UAE exempts entities established for public benefit from corporate tax

Gulf Today, Staff Reporter

The Ministry of Finance has revealed the new Cabinet Resolution regarding eligible public benefit entities for the purposes of the Corporate Tax Law.
The decision aims to ensure that entities are exempted from tax on companies that were established to achieve public benefit.

This is according to Cabinet Resolution No. (37) of 2023 regarding public benefit entities that are eligible for the purposes of Federal Decree-Law No. 47 of 2022 regarding corporate and business tax.

Qualified public benefit entities work to achieve the welfare of people and society.

These entities also focus on activities that contribute to strengthening the social fabric of the UAE, public welfare activities, charitable work, community services or corporate social responsibility.

The new regulatory decision reflects the important role of these entities in the UAE in the religious, charitable, scientific, educational, cultural and similar fields.

In order for the entity to be eligible for exemption from corporate tax, public benefit entities must fulfill the conditions stipulated in Article (9) of the Corporate Tax Law, and must continue to comply with all relevant federal and local laws and must notify the Ministry of Finance of any changes that may affect their status as a qualified public benefit entity.

Eligible public benefit entities must also register for the corporate tax system with the Federal Tax Authority and obtain a tax registration number for corporate tax purposes.

The Council of Ministers may amend the list of eligible public benefit entities, based on a proposal from the Minister to update, add or delete any entities.

The entity listed in the Cabinet’s decision must send a notice of any changes that may affect its continuity in fulfilling the conditions stipulated in the decision and in the Companies Tax Law.

Reporting obligations apply to eligible public benefit entities, in order to verify that they continue to meet the exemption criteria.

It should be noted that this decision provides more certainty and transparency to taxpayers regarding their deductible expenses under Article 33 of the Corporate Tax Law, as grants and gifts will be allowed to be treated as deductible expenses for corporate tax purposes if they are provided to a qualified public interest entity listed in Cabinet decision.