Cabinet Decision No 55 of 2023 and ministerial Decision No.139 of 2023 have now been revoked and they have been replaced by the following new decision and these decisions bring more clarity and provide more comprehensive definitions for each qualifying activities.
Cabinet Decision No 55 of 2023 , which focuses on determining the Qualifying income for the Qualifying Free Zone Person ;
Ministerial Decision No . 265 of 2023 which deals with Qualifying Activities and Excluded Activities.
It primarily introduces three significant changes as outlined below :
- Trading in qualifying commodities included in the category of a qualifying activities ;
- Income derived from the ownership or exploitation of qualifying intellectual property has been included in the definition of qualifying income .
- Investment purposes has added to the qualifying activities ” Holding of shares and other securities “.
The key highlight of these changes are summarized as follows :
- Trading of Qualifying Commodities means the physical trading activities of qualifying commodities and associated derivative trading used to hedge against risks involved in such activities
- Qualifying Commodities includes metals , minerals , energy & agriculture commodities that are traded on a recognized commodities exchange in raw form.
- Recognized Commodities Exchange Markets : Any Commodities Exchange Markets established in the state that is licensed and regulated by the relevant competent authority , or any commodities exchange market established and recognized outside the state of equal standing.
- Qualifying income derived from the ownership or exploitation of qualifying intellectual Property : includes patents , copyrighted software any right functionally equivalent to patent but not including any marketing related intellectual property assets such as trademarks , qualifying income shall be calculated based on the following methodology.
Qualifying Expenditure = Qualifying Expenditure + Up – lift Expenditures / Over all Expenditure x Overall income
Income derived from the ownership or exploitation of intellectual property that is not qualifying intellectual property and income in excess of qualifying income calculated above shall be considered Taxable income and taxed at 9%.
Holding of shares and other securities for investment purpose : deemed to be held for an uninterrupted period of at least (12) twelve months.
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