UAE Issues Corporate Tax Exemption for Public Benefit Entities
By BMS AUDITING
The CT exemption for Public Benefit Entities would be effective from the beginning of the Tax Period
As per the UAE Cabinet Decision announced by MoF, Qualifying Public Benefit Entities under Article 9 of Corporate Tax law can now be exempted from tax. Authorizing public benefit entities were established for society's and the public's welfare, prioritizing the activities which influenced the UAE’s overall structure. This decision of implementation was designed to reveal the significant role of the entities in the UAE.
Before this decision, As per Article 9 of the Corporate Tax Law the FTA issued some conditions and has not clarified the details of the conditions. The conditions published for exemption of the Qualifying Public Benefit Entity from the UAE Corporate Tax are:
- It is established and operated for any of the following:
- Religious, charitable, scientific, artistic, cultural, athletic, educational, healthcare, environmental, humanitarian, animal protection, or other purposes.
- As a professional entity, a Chamber of Commerce, or a similar entity managed exclusively for the promotion of social welfare or public benefit.
- No business or business activity is conducted, except for activities related to fulfilling the purpose for which the entity was developed.
- Its income or assets were exclusively used for the establishment of the entity, or for the payment of any expenditure incurred.
- No part of income or assets would be payable, or available for the personal benefit of a shareholder, member, trustee, or founder, that itself is not a Qualifying Public Benefit Entity, Government Entity, or a Government Controlled Entity
The exemption would be effective from the beginning of the Tax Period wherein the Qualifying Public Benefit Entity was listed in the Cabinet Decision declared at the suggestion of the Minister or any date decided by the Minister.
Article 9 also stated that, for monitoring the constant compliance with the exemption conditions, the Authority would possibly request relevant information from the Qualifying Public Benefit Entity within the timeline declared by the Authority.
However, the FTA now finally clarified the Article 9 in detailed as given below.
The entities must fulfill certain eligibility criteria to enjoy this exemption:
- Meet conditions mentioned under Article 9 of Corporate Tax Law, comply with the local and federal laws, and notify the Ministry of Finance about changes in the entities that affect the status as Qualifying Public Benefit Entity
- Register in the FTA and get a Tax Registration Number (TRN) for Corporate Tax reasons.
- The Cabinet could bring in changes in the plan of Qualifying Public Benefit Entities as per the Minister’s suggestion by modifying, adding, or removing entities
- An entity included in the schedule and connected to the decision must notify about any change that affects the entity’s stability to meet the conditions declared in the Decision and the Corporate Tax Law
- Different reporting obligations have affected the Qualifying Public Benefit Entities, mainly to check their consistency in meeting the criteria for approval
Are you a Public Benefit Entity who looking to get the Corporate Tax Exemption? Call BMS Auditing! Our Corporate Tax Consultants Helps you get a better understanding of corporate tax and clear your doubts.