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In our ongoing series of articles discussing UAE corporate tax, we have previously covered exemptions for government entities, government-controlled entities, extractive businesses, and non-extractive natural resource businesses under the corporate tax law.
Now, the Ministry of Finance, UAE, has introduced an additional exemption. Companies that focus on public welfare, philanthropy, community services, or corporate and social responsibility will be exempt from corporate tax.
To qualify for this exemption, these entities must meet the conditions specified in Article 9 of the Corporate Tax Law and maintain compliance with all relevant federal and local laws. It's also essential for them to notify the Ministry of Finance of any changes that may affect their status as a Qualifying Public Benefit Entity.
Furthermore, Qualifying Public Benefit Entities must register with the Federal Tax Authority and obtain a Tax registration number for Corporate Tax purposes.
The UAE Ministry of Finance has also clarified that deductible expenditure, such as donations and gifts under Article 33 of the Corporate Tax Law, will be allowed as deductible expenses for Corporate Tax purposes when made to a listed Qualifying Public Benefit Entity.
A Qualifying Public Benefit Entity will be eligible for Corporate Tax exemption when it meets the following conditions:
a) It is established and operates exclusively for purposes such as religion, charity, science, art, culture, sports, education, healthcare, environment, humanitarian aid, animal protection, or similar objectives.
b) It does not engage in Business or Business Activities, except those directly related to its established purpose.
c) Its income and assets are exclusively used to further its established purpose or cover associated necessary and reasonable expenses.
d) None of its income or assets benefit any shareholder, member, trustee, founder, or settlor who is not themselves a Qualifying Public Benefit Entity, Government Entity, or Government Controlled Entity.
e) Any additional conditions, as determined by a Cabinet decision based on the Minister's recommendation
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