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UAE telecom companies e& and Du will pay a minimum of AED 5.7 billion ($1.55 billion) and AED 1.8 billion ($490 million), respectively, in royalty and corporate tax, effective from 2024 to 2026.
The companies, listed on the Abu Dhabi Securities Exchange (ADX) and Dubai Financial Market (DFM), said they will pay 38% of regulated and unregulated UAE profit, as calculated before royalty and corporate tax, under the new royalty regime outlined by the UAE Ministry of Finance.
Corporate tax will correspond to 9% of profit after royalty as per corporate tax law.
The aggregate amount of royalty and corporate tax payable by Du, which trades as Emirates Integrated Telecommunications Company (EITC), shall not be lower than 1.8 billion AED per year, and for e& it will not be lower than AED 5.7 billion per year.
However, profits attributable to non-controlling interest holders of the UAE controlled entities will be excluded from the royalty calculation.
Profits generated by international entities, and dividend distributions or other profits from international investments, subject to a local corporate tax or similar tax rate of 9% or above, will also be excluded from the royalty calculation.
Royalty and corporate tax will be payable within five months of the end of each fiscal year.
Du’s statement concluded: “Based on our initial assessment, the aggregate amount of corporate tax and royalty under the new regime will not be higher than the royalty under the old regime.”
“EITC welcomes this resolution, recognising it as a positive step towards fostering the growth and sustainability of the telecommunications industry within the UAE.”
e& said the impact of royalty and corporate tax will be neutral to e&’s financials, saying it had had ‘effective dialogue between e& and the Ministry of Finance focused on ensuring the long-term viability of the telecom sector and the interests of our shareholders’.
(Writing by Imogen Lillywhite; editing by Seban Scaria)
