UAE Allows Corporate Tax Exemptions for Philanthropic Organizations
The UAE Ministry of Finance has recently announced a Cabinet decision that exempts “Public Benefit Entities” from the Corporate Tax Law. This decision is designed to support entities operating for the larger public benefit by ensuring their eligibility for tax exemption.
“Public benefit entities” are established for society’s welfare and focus on activities that contribute to the UAE community. These entities typically promote philanthropy, community services, or corporate and social responsibility. The Cabinet decision reflects the critical role that these organizations play in the UAE, which often includes religious, charitable, scientific, educational, or promoting cultural values, among others.
Public benefit entities must meet the conditions under Article (9) of the Corporate Tax Law, register with the Federal Tax Authority (FTA), and obtain a Tax registration number for Corporate Tax purposes to qualify for a tax exemption. The Cabinet may modify, add, or remove entities from the qualifying list at the suggestion of the Minister.
Entities listed in the schedule annexed to the decision must inform the Ministry of Finance of any changes occurring to the entity that impact its continuity in meeting the conditions set out in this decision and the Corporate Tax Law.
Qualifying Public Benefit Entities are required to report on activities and check that they continue to meet the criteria for approval. Additionally, donations and gifts made to a qualifying Public Benefit Entity listed in the Cabinet Decision will be considered deductible expenditure for Corporate Tax purposes under Article 33 of the Corporate Tax Law.
Apart from Public Benefit Entities, the UAE Ministry of Finance has also exempted government and government-controlled organizations, extractive businesses, and non-extractive natural resource businesses that meet the set conditions from registering under the UAE Corporate Tax Law.
Additionally, non-resident companies that earn UAE-sourced income but have no permanent establishment in the country will not be required to register. The Corporate Tax Law comes into effect in June this year.