Allocates covered taxes among permanent establishments, transparent and hybrid entities, owners and distributed income according to source and tax type.
What should you do now?Build a matrix linking tax, income, entity and jurisdiction to prevent double allocation.
What does the official Article provide?
The official source is Arabic. This English commentary is explanatory and is not presented as an official translation.
Allocates covered taxes among permanent establishments, transparent and hybrid entities, owners and distributed income according to source and tax type.
This is a verified summary rather than a verbatim reproduction. Consult the official Arabic text, the Law and later decisions before making a final determination.
What does the Article mean in plain language?
Tax recorded by one entity may relate to a PE or another entity's income. This Article allocates taxes for PEs, transparency, CFC regimes, hybrids and distributions. Passive-income allocation is capped at the lesser of the relevant tax and the specified Additional Tax Rate multiplied by that income. Income attributed back to a Main Entity under Article 10 has another cap. Read these rules with the Covered Tax exclusions and Article 32's prohibition of duplicate adjustments. Tax relating to another entity requires an applicable allocation rule and its conditions.
Financial reporting, tax, transfer-pricing and consolidation teams.
Build a matrix linking tax, income, entity and jurisdiction to prevent double allocation.
Moving taxes between entities without tracing income, applying allocation caps and preventing duplication.
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Is this Article enough on its own?
Usually not. Read it with the connected Law Article, definitions, any effective election and current NBR guidance, especially for an amount or deadline.
Does NBR guidance replace the Regulations?
No. Guidance explains application and supports procedures and examples, but current legislation and decisions prevail in case of inconsistency.