Firms No Longer Required to Notify Tax Authority of Company Changes, Simplifying Compliance for Businesses
In a significant move to simplify tax compliance for businesses, the UAE Ministry of Finance announced on Monday that companies will no longer be required to notify the Federal Tax Authority (FTA) of changes to their business structure within 20 business days. This change follows the issuance of Ministerial Decision No. (261) of 2024 and aligns with Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, and its subsequent amendments.
The updated regulations aim to streamline tax procedures for unincorporated partnerships, foreign partnerships, and family foundations. They reflect the UAE’s ongoing efforts to create a more business-friendly environment while reducing administrative burdens for companies.
Under the revised law, which applies to tax periods starting on or after June 1, 2023, foreign partnerships are now recognized as “tax transparent” in the UAE if they are treated similarly in their home jurisdictions. This adjustment eliminates the need for individual partners to verify their tax status with the FTA, further simplifying the tax process for international businesses operating in the UAE.
Additionally, the amendments extend tax-transparent status to family foundations that hold assets in the UAE. This change brings additional tax advantages for family foundations and aligns them with the UAE’s Corporate Tax framework, boosting their role in wealth management and financial planning.
Younis Haji AlKhoori, Undersecretary of the Ministry of Finance, highlighted the importance of these reforms in enhancing the UAE’s global competitiveness. He emphasized that the changes were designed to reduce compliance burdens on businesses and provide greater clarity, thereby reinforcing the country’s status as a leading hub for international business and investment.
These updates are part of the UAE’s broader strategy to attract and retain international businesses by offering a more flexible and efficient tax environment. The removal of the notification requirement, along with the introduction of tax transparency for foreign partnerships and family foundations, signals the UAE’s commitment to simplifying the corporate tax landscape and ensuring that businesses can operate with ease and confidence.
As the UAE continues to modernize its tax laws, businesses will benefit from an increasingly streamlined system that supports growth, investment, and long-term stability.
