The Ministry of Finance has announced the issuance of Cabinet Decision which grants the unincorporated partnerships (subject to prior approval by the Federal Tax Authority) the option to be treated as a taxable person for the purposes of Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses.

It can be recalled that under Article 16 of the Corporate Tax Law, an unincorporated partnership shall not be considered a taxable person in its own right and persons conducting a business as an unincorporated partnership shall be treated as individual taxable persons for the purposes of the Decree unless an application has been made to the Federal Tax Authority for the partnership to be treated as a taxable person, similar to any other legal entity.

If the application has been approved, each partner in the unincorporated partnership shall remain jointly and severally liable for the corporate tax payable by the unincorporated partnership for those tax periods when they are partners in the unincorporated partnership. One partner shall also be appointed as the partner responsible for any obligations and proceedings in relation to the Decree-Law on behalf of the unincorporated partnership.

Finally, if the application is approved, the unincorporated partnership shall be treated as taxable person from the commencement of the tax period in which the application is made, or from the commencement of a future tax period, or any other date determined by the Federal Tax Authority.

Want to know more? Connect with us!