Ministerial Decision No (120) of 2023 on Transitional Rules for Corporate Tax.

UAE Corporate Tax Update📣

The Ministry of Finance UAE has issued Ministerial Decision No (120) of 2023 on Transitional Rules for Corporate Tax.

The decision includes adjustments for the opening balance sheet under the Corporate Tax Law and offers significant clarifications for businesses to transition smoothly before and after the enactment of the Law.

The decision applies to certain assets and liabilities held by businesses before the Corporate Tax Law comes into effect, such as:

  • Immovable property
  • Financial assets

When filing their initial Tax Return, businesses have the opportunity to make adjustments to the tax treatment of their assets and liabilities, in accordance with specific regulations. It is crucial for businesses to carefully consider and determine the approach they wish to take in this regard.

Under normal circumstances, their decision would be considered permanent. However, it is important to note that there may be certain exceptional situations or specific conditions where this permanence could be subject to change or reconsideration. These special circumstances would require additional evaluation or consideration before any adjustments or alterations to the initial decision are made.

There is further flexibility for the real estate sector

Companies with immovable property recorded on a historical cost basis, before the Corporate Tax comes into effect, can select the basis of the relief, using either:

✅ a time apportionment method; or

✅ valuation method

For details, refer the detailed copy of the Ministerial Decision here: https://mof.gov.ae/tax-legislation/


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