As UAE corporate tax (CT) law is now fully in force, UAE-based businesses are required to make certain elections or applications in order to comply with the law.

Elections can be applied unilaterally by a taxable person and do not require an approval from the Federal Tax Authority (FTA) to become effective. A taxable person only needs to inform the FTA of its decision; no confirmation is required from the FTA. Aspects of the CT law which can be implemented by a taxable person through an “election” include, inter alia:

• benefitting from the small business relief;
• exemption of its foreign permanent establishment income;
• accounting for gains and losses on a realization basis;
• being subject to CT at the standard CT rate in case of a qualifying free zone person;
• applying the relief in relation to transfers in a qualifying group; and
• applying transitional relief.

Unlike elections, applications require approval from the FTA, i.e., a taxable person is required to demonstrate that it meets the necessary criteria. The FTA can ask for any additional information it requires to make its decision and approve the relevant application. For instance, a group of companies cannot form a tax group without making an application and receiving approval from the FTA.

A non-exhaustive list of aspects of the CT law which require an application from a taxable person to the FTA is set out below:

• exemption from CT, if the person is a qualifying investment fund;
• treating an unincorporated partnership as a single taxable person;
• requesting a refund from the FTA;
• forming, joining, or leaving a tax group, replacing a parent company in a tax group, or ceasing to be a tax group;
• deregistering from CT; and
• changing its tax period.