The UAE’s telecom operators announced receiving the new Royalty Guidelines for the telecommunications sector from the Ministry of Finance. This included details of the new Telecom Federal Royalty Regime, applicable from 2024-2026 in the context of the new corporate tax regime.
The federal royalty rate of 38% will be applied to the sum of regulated and non-regulated UAE net profit for both e& and du, as well as the royalty and corporate tax rate of 9% on profit.
Profits from non-controlling interest holders in UAE-controlled entities will not be considered in the royalty calculation. Additionally, profits originating from international entities, as well as dividend distributions or other earnings from international investments subject to a local corporate tax rate of 9% or higher, will also be excluded.
e&’s Royalty and Corporate Tax From 2024
For e&, the aggregate annual amount of royalty and corporate tax shall not be lower than AED 5.7 billion.
“We believe that the new royalty structure is more simplified and avoids complexity in the calculation. In addition, based on our initial assessment, the combined impact of royalty and corporate tax will be neutral to e&’s financials,” notified the company’s statement at Abu Dhabi Securities Exchange (ADX).
e& recently announced its consolidated financial results for Q3 2023, with consolidated revenues of AED 13.4 billion, a YoY increase of 3.3%, and consolidated net profit of AED 3 billion, a YoY increase of 20%.
Moreover, the aggregate group subscribers reached 167 million, a 3.3% increase.
du’s Royalty and Corporate Tax From 2024
On the other hand, the aggregate amount of royalty and corporate tax payable by EITC shall not be lower than AED 1.8 billion per year.
“EITC welcomes this resolution, recognizing it as a positive step towards fostering the growth and sustainability of the telecommunications industry within the UAE,” disclosed the company at Dubai Financial Market (DFM).
Du reported a 57.7% increase in total net profit to AED 504 million and revenue growth of 3.7% to AED 3.3 billion for the third quarter of the year, as revenue grew on high demand for mobile and fixed services.
This year, the company’s mobile customer base increased by 9.4% to 8.1 million, while its fixed customer base grew by 12.4% to 573,000.