UAE announces corporate tax exemption for public and community welfare entities

The Ministry of Finance on Sunday announced that entities contributing to the public and community welfare are exempt from the corporate tax, which is set to come into effect this year.

A statement issued by the Ministry said companies involved and focused on public welfare, philanthropy, community services or corporate and social responsibility will be exempt from corporate tax.

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

The UAE last year announced that it would levy a nine per cent corporate tax on companies and freelancers earning Dh375,000 and above, hence, requiring them to enrol for tax registration. The UAE’s corporate tax will be one of the lowest in the world.

To be eligible for exemption, these entities must meet the conditions under Article (9) of the Corporate Tax Law and they must continue to comply with all relevant federal and local laws and notify the Ministry of Finance of any changes occurring to these entities that impact their status as a Qualifying Public Benefit Entity.

The Qualifying Public Benefit Entities should also register with the Federal Tax Authority and obtain a Tax registration number for Corporate Tax purposes.

The ministry said Cabinet may amend the schedule of Qualifying Public Benefit Entities at the suggestion of the Minister by modifying, adding, or removing entities. An entity that is listed in the schedule annexed to the decision must make a notification of any change occurring to the entity.