UAE Corporate Tax Law Update: Exemptions for Public Benefit Entities

The UAE Ministry of Finance recently announced the implementation of a new corporate tax law, which provides exemptions for qualifying public benefit entities. This decision aims to support organisations that work for the betterment of society by ensuring they are not burdened with corporate taxes.
 

What are Qualifying Public Benefit Entities?

Qualifying Public Benefit Entities are organisations that contribute significantly to the UAE’s social fabric by focusing on activities related to public welfare, philanthropy, community services, and corporate and social responsibility. These entities primarily engage in areas such as:

1. Religion
2. Charitable work
3. Science
4. Education
5. Culture

Eligibility for UAE Corporate Tax Exemption

To be eligible for the UAE Corporate Tax exemption, public benefit entities must meet the following criteria:

1. Fulfil the conditions specified in Article (9) of the Corporate Tax Law in the UAE.
2. Comply with all relevant federal and local laws.
3. Notify 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.

Amendments to the Schedule of Qualifying Public Benefit Entities

The UAE Cabinet has the authority to amend the schedule of Qualifying Public Benefit Entities at the suggestion of the Minister. This can include modifying, adding, or removing entities. Entities listed in the schedule must notify the Ministry of Finance of any changes that impact their ability to meet the conditions set out in the decision and the Corporate Tax Law.

Deductible Expenditures and Corporate Tax Rates

The Cabinet’s decision provides taxpayers with more clarity and transparency regarding deductible expenditures under Article 33 of the Corporate Tax Law. Donations and gifts made to Qualifying Public Benefit Entities listed in the Cabinet Decision are allowed as deductible expenditures for corporate tax purposes.
UAE corporate tax rates are as follows:

1. Zero percent for taxable income below AED375,000.
2. Nine percent for taxable income exceeding AED375,000.

Exemptions from UAE Corporate Tax

Entities exempt from UAE corporate tax include:

1. Government entities.
2. Government-controlled entities.
3. Persons engaged in extractive or non-extractive natural resource businesses.
4. Qualifying public benefit entities.
5. Qualifying investment funds.
6. Public and private pension or social security funds subject to regulatory oversight.
7. Juridical persons incorporated in the UAE that are wholly owned and controlled by an exempt person and meet specific criteria.

The Cabinet may also determine other exempt persons based on the Minister’s suggestion. This new tax law update aims to support organisations working for public welfare and ensure their continued growth and development within the UAE.

If you want to reap the benefits of establishing your public benefit entity, company or organisation in Dubai, Europe Emirates Group is on hand to assist. Get in touch and a member of our team will be delighted to help you with your needs as well as talk you through Dubai’s new visa rules, income tax residence, corporate banking requirements, and more.