Taxation of Non-Fungible Tokens – Musings observations and interrogations.
Planning and protecting for tax risks identified during the due diligence process through the purchase of a specific insurance product has become increasingly commonplace in the last five years. Indeed, the tax insurance market has grown significantly year-over-year, and it is estimated that over $100 billion of specific tax risk was insured globally in 2021. This, of course, is in addition to those unknown and unquantifiable tax risks that are covered by warranty and indemnity (W&I) policies that are now standard in most transactions and, notably, in private equity, real estate, and infrastructure mergers and acquisitions (M&A).
In the text of the public consultation, published by the UAE Ministry of Finance, it discusses its proposed regime for Free Zone Companies.
While the Corporate Income Tax concepts are thus far fairly straightforward, they are much less so for Free Zones.
Contrary to perhaps more simple exemptions for Free Zone companies in the Philippines or India, the UAE is implementing a fairly complex regime, trying to balance a number of interests.
Free Zones have been one of the success stories of the UAE, but incorporating there comes with limitations too, as e.g. the prohibition to trade with the mainland. In mainland, foreign businesses needed a local sponsor or shareholder.
51 years after the inception of the UAE today is the historic day on which the UAE announces the introduction of corporate income tax.
In a historic moment, the Ministry of Finance has announced today that the UAE will introduce a Federal Corporate Income Tax on business profits.