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ABU DHABI: On Sunday, the UAE Finance Ministry published a cabinet decision exempting “public benefit entities” from corporate tax law. The exemption ensures that entities operating in the wider public interest qualify for tax exemption.
According to the ministry, “public benefit entities” are established for the benefit of the public and society and focus on activities that contribute to the structure of the UAE. Typically, these entities are concerned with the public interest, promoting philanthropy, community service, or corporate and social responsibility. The Cabinet’s decision is intended to reflect the key role these organizations play in the UAE, often involving religious, charitable, scientific, educational or promotion of cultural values, among others.
The Ministry said that it has passed Cabinet Decision No. (37) of 2023 on Federal Decree No. 47 of 2022 on Qualified Public Benefit Entities for Taxation of Companies and Enterprises.
How do I qualify for tax exemption?
For public benefit entities to qualify for the corporate tax exemption, they must satisfy the conditions set out in section (9) of the Corporation Tax Act and must continue to comply with all relevant federal and local laws and notify the Treasury of any changes affecting these entities Its status as a qualified public benefit entity. Qualifying public benefit entities should also register with the Federal Tax Agency (FTA) and obtain a tax registration number for corporate tax purposes.
Cabinet may, on the advice of the Minister, amend the list of eligible public benefit entities by amending, adding or removing entities. Entities listed in the Schedule attached to the Decision must give notice of any changes that occur to the entity that affect its continuity in meeting the conditions set forth in this Decision and the Corporation Tax Act.
Various reporting obligations apply to eligible public benefit entities, primarily to check that they continue to meet approval criteria.
tax allowance
The Cabinet decision provides further transparency to taxpayers regarding their deductible expenses under section 33 of the Corporations Tax Act. Donations and gifts will be allowed as a deductible expense for corporation tax if the donation is made to an eligible public benefit entity listed in the Cabinet Decision.
Earlier this month, the UAE’s Ministry of Finance published details of public and private organizations exempted from tax registration under the new corporate tax law, which came into effect in June this year.
Except for public interest entities, “non-resident” companies are not required to register for corporate tax if they earn UAE-sourced income but do not have a permanent establishment in the country.
Government and government-controlled organizations, extractive businesses and non-extractive natural resource businesses that meet the prescribed conditions are not required to register under the UAE corporate tax law, the ministry said.
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