Treatment Of All Businesses And Business Activities Conducted By A Government Entity As A Single Taxable Person

The treatment of government entities as single taxable persons is a crucial aspect of the Corporate Tax Law in the UAE. The Federal and Local Government Entities must meet specific conditions to be considered a single taxable person. This article will explore the conditions, notifications, and the start and end dates of this treatment, as well as how the taxable income is determined for these entities.

Conditions to treat the Federal Government's Businesses and Business Activities as a Single Taxable Person:

1. Application for Single Taxable Person Status: To be treated as a single taxable person, an application must be submitted stating the businesses and business activities conducted by the Federal Government Entities.
2. Licensing Authority Requirement: Federal Government entities' businesses and business activities must be conducted under a license issued by a Licensing Authority.
3. Representative Federal Government Entity: The application to be treated as a single taxable person should be made only by the Representative Federal Government Entity, who will act as the central representative for compliance with all obligations specified in the Corporate Tax Law and relevant decisions.
4. Appointment of Representative: The Authority must be notified about the appointment of the Representative Federal Government Entity, who will be responsible for fulfilling all tax obligations on behalf of the entity.
5. Changes in Business Activities: Any new businesses or business activities conducted by a Federal Government entity that meet the conditions under Clause 1 should be treated as part of the single taxable person. The Representative Federal Government Entity must inform the Authority within twenty business days of the occurrence of such events.
6. Ceasing Treatment as Single Taxable Person: Treatment as a single taxable person under Clause 1 ceases in the following circumstances:

1. Approval by the Authority of an application made by the Representative Federal Government Entity to cease the treatment.
2. Failure to meet the conditions specified in Clause 1 of Article 2 of the Ministerial Decision.

Conditions to treat the Local Government’s Businesses and Business Activities as a Single Taxable Person (Article3)

1. Application for Single Taxable Person Status: Similar to Federal Government entities, an application must be submitted stating the businesses and business activities conducted by the Local Government Entities to be treated as a single taxable person.
2. Licensing Authority Requirement: Local Government entities' businesses and business activities must be conducted under a license issued by a Licensing Authority.
3. Same Emirate Requirement: Local Government entities' businesses and business activities must be conducted within the same Emirate.
4. Representative Local Government Entity: The application to be treated as a single taxable person should be made only by the Representative Local Government Entity, who will act as the central representative for compliance with all obligations specified in the Corporate Tax Law and relevant decisions.
5. Appointment of Representative: Similar to Federal Government entities, the Authority must be notified about the appointment of the Representative Local Government Entity, who will be responsible for fulfilling all tax obligations on behalf of the entity.
6. Changes in Business Activities: Any new businesses or business activities conducted by a Local Government entity that meet the conditions under Clause 1 should be directly treated as part of the single taxable person. The Representative Local Government Entity must inform the Authority within twenty business days of the occurrence of such events.
7. Ceasing Treatment as Single Taxable Person: Treatment as a single taxable person under Clause 1 ceases in the following circumstances:

• Approval by the Authority of an application made by the Representative Local Government Entity to cease the treatment.
• Failure to meet the conditions specified in Clause 1 of Article 3 of the Ministerial Decision.

Start and End Dates of the Treatment as a Single Taxable Person (Article4)

1. Start Date: The treatment as a single taxable person begins from the beginning of the tax period specified in the application submitted to the Authority or from any other tax period determined by the Authority.
2. End Date: The treatment as a single taxable person ends either from the beginning of the tax period specified in the application submitted to the Authority or from the beginning of any other tax period determined by the Authority.
3. Non-Fulfillment of Conditions: The treatment as a single taxable person ends from the beginning of the tax period in which the conditions specified in Clause 1 of Article 2 or Clause 1 of Article 3 of the Ministerial Decision are no longer met.

Taxable Income of the Single Taxable Person (Article 5)
 

1. When Clause 1 of Article 2 or Clause 1 of Article 3 is applied, the Representative Federal Government Entity or the Representative Local Government Entity, respectively, must consolidate the financial results, assets, and liabilities of all businesses and business activities attributable to the single taxable person for the relevant tax period. This consolidation involves eliminating transactions between government entities' businesses and business activities within a single taxable person.

These provisions ensure government entities' efficient and accurate taxation, providing a clear framework for treating their businesses and business activities as a single taxable person. By adhering to these conditions and procedures, government entities can ensure compliance with the Corporate Tax Law and contribute to a transparent and fair tax system.

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