REPORT BASED ON PRESS RELEASE: BY DU ON NOV 08, 2023
EITC Receives New Royalty Guidelines: What You Need to Know
Dubai, November 8, 2023 – Emirates Integrated Telecommunications Company PJSC (EITC) has announced that it has received the Cabinet Decision and the Royalty Guidelines from the Ministry of Finance. These guidelines outline the specifics of the new royalty regime, effective from 2024 to 2026, within the framework of the updated corporate tax regime.
Here’s a breakdown of the key provisions outlined in the Cabinet Decision and the Royalty Guidelines:
- Royalty Calculation: The annual royalty payment will be equivalent to 38% of EITC’s yearly regulated and unregulated UAE profits, calculated before royalty and corporate tax.
- Corporate Tax: Corporate tax will be 9% of the profit after royalty as per the corporate tax law.
- Minimum Payment: The combined amount of royalty and corporate tax payable by EITC cannot be less than 1.8 billion AED per year.
- Exclusions: Profits attributed to non-controlling interest holders of the UAE controlled entities will be excluded from the royalty calculation. Additionally, profits generated by international entities, as well as dividend distributions or other profits from international investments subject to a local corporate tax rate of 9% or above, will also be excluded from the royalty calculation.
- Payment Schedule: Royalty and corporate tax must be paid within 5 months of the end of each fiscal year.
The new royalty regime aims to provide clarity and simplicity while ensuring fairness by tying the calculations solely to net profit. According to the initial assessment by EITC, the aggregate amount of corporate tax and royalty under the new regime will not exceed the royalty under the old regime.
EITC views this resolution positively, considering it a step forward in promoting the growth and sustainability of the telecommunications industry within the UAE.
