Will the payment of a royalty to a foreign company in the worldwide group be deductible?
Ordinarily, a royalty payment to a foreign group company can be eligible for deduction when it constitutes a essential business expenditure. Furthermore, under UAE Corporate Tax regulations, a foreign group company is typically categorized as a Related Party to the UAE business. This classification necessitates that the royalty payment be conducted at arm’s length, meaning it should reflect a fair market rate. If the payment deviates from this arm’s length principle, any amount exceeding the market rate would not qualify for deduction
CONTACT US FOR TAX CONSULTANCY
Master UAE Corporate Tax: Explore our course!
Related Content for UAE Corporate Tax
Are Free Zone companies in UAE liable to Corporate Tax ?
Free Zone has distinct taxation system based on Qualifying Income and Excluded Income. It is therefore essential to know the kind of income taxable under UAE Corporate Tax Law for Free Zone companies.
Can you Split up your Business to claim Small Business Relief in the UAE?
If your business exceeds the Revenue Threshold limit for Small Business Relief, can you split up your business to claim Small Business Relief as per UAE Corporate Tax Law or will it constitute a Tax Crime punishable under the UAE Tax Procedures Law?
Who is a Taxable Person under UAE Corporate Tax Laws?
Are you a Taxable Person liable for Corporate Tax under the UAE Corporate Tax Law? Can an Exempt Person be considered as a Taxable Person?