The Tax Indemnification Agreement is essential in UAE business transactions where parties need to allocate tax-related risks and responsibilities. This document has become increasingly important with the UAE's expanding tax framework, including the implementation of VAT in 2018 and the new corporate tax regime effective from June 2023. The agreement typically addresses both existing and potential future tax liabilities, providing mechanisms for handling tax claims and establishing clear indemnification obligations. It is commonly used in mergers and acquisitions, corporate restructurings, and significant commercial transactions where tax exposure needs to be clearly allocated between parties. The document must comply with UAE federal tax laws, including Federal Decree-Law No. (8) of 2017 on VAT and Federal Decree-Law No. (47) of 2022 on Corporate Tax.
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1. Parties: Identification of the indemnitor and indemnitee, including full legal names and addresses
2. Background: Context of the agreement, underlying transaction or relationship giving rise to the tax indemnification obligation
3. Definitions: Key terms including 'Tax', 'Tax Authority', 'Tax Claim', 'Losses', 'Indemnified Taxes', and other relevant definitions under UAE law
4. Scope of Indemnification: Detailed description of the tax matters covered by the indemnification, including specific types of taxes under UAE law
5. Tax Indemnification Obligations: Core provisions detailing the indemnitor's obligations to pay, reimburse, or indemnify for covered tax liabilities
6. Procedure for Tax Claims: Process for handling tax claims, including notification requirements, control of proceedings, and cooperation obligations
7. Payment Terms: Timing and method of indemnification payments, including currency and payment mechanisms
8. Duration and Survival: Term of the agreement and survival provisions for tax claims arising after termination
9. Dispute ReΊμΠΣΦ±²₯: Procedures for resolving disputes, including jurisdiction and governing law provisions specific to UAE
10. Notices: Format and procedures for giving notices under the agreement
11. General Provisions: Standard provisions including amendments, assignment, severability, and entire agreement clauses
1. Tax Returns and Compliance: Include when parties need specific provisions regarding preparation and filing of tax returns
2. Cross-Border Tax Provisions: Include when transaction involves international elements or multiple jurisdictions
3. Free Zone Specific Provisions: Include when either party operates in UAE free zones with special tax treatment
4. VAT-Specific Provisions: Include detailed VAT handling when transaction involves significant VAT implications
5. Corporate Tax Provisions: Include specific provisions related to the new UAE corporate tax regime when relevant
6. Tax Insurance: Include when parties agree to maintain tax liability insurance
7. Third Party Rights: Include when tax indemnification may affect or benefit group companies or related parties
1. Schedule 1 - Specific Indemnified Taxes: Detailed list of specific taxes, charges, and duties covered by the indemnification
2. Schedule 2 - Excluded Tax Matters: List of tax matters specifically excluded from the scope of indemnification
3. Schedule 3 - Claim Procedures: Detailed procedures for making and handling tax indemnification claims
4. Schedule 4 - Required Notices and Forms: Templates for notices and forms required under the agreement
5. Appendix A - Power of Attorney: Standard form of power of attorney for handling tax matters
6. Appendix B - Tax Jurisdictions: List of relevant tax jurisdictions and applicable tax rates/requirements
Authors
Relevant legal definitions
Clauses
Relevant Industries
Financial Services
Real Estate
Manufacturing
Oil & Gas
Retail
Technology
Healthcare
Construction
Professional Services
Hospitality
Trading
Logistics
Free Zone Operations
Relevant Teams
Legal
Finance
Tax
Compliance
Treasury
Corporate Development
Risk Management
Mergers & Acquisitions
Executive Leadership
Corporate Governance
Relevant Roles
Chief Financial Officer
Tax Director
Finance Manager
Corporate Lawyer
Tax Counsel
Compliance Officer
Financial Controller
Treasury Manager
M&A Director
Risk Manager
Corporate Secretary
General Counsel
Managing Director
Chief Executive Officer
Head of Finance
Tax Consultant
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