Taxation of Capital Gains Quiz

How is Capital gains of an immovable property calculated as per UAE Corporate Tax?

• On the difference between consideration and historical cost of the asset

• By providing specific indexation benefit

• As per the applicable accounting standard

• None of the above

What basis of taxation is principally followed by the UAE?

• Combination of Residence and Source based taxation

• Source basis of taxation

• Territorial basis of taxation

• Residence basis of taxation

What is the threshold limit for ownership rights for claiming participation exemption as per UAE CT?

• As provided in relevant DTA

• 15%

• 5%

• 25%

Under Article 13 of OECD Model, which of the following types of capital gains is generally taxable only in the resident state of the alienator?

• From exchange of property

• From sale of ships & Aircrafts

• From gift

• From sale of PE as a whole

What is the main purpose of paragraph 4 of Article 13?

• To define the term "resident" for the purposes of capital gains taxation

• To exempt gains from the disposal of ships and aircraft used in international transport

• For prevention of tax avoidance by using conduit companies

• To clarify the taxation of gains from intangible assets like patents and copyrights

Under paragraph 5 of Article 13, when can a Contracting State tax gains from the disposal of shares in a company even if the alienator is not a resident of that state?

• When the company owns immovable property situated in the state

• When the company is publicly traded and meets certain ownership thresholds

• None of the above

• When the alienator holds a stipulated % of shares any time during last 12 months

What are the potential challenges associated with applying Article 13 to taxation of capital gains?

• Difficulty in identifying and verifying non-resident taxpayers

• Administrative burden for tax authorities

• Risk of tax avoidance and evasion through treaty shopping

• All of the above

Which of the following assets is typically taxed in the source state also as per Article 13 of OECD Model Convention?

• Immovable property (e.g., land, buildings)

• All of the above

• Intangible assets (e.g., copyrights, patents)

• Bonds and debentures

Capital gains from alienation of which of the following assets are not dealt with in Article 13 of the OECD Model Convention?

• Gains from the alienation of ships, boats, or aircraft used in international traffic

• Gains from the alienation of movable property forming part of the business property of a permanent establishment

• Gains from alienation of personal Assets (Jewelry, cars etc)

• Gains from the disposal of shares in a company that derives more than 50% of its gross income from immovable property

Which of the following is true in respect of Transitional Provisions (TP) under UAE CT?

• TP applies only to assets which are accounted under historical cost basis

• TP applies to all assets directly

• TP applies to assets which are acquired after 01 January 2024

• Fair valuation from a registered valuer is mandatory for claiming TP exemption