The United Arab Emirates Ministry of Finance has set the conditions for federal and local government entities to be considered single taxpayers.
Federal government entities will be treated as a single taxpayer if the following conditions are met:
- the application to be treated as a single taxpayer must include all businesses and business activities of the federal government entities;
- the businesses and business activities of the federal government entities must be carried on under a licence issued by a licensing authority; and
- the application to the authority to be treated as a single taxable person can be made only by the representative federal government entity.
Local government units will be treated as a single taxpayer if the following conditions are met:
- the application to be treated as a single taxpayer must cover all the businesses and business activities of the local government entities;
- the businesses and business activities of the local government entities must be carried on under a licence issued by a licensing authority;
- the businesses and business activities of the local government entities must be carried on within the same emirate; and
- the application to the authority to be treated as a single taxpayer can be made only by the representative local government entity.
Upon submission of the application to the Federal Tax Authority (FTA), the taxpayer will be treated as a single taxpayer from the beginning of the period for which the application has been submitted or any other period determined by the FTA.
All enterprises and business activities attributable to the single taxpayer will be consolidated by the representative federal or local government body for the relevant tax period, eliminating transactions between enterprises forming part of the single taxpayer.
In addition, the decision provides that any new business or business activity of the federal/local government entity that meets the above conditions will be considered part of the single taxable person, and the representative government entity must notify the FTA within 20 business days of the occurrence of such an event. Similarly, if a government entity or licensing authority ceases to carry on business or perform a business activity, the representative government entity must notify the FTA within 20 business days of the change.
Decision No. 68 of 2023 was issued on 29 March 2023 for the purpose of the provisions of article 5 of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.