Who qualifies as a Public benefit entity that are exempted from Corporate Tax?

25 April 2023

Manasi Dicholkar

The Ministry of Finance has announced a new Cabinet decision that has exempted 'qualified public benefit entities' from corporate tax.

Entities qualifying as Public Benefit Entity can avail this exemption for financial years starting on or after 1 June 2023.

To qualify for UAE Corporate Tax exemption under the Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses, entities must comply with all local, state, and federal laws and notify the Ministry of Finance of any changes that may affect their status as Qualifying Public Benefit Entities.

These entities must also comply with Article (9) of the Corporate Tax Law, which states:

a) An Entity that is established and operated for the following should be exempted:

Exclusively for religious, charitable, scientific, artistic, cultural, athletic, educational, healthcare, environmental, humanitarian, animal protection or other similar purposes.

A professional entity, chamber of commerce, or a similar entity operated exclusively for the promotion of social welfare or public benefit.

b) It does not conduct Business Activity, except for such activities that directly relate to or are fulfilling the purpose for which the entity was established.

c) Its income or assets are used exclusively for purpose for which it was established, or for the payment of any associated necessary and reasonable expenditure incurred.

d) No part of its income or assets is payable to, or otherwise available, for the personal benefit of anyone that is not itself a Qualifying Public Benefit Entity, Government Entity or Government Controlled Entity.

It is important to note that Public benefit entities should register with the Federal Tax Authority and obtain a registration number for corporate tax in order to get the exemption from Corporate Tax.