This Decision details the application of the General Interest Deduction Limitation Rule under Article 30 of the Corporate Tax Law. It provides an expansive definition of 'Interest', covering not only conventional interest but also its economic equivalent in various financial arrangements, amounts incurred in connection with raising finance like guarantee fees, and amounts from Islamic financial instruments. It explains the de minimis threshold of AED 12 million for Net Interest Expenditure, below which the limitation does not apply. It clarifies the calculation of EBITDA for the rule's purpose and provides exemptions for Qualifying Infrastructure Projects.
This is not an Official Translation:
General Interest Deduction Limitation Rule for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses
Ministerial Decision No. 126 of 2023
Issued 23 May 2023 – (Effective the day after publishing in the Official Gazette)
[GTL Notes]
The Minister of State for Financial Affairs has decided:
Having reviewed the Constitution,
Federal Law No. 1 of 1972 on the Competencies of Ministries and Powers of the Ministers, and its amendments,
Federal Decree-Law No. 13 of 2016 on the Establishment of the Federal Tax Authority, and its amendments,
Federal Decree-Law No. 28 of 2022 on Tax Procedures,
Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses,
Article 1 - Definitions
Words and expressions in this Decision shall have the same meanings specified in the Federal Decree-Law No. 47 of 2022 referred to above ('Corporate Tax Law'), and the following words and expressions shall have the meanings assigned against each, unless the context otherwise requires:
Accounting Standards
:
The accounting standards specified in a decision issued by the Minister for the purposes of the Corporate Tax Law.
Islamic Financial Instrument
:
A financial instrument which is in compliance with Sharia principles and is economically equivalent to any instrument provided for under Clause (2) of Article 2 of this Decision, or a combination thereof.
Qualifying Infrastructure Project
:
A project that meets the conditions of Article 14 of this Decision.
Qualifying Infrastructure Project Person
:
A Resident Person that meets the conditions of Clause (2) of Article 14 of this Decision.
General Interest Deduction Limitation Rule
:
The limitation provided under Article 30 of the Corporate Tax Law.
Article 2 - Interest Component on Financial Assets and Liabilities
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