UAE Corporate tax exemption for public and community welfare entities:
The UAE Ministry of Finance has announced a new Cabinet decision exempting Public Benefit Entities from the Corporate Tax Law. These entities, which are established for the public’s and society’s welfare and focus on promoting philanthropy, community services or corporate and social responsibility, play a critical role in contributing to the fabric of the UAE. The decision is intended to acknowledge the vital role played by such entities in the UAE, which frequently encompasses religious, charitable, scientific, educational, and cultural values, among others.
To qualify for tax exemption, public benefit entities must meet the conditions under Article 9 of the Corporate Tax Law and continue to comply with all relevant federal and local laws. They must also register with the Federal Tax Authority (FTA) and obtain a tax registration number for Corporate Tax purposes. Reporting obligations apply to ensure that they continue to meet the criteria for approval.
The Cabinet may amend the schedule of Qualifying Public Benefit Entities at the suggestion of the Minister by modifying, adding, or removing entities. Donations and gifts made to a qualifying Public Benefit Entity listed in the Cabinet Decision will be allowed as deductible expenditures for Corporate Tax purposes.
The Corporate Tax Law comes into effect in June this year, and certain organisations will be exempt from tax registration. A ‘non-resident’ company earning UAE-sourced income but with no permanent establishment in the country, government and government-controlled organisations, extractive businesses, and non-extractive natural resource businesses that meet the set conditions will not be required to register under the UAE Corporate Tax Law.
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