UAE announces corporate tax exemption for public and community welfare entities – News

Entities that contribute to the public and social welfare of the UAE are eligible for corporate tax exemption if they meet certain criteria

Entities that contribute to public and community benefits are exempt from corporate tax, which will take effect this year, the Treasury Department announced on Sunday.

A statement issued by the ministry said companies that are involved and dedicated to public welfare, philanthropy, community service or corporate and social responsibility will be exempt from corporate tax.

The decision is intended to reflect the important role of these entities in the UAE, which often includes religious, charitable, scientific, educational or cultural values, among others.

The UAE announced last year that it would impose a corporate tax of 9 percent on companies and freelancers with an annual income of AED375,000 and above, requiring them to register for the tax. Corporate tax in the UAE will be one of the lowest in the world.

To qualify for the exemption, these entities must meet the conditions set out in section (9) of the Corporations Tax Act and must continue to comply with all relevant federal and local laws and notify the Treasury of any changes to these entities that affect Their status as a qualified public benefit entity.

Qualifying public benefit entities should also register with the Federal Tax Service and obtain a tax registration number for corporate tax purposes.

The Ministry said that the Cabinet may amend the timetable for eligible public benefit entities by amending, adding or removing entities on the advice of the Minister. Entities listed in the schedule attached to the decision are required to give notice of any changes to the entity.

In addition, various reporting obligations apply to qualified public benefit entities, primarily to check that they continue to meet approval criteria.

The Cabinet decision also provides further certainty and transparency to taxpayers regarding deductible expenses under Section 33 of the Corporate Tax Act, as donations and gifts can be deductible as corporate tax deductions if they are made to qualifying public benefit entities. Deductions for expenditure are included in a Cabinet decision.

Earlier, the ministry announced corporate tax exemptions for non-resident individuals, government entities, government-controlled entities, and extractive and non-extractive natural resource businesses.