Dh12m interest cap on UAE corporate tax
MINISTRY SIMPLIFIES TAX GROUPING, UNINCORPORATED PARTNERSHIP RULES
The UAE Ministry of Finance issued three new decisions on corporate tax yesterday — on tax grouping, general interest deduction limit, and unincorporated partnerships. The new tax law comes into effect starting tomorrow.
According to the new rules, UAE resident entities that are 95 per cent or more commonly owned can form or join a tax group and be treated as a single entity for corporate tax purposes. Under this decision, the UAE parent company must own at least 95 per cent of the voting rights and shares in each UAE entity. Also, all members of the tax group must be considered UAE residents for corporate tax purposes.
The second rule sets out the maximum cap of interest that can be deducted by businesses that are not banks, insurance providers or natural persons (individuals) undertaking a business or business activity in the UAE — the net interest expenditure is capped at 30 per cent of adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA), or a ‘safe harbour’ amount of Dh12 million. Tax groups with members who are banks and/or insurance providers must exclude these members’ income and expenditure when determining the 30 per cent EBITDA threshold.
The third decision states that an unincorporated partnership will not be considered a taxable person in its own right provided it is not a juridical person (corporate entity). If an unincorporated partnership elects to be treated as a taxable person in its own right, its decision is irrevocable once approved, and any change in the partnership composition must be notified to the Federal Tax Authority within 20 business days.
The third decision states that an unincorporated partnership will not be considered a taxable person in its own right provided it is not a juridical person (corporate entity).
The UAE district cooling company Tabreed has made its first major breakthrough in India, through a ‘strategic alliance’ with Tata Realty & Infrastructure Ltd.
It will see an investment of Dh44.34 million into Tata Realty’s Intellion Park special economic zone in Gurugram. Tabreed will thus acquire the existing cooling infrastructure at the Intellion Park development, which covers a total area of 3.5 million square feet. It will develop additional capacity to meet the economic zone’s demand for cooling services.
“As the world’s most populous country and one of the fastest growing economies, India will be a key strategic market and important partner for Tabreed as we expand our international presence,” said Khalid Abdullah Al Qubaisi, Chairman of Tabreed.
Developers in India are allocating ‘significant capital’ on HVAC systems for new buildings as well as ‘highly-inefficient existing buildings’ to achieve their net zero goals.
Sustainable solutions
India’s Ministry of Environment, Forest and Climate Change forecasts that aggregated cooling demand will rise eight-fold by 2037-38, with cooling expected to account for 45 per cent of peak energy demand across the country by 2050.
“Through demonstrating the value of cooling services at Intellion Park, Tabreed intends to pave the way for more rapid adoption of district cooling in India,” said a statement. Thus ‘easing the burden of upfront costs for developers to inspire more sustainable cooling solutions for the Indian real estate sector, set to witness its fastest global increase in cooling-related energy demand’.
Tata Realty operates India’s first net-zero certified commercial real estate campus. Through Tabreed, the company is launching ‘cooling as a service’ in India.
Along with India, Egypt and Saudi Arabia are the other prime overseas territories for Tabreed. In the recent past, the company has picked up projects in both the regional markets. In fact, the Saudi wealth fund PIF is a stakeholder in Tabreed’s venture in the Kingdom.