2023 Marcum Year-End Tax Guide

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COUNTRY SPOTLIGHTS Beginning in 2024, Malta and the United Arab Emirates (“UAE”) will implement adopted transfer pricing legislation. Neither of these jurisdictions historically has had transfer pricing rules. Malta On November 18, 2022, Malta published legislation implementing formal transfer pricing rules. The rules will take effect on January 1, 2024, and will apply to arrangements that are between related parties and are cross-border in nature, in the sense that they take place between a resident company and a non-resident company or are effectively connected to a permanent establishment (PE) of a company outside of Malta and a resident company in Malta. Per the new rules, the threshold for the transfer pricing requirements to apply is EUR 6 million in revenue and EUR 20 million in capital measured in the preceding financial year. The rules contain a carve-out for securitization transactions. The introduction of transfer pricing rules means that entities with cross-border transactions that meet the defined thresholds will, from January 2024, have to comply

with the arm’s length principle by demonstrating that such transactions generate income and expenses unrelated parties would generate under similar circumstances. In other words, related-party transactions must lead to arm’s length market prices. Transactions that fail to meet the arm’s length principle are not compliant and face potential On December 9, 2022, the UAE Ministry of Finance released the Federal Decree-Law No. 47 of 2022 on the taxation of corporations and businesses. It updated the related “frequently asked questions” (“FAQs”) section, which includes new transfer pricing rules as described below. operating in the UAE for tax years starting on or after June 1, 2023. The law defines taxable persons and confirms that a UAE branch of a UAE taxable person should be treated as one taxable person (i.e., a single tax registration and return). Certain businesses and certain types of income may be exempt from corporate tax. The law calls for introducing a corporate tax on businesses adjustments and penalties. United Arab Emirates (UAE)

The law prescribes two rates of corporate tax: • 0% for income below certain thresholds • 9% above this taxable threshold • 0% on qualifying income of free zone entities All businesses will need to comply with the transfer pricing regulations set out in the Corporate Tax Law 5 . Transfer pricing rules apply to UAE businesses that have transactions with related parties and connected persons, irrespective of whether the parties or connected persons are located in the UAE mainland, a Free Zone, or a foreign jurisdiction. A taxable person will need to maintain a master file and a local file if either: Entity revenue in the relevant tax period is AED 200 million or more. The entity is part of an MNE group with a total consolidated group revenue of AED 3.15 billion or more in each financial period.

4https://www.whitehouse.gov/omb/briefing-room/2023/03/09/fact-sheet-the-presidents-budget-for-fiscal-year-2024/ 5https://mof.gov.ae/corporate-tax-faq/

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