of the maturity proceeds of a life insurance policy.
“One should note that if an individual has more than one life insurance policy, which is issued on or after the 1st of April 2023 and also if the aggregate amount of premium of such policies exceeds Rs 5 lakh, then the maturity amount will be taxable,” Manchanda said.
The memorandum to the Finance Bill 2023 said that over the years, it has been observed that several high net-worth individuals are misusing the exemption provided under clause (10D) of section 10 of the Act by investing in policies having large premium contributions (as it is acting as an investment policy) and claiming exemption on the sum received under such life insurance policies.

Kapil Mehta, a co-founder, SecureNow Insurance Broker, said the proposal will dampen the interest of individuals to buy high-value traditional insurance. The government’s proposal may, however, increase the focus on term plans and pure risk covers, which is good.
“A concern is that it should not result in a significant shift towards purely investment-oriented unit link insurances,” he said.
Following the announcement in the Budget Speech, shares of ICICI Prudential Life Insurance Company dropped 10.97 per cent to close at Rs 402.55 on the BSE.
HDFC Life Insurance Company Ltd fell 10.96 per cent, Max Financial Services Ltd (9.45 per cent), SBI Life Insurance Company Ltd (9.31 per cent) and Life Insurance Corporation of India (8.38 per cent).
Life insurance stocks witnessed significant selling-on-demand concerns as the budget proposals made life insurance schemes less appealing as a tax-saving instrument, said Cyril Charly, Research analyst at Geojit Financial Services.
In order to curb misuse of the existing provisions, the memorandum said: “It is proposed to tax income from insurance policies (other than ULIP for which provisions already exist) having premium or aggregate of premium above Rs 5,00,000 in a year. Income is proposed to be exempt if received on the death of the insured person”.
The minister also proposed that a TDS at the rate of 20 per cent will apply on the withdrawal of taxable components from Employees’ Provident Fund Scheme in case of non-submission of PAN. Currently, such withdrawals attract TDS at the rate of 30 per cent.
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( With inputs from www.siasat.com )

February 1, 2023