What Are The Main CT Compliance Requirements For Investment Funds?
The UAE, being one of the best landscapes for businesses, has been providing multiple opportunities to the entities already established in the UAE and those planning to set up. The introduction of the corporate tax being at a lower rate as compared to other GCC countries is yet another attractive regime that has made the UAE the best amongst the other countries. The introduction of the new tax regime has brought with it a complex framework of which the businesses must be aware to ensure tax compliance, avail the tax exemptions, tax deductions, etc. The implementation of the UAE corporate tax for the investment fund entities is yet another area that the businesses pertaining to the sector must be aware of.
Compliance with the regime is mandatory; otherwise, it would attract penalties and fines, which could affect the reputation of the business. In this blog, we will focus on the UAE corporate tax compliance requirements for the investment funds.
CT Compliance Framework
The investment fund entities must ensure that the following requirements are complied with in order to avoid instances of penalties and fines. The requirements include the following:
Application for the Qualifying Investment Fund Exemption
There are certain requirements that are to be complied by the entities in order to be approved for the exemption. As per the CT requirement, the entity must be registered under the FTA and must hold a tax registration number related to CT purposes before the application for the exemption. Further, the qualifying fund condition as per the regime must be adhered to in order to proceed with the application for the exemption from the corporate tax.
The application made to the FTA must specifically include the relevant tax period related to which the exemption application is made by the Qualifying Investment Fund. Based on the application made and the details provided, the FTA might provide the approval for the exemption or reject the application. The FTA will also provide further detail about the tax period if the application is approved or the reasons for the rejection.
The stipulated conditions are to be complied with in order to get the exempt status for the investment fund.
You may also like to read: What Are The Key Areas To Be Known For Investment Funds Under The Corporate Tax Law?
Earliest Date of Application Becoming Effective
After getting the approval for the exempt person status from the FTA, the exempt status would be applicable from the beginning of the tax period stated in the application made. In certain situations, the FTA might stipulate the tax period during which the entity would be exempt:
- If the tax period included in the application is incorrect, the FTA would specify the accurate starting date for the exempt status, based on the details and registration information of the qualifying investment fund.
- The FTA shall grant a different date as the starting date of the tax period during which the exempt status will be applicable if the applicant is being acquired by any qualifying investment fund during a tax period, where the application under Article 4 (1)(h) of the CT regime won’t be approved if there is noncompliance to the conditions during the starting of the tax period. Hence the period stipulated by the FTA would ensure that the conditions are met.
- If the tax period included in the application made to the FTA is incorrect, but still the FTA manages to receive the evidence highlighting the compliance of the entity to the conditions, then the tax period would be starting from the date when all the conditions are met; hence the exempt status will be granted during such a period.
It is mandatory for the entities to ensure that all the relevant records supporting the exempt status have been maintained to be analysed by the FTA for a period of 7 years from the end of the stipulated tax period pertaining to it. Also, there must be an annual declaration regarding the confirmation that all the conditions related to the exemptions have been met by the entity, which is required within 9 months after the end of the tax period of the entity.
CDA’s Professional Tax Assistance
The introduction of CT has resulted in a major drift. It has made the businesses ensure compliance and continue to grow in this dynamic market. Understanding such core needs of the businesses, CDA has a well-structured team of tax experts who are well equipped with the tax strategies and plans that can enable your business to reduce the tax burden. Our team of experts is always on standby to assist you and provide all the required guidance. To discover more about our services, approach our team now.