ABU DHABI (ALETIHAD)

The UAE Ministry of Finance has extended the existing federal royalty regime for telecom operators e& and du for another three years, covering the period from 2027 to 2029.

The extension was disclosed in separate stock market statements issued by the two telecom operators.

Under the extended regime, a federal royalty rate of 38% will continue to apply to net profit generated in the UAE. Corporate tax of 9% will then apply to the UAE net profit remaining after deduction of the federal royalty.

The annual federal royalty and corporate tax amounts must be paid within five months of the end of the relevant financial year.

The terms disclosed by the two operators are the same, except for the minimum combined annual amount of federal royalty and corporate tax payable by each company.

For e&, the aggregate annual federal royalty and corporate tax payment will remain subject to a minimum of Dh5.7 billion. For du, the combined annual payment must not be lower than Dh1.8 billion.

Both companies said profits generated by their international controlled entities would be excluded from the royalty calculation. Profits from international non-controlled entities, including associates and joint ventures, will also be excluded.

Dividends and other profit distributions received from international investments will not be included where those investments are already subject to corporate tax, or a similar tax, of at least 9% in the relevant jurisdiction.

Profit attributable to holders of non-controlling interests in UAE-controlled entities will also be excluded from the royalty calculation.