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The UAE Ministry of Finance announced on Sunday the implementation of a new cabinet decision that aligns with the corporate tax law. With respect to qualifying public interest entities, it seeks to ensure that entities that exist and operate in the broader public interest qualify for tax exemption.
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According to a press release issued by the ministry, eligible public benefit entities are established for the benefit of the public and society, with an emphasis on activities that contribute to the structure of the UAE. Often, this focuses on the public good, promoting philanthropy, community service, or corporate and social responsibility. The implementation 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.
To qualify for the CT 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 Department of any changes to these entities that affect them as qualifying public benefit entities status. Qualifying public benefit entities should also register with the Federal Tax Service 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.
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.
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