UAE Grants Corporate Tax Exemptions to Public Benefit Entities

The Ministry of Finance announced on Sunday that public benefit organizations that work towards the betterment of society will be able to receive exemptions under the UAE's corporate tax law. This decision was made by the UAE Cabinet and will apply to organizations that engage in activities such as philanthropy, community services, and corporate social responsibility.

“This implementing decision is designed to reflect these entities' important role in the UAE, which often includes religious, charitable, scientific, educational, or cultural value”, the Ministry of Finance said.

The Ministry of Finance stated that in order for public benefit organizations to be eligible for the exemption under the UAE's corporate tax law, they must meet the conditions outlined in Article 9 of the law, as well as adhere to all applicable federal and local laws. These organizations must also inform the ministry of any changes that could impact their status as a qualifying public benefit entity.

Public benefit organizations must register with the Federal Tax Authority and obtain a registration number for corporate tax purposes.

The UAE implemented a federal corporate tax law last year, which has a standard statutory rate of 9 percent. The law will be applicable to companies whose financial year commences on or after June 1 of this year.

The UAE introduced a federal corporate tax law in December, which applies to companies with income exceeding Dh375,000. Certain entities are exempt from the law, including those involved in natural resource extraction and existing free-zone entities. Government entities and pension or investment funds are also eligible for exemptions.