General anti-abuse rule
- Applies
- FY2024 onwards
- Reviewed
- Rule
- UAE-CT-GAAR-2024.1
When does the UAE general anti-abuse rule apply?
Where an arrangement has no valid commercial reason reflecting economic reality and a main purpose is a tax advantage the law did not intend.
Per Federal Decree-Law No. 47 of 2022, Article 50, General anti-abuse rule
Article 50 applies to a transaction or arrangement where, having regard to all relevant circumstances, it can reasonably be concluded both that entering into or carrying it out, or any part of it, is not for a valid commercial or other non-fiscal reason which reflects economic reality, and that a main purpose of it, or of any part of it, is to obtain a Corporate Tax advantage that is not consistent with the intention or purpose of the Decree-Law. Where it applies, the Authority may determine that specified advantages be counteracted or adjusted, must issue an assessment giving effect to that determination, and must demonstrate in any proceeding that the determination is just and reasonable.
A power of the Authority, not a computation. This page records a self-assessment against the article's two limbs and enforces the Article 50(5) requirement that certain matters be considered. It produces no figure, counteracts nothing, and reaches no conclusion about what the Authority would determine.
The test, the power and the burden
50(1) — both limbs, on all relevant circumstances
The article applies where it can be REASONABLY CONCLUDED that both hold. That is a judgement on an open set of facts, not a condition a deterministic function can evaluate — which is why the conclusions here are the reader's.
- (a) The entering into or carrying out of the transaction or arrangement, or any part of it, is not for a valid commercial or other non-fiscal reason which reflects economic reality
- (b) The main purpose or one of the main purposes of it, or of any part of it, is to obtain a Corporate Tax advantage that is not consistent with the intention or purpose of the Decree-Law
50(2) — what a Corporate Tax advantage includes, non-exhaustively
- (a) A refund or an increased refund of Corporate Tax
- (b) Avoidance or reduction of Corporate Tax Payable
- (c) Deferral of a payment of Corporate Tax or advancement of a refund
- (d) Avoidance of an obligation to deduct or account for Corporate Tax
50(5) — matters that MUST be considered
The article does not weight them or say what they prove. It says they must be considered — so an unconsidered matter blocks the assessment here rather than lowering a score. A self-assessment reached without considering what the law says must be considered is not an assessment.
- (a) The manner in which the transaction or arrangement was entered into or carried out
- (b) Its form and substance
- (c) Its timing
- (d) Its result in relation to the application of the Decree-Law
- (e) Any change in the financial position of the Taxable Person that has resulted, will result, or may reasonably be expected to result from it
- (f) Any change in the financial position of another Person, on the same footing
- (g) Whether it created rights or obligations which would not normally be created between Persons dealing with each other at arm's length
- (h) Any other relevant information and circumstances
50(3)–(4) — the Authority's power
- The Authority may determine that one or more specified Corporate Tax advantages obtained are to be counteracted or adjusted
- It must then issue an assessment giving effect to the determination, which may allow or disallow any exemption, deduction or relief; allocate it to other Persons; recharacterise the nature of a payment or amount; or disregard the effect of other provisions
- It can make compensating adjustments to the liability of any other Person affected
50(6) — where the burden sits
In any proceeding concerning the application of the article, the Authority must demonstrate that its determination is just and reasonable. That is the opposite posture from a page that tells a reader they have a problem.
Order of testing
- 1
Inputs requiring your determination
Any input a person must decide and has not decided stops the assessment — including each matter Article 50(5) requires to be considered, which blocks rather than weighing against.
- 2
Both limbs of Article 50(1)
The article applies only where both limbs hold. Where you have concluded both, the arrangement is within its scope as you have assessed it — which is not a determination that anything be counteracted.
- 3
Limb 50(1)(a) or 50(1)(b) of Article 50(1)
Where you have not concluded one of the limbs, the arrangement is outside the article's scope on your assessment, and the result names which limb.
Examples
Illustrative scenarios — ours, not the authority’s — each computed live by this rule. Change any fact and the outcome is the rule’s, not a hand-written answer.
A circular arrangement with no commercial rationale
A series of transactions whose only effect is to reduce Corporate Tax Payable, which the person concludes has no valid non-fiscal reason and whose main purpose is that reduction. Every Article 50(5) matter has been considered.
Computed
On the conclusions you have recorded, the arrangement is within the scope of Article 50: you have concluded both that entering into or carrying it out is not for a valid commercial or other non-fiscal reason reflecting economic reality, and that a main purpose is to obtain a Corporate Tax advantage inconsistent with the intention or purpose of the Decree-Law. The advantage identified is Article 50(2)(b) — avoidance or reduction of Corporate Tax Payable. Every matter Article 50(5) requires to be considered has been marked as considered. This reflects your assessment and requires your determination of what follows from it. Article 50(3) reserves to the Authority any determination that a Corporate Tax advantage be counteracted or adjusted, and Article 50(6) requires the Authority to demonstrate that such a determination is just and reasonable. Nothing here is a determination, and no advantage is counteracted by it.
Decided by the both limbs of article 50(1)
A commercial reorganisation with a tax benefit
A restructuring undertaken for operational reasons that also reduces tax. The person concludes there is a valid commercial reason reflecting economic reality, so limb (a) is not met.
Computed
On the conclusions you have recorded, the arrangement is outside the scope of Article 50: the article applies only where both limbs of Clause 1 hold, and you have not concluded limb 50(1)(a). Every matter Article 50(5) requires to be considered has been marked as considered. This reflects your assessment and is not a determination by anyone. Article 50(3) reserves to the Authority any determination that a Corporate Tax advantage be counteracted or adjusted, and Article 50(6) requires the Authority to demonstrate that such a determination is just and reasonable. Nothing here is a determination, and no advantage is counteracted by it.
Decided by the limb 50(1)(a) of article 50(1)
A timing arrangement, deferral identified
An arrangement whose effect is to defer a payment of Corporate Tax, with no non-fiscal reason and deferral as its main purpose.
Computed
On the conclusions you have recorded, the arrangement is within the scope of Article 50: you have concluded both that entering into or carrying it out is not for a valid commercial or other non-fiscal reason reflecting economic reality, and that a main purpose is to obtain a Corporate Tax advantage inconsistent with the intention or purpose of the Decree-Law. The advantage identified is Article 50(2)(c) — deferral of a payment of Corporate Tax or advancement of a refund. Every matter Article 50(5) requires to be considered has been marked as considered. This reflects your assessment and requires your determination of what follows from it. Article 50(3) reserves to the Authority any determination that a Corporate Tax advantage be counteracted or adjusted, and Article 50(6) requires the Authority to demonstrate that such a determination is just and reasonable. Nothing here is a determination, and no advantage is counteracted by it.
Decided by the both limbs of article 50(1)
A tax benefit, but not an inconsistent advantage
An arrangement considered against every Article 50(5) matter. It reduces Corporate Tax, but the person concludes that obtaining that reduction is not its main purpose and is not an advantage inconsistent with the intention of the Decree-Law — so limb (b) is not met and the arrangement sits outside the rule.
Computed
On the conclusions you have recorded, the arrangement is outside the scope of Article 50: the article applies only where both limbs of Clause 1 hold, and you have not concluded limb 50(1)(b). Every matter Article 50(5) requires to be considered has been marked as considered. This reflects your assessment and is not a determination by anyone. Article 50(3) reserves to the Authority any determination that a Corporate Tax advantage be counteracted or adjusted, and Article 50(6) requires the Authority to demonstrate that such a determination is just and reasonable. Nothing here is a determination, and no advantage is counteracted by it.
Decided by the limb 50(1)(b) of article 50(1)
Try it
Supply the facts and this rule computes the outcome in your browser, live. Leave a determination undecided and it blocks the result — it is never read as a no.
Not computed yet
10 inputs still need your determination:
- Article 50(5)(a) requires you to consider the manner in which the transaction or arrangement was entered into or carried out. Have you?
- Article 50(5)(b) requires you to consider its form and substance. Have you?
- Article 50(5)(c) requires you to consider its timing. Have you?
- Article 50(5)(d) requires you to consider its result in relation to the application of the Decree-Law. Have you?
- Article 50(5)(e) requires you to consider any change in the financial position of the Taxable Person resulting or expected from it. Have you?
- Article 50(5)(f) requires you to consider any change in the financial position of another Person resulting or expected from it. Have you?
- Article 50(5)(g) requires you to consider whether it created rights or obligations that would not normally be created between Persons dealing at arm's length. Have you?
- Article 50(5)(h) requires you to consider any other relevant information and circumstances. Have you?
- Having regard to all relevant circumstances, do you conclude that entering into or carrying out the transaction or arrangement, or any part of it, is not for a valid commercial or other non-fiscal reason which reflects economic reality?
- Do you conclude that the main purpose, or one of the main purposes, of the transaction or arrangement, or any part of it, is to obtain a Corporate Tax advantage that is not consistent with the intention or purpose of the Decree-Law?
Computed in your browser from the figures you supply. Nothing is sent anywhere, and the result is a computation against a rule — reference, not tax advice.
Sources
Federal Decree-Law No. 47 of 2022, Article 50 — General anti-abuse rule
The article this rule encodes, in full
https://mof.gov.ae/wp-content/uploads/2022/12/Federal-Decree-Law-No.-47-of-2022-EN.pdf