IMPORTANT INFORMATION FOR FINANCIAL COMPANIES IN THE AIFC: REQUIREMENTS FOR SUBSTANTIAL PRESENCE

Dear AIFC participants applying for a CIT and VAT exemptions! This post is targeted specifically at licensed AIFC participants that are actively seeking exemptions from corporate income tax and value-added tax.

The AIFC has established “Rules on the Substantial Presence of the AIFC Participants Applying Tax Exemptions for the Payment of Corporate Income Tax, Value Added Tax,” outlining requirements for substantial presence. These rules apply only to licensed AIFC participants conducting regulated and market activities in the AIFC.

To be eligible for tax incentives, companies must convincingly demonstrate the actual conduct of business in the AIFC. They need to meet criteria confirming that the company operates in the AIFC and is not a formal structure created solely for the benefits provided to AIFC participants.

These criteria include following aspects:
the core income generating activities of the company are provided in the AIFC
operating expenses are sufficient to conduct business in the AIFC
the company has adequate number of qualified employees

Companies are required to submit annual reports to tax authorities, confirming compliance with substantial presence requirements.
 
Remember that failure to meet reporting deadlines may result in administrative liabilities.