The UAE Cabinet has introduced a fresh resolution regarding Qualifying Public Benefit Entities, which exempts them from the obligatory corporate tax fee. The Ministry of Finance has disclosed this latest development aimed at ensuring that such organizations, which operate for the benefit of the broader public, are not required to pay the tax.

UAE tax law update

Public benefit entities that meet the criteria are created to promote the well-being of the public and society by engaging in activities that enhance the fabric of the UAE. Such organizations usually prioritize public welfare, charitable giving, community service, and corporate and social responsibility.

The purpose of this implementation decision is to acknowledge the significant role played by these entities in the UAE, which often includes organizations with a particular focus on:

 

  • Religion
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  • Charitable
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  • Science
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  • Education
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  • Culture

 

For Qualifying Public Benefit Entities to qualify for exemption from UAE Corporate Tax, they must fulfill the conditions stipulated in Article (9) of the Corporate Tax Law, and also ensure ongoing compliance with all relevant federal and local laws. These entities are also required to inform the Ministry of Finance of any changes that may affect their status as a Qualifying Public Benefit Entity.

Additionally, these entities must register with the Federal Tax Authority and obtain a Tax registration number for Corporate Tax purposes.

The Cabinet has the power to amend the list of Qualifying Public Benefit Entities at the recommendation of the Minister by adding, modifying, or removing entities.

Entities included in the decision’s schedule must notify any changes that impact their ability to meet the set conditions of this Decision and the Corporate Tax Law.

Various reporting requirements apply to Qualifying Public Benefit Entities to ensure their continued adherence to the approval criteria.

UAE Corporate tax rates

  • Zero percent on the portion of the Taxable Income below AED375,000.
  • Nine percent on Taxable Income that exceeds AED375,000

UAE Corporate Tax exemptions

  • Government entities.
  • Government controlled entities.
  • Person engaged in an extractive business.
  • Person engaged in a non-extractive natural resource business.
  • Qualifying public benefit entity.
  • Qualifying investment fund.
  • Public pension or social security fund that is subject to regulatory oversight of the competent state authority.
  • Private pension or social security fund that is subject to regulatory oversight of the competent state authority.
  • A juridical person incorporated in the State that is wholly owned and controlled by
  • an Exempt Person that conducts any of the following:
  • Undertakes part or whole of the activity of the Exempt Person.
  • Is engaged exclusively in holding assets or investing funds for the benefit of
  • the Exempt Person.
  • Only carries out activities that are ancillary to those carried out by the Exempt Person.
  • Any other Person as may be determined in a decision issued by the Cabinet at the suggestion of the Minister.
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