Domestic and International Anti Abuse Rules

Anti-abuse rules aim to combat the abuse of tax laws and treaties in order to prevent taxpayers from obtaining a tax position otherwise inconsistent with the intent of the law or treaty. In this regard, domestic tax laws often include a General Anti Abuse Rule (“GAAR”), while BEPS Action 6 outlines the anti abuse measures in relation to tax treaties. On this note, Federal Decree-Law No. 47 of 2022 (“UAE CT Law”) includes a GAAR provision in Article 50.

Particular	GAAR - Article 50 of the UAE CT Law	BEPS Action Plan 6 - Prevention of Tax Treaty Abuse
Why?	· To prevent the taxpayers from obtaining unfair tax advantages	· To prevent the granting of treaty benefits in inappropriate circumstances
When?	· Absence of valid commercial substance · Absence of non fiscal reasons reflecting economic reality · Main purpose to obtain a Corporate Tax advantage that is not consistent with the intention or purpose of this Decree-Law	· Treaty shopping · Double non-taxation · Main purpose to indirectly access the benefits of a tax treaty between two jurisdictions without being a resident of one of those jurisdictions
What is the impact?	· Authority will assess the GAAR applicability on any transaction or arrangement of the taxpayer · Tax authorities can make adjustments to the tax liability for any unfair tax advantage obtained	· Taxpayers engaged in treaty abuse strategies undermine tax sovereignty by claiming treaty benefits in situations where these benefits were not intended to be granted · Tax authorities can apply the Principal Purpose Test (“PPT”) or the Limitation of Benefit (“LoB”)