UAE announces major new tax law changes

According to the UAE Ministry of Finance, some businesses and organizations will not be required to pay taxes.

Several businesses will no longer be required to pay the necessary Corporate Tax levy, according to a change in tax laws published by the UAE.

A new decision by the UAE Cabinet regarding Qualifying Public Benefit Entities was made public by the Ministry of Finance.

It is intended to make sure that businesses and organizations that operate for the benefit of the general public are exempted from paying tax.

UAE tax law change

Qualifying public benefit entities are established for the welfare of the public and society, focusing on activities which contribute to the fabric of the UAE.

Typically, this focus is  on public welfare, promoting philanthropy, community services or corporate and social responsibility.

The purpose of this implementing decision is to represent the significant role that these entities play in the UAE, which frequently consists of organizations with a focus on

• Religion
• Charitable
• Science
• Education
• Culture

To be eligible for UAE Corporate Tax 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.

For corporate tax reasons, the Qualifying Public Benefit Entities must also register with the Federal Tax Authority and get a tax registration number.

On the Minister’s recommendation, the Cabinet may change, add, or remove entities from the list of Qualifying Public Benefit Entities.

Any change that affects the business’s ability to continue meeting the requirements outlined in this Decision and the Corporate Tax Law must be reported by an entity that is identified in the schedule attached to the decision.

Qualifying Public Benefit Entities are subject to a number of reporting requirements, mostly to ensure that they continue to meet the requirements for approval.

With regard to their deductible expenses under Article 33 of the Corporate Tax Law, taxpayers now have more clarity and transparency thanks to the Cabinet’s decision, as donations and gifts will be recognized as deductible expenses for corporate tax purposes if they are given to one of the Qualifying Public Benefit Entities listed in the Cabinet Decision.

UAE Corporate tax rates

• Zero percent on the portion of the Taxable Income below AED375,000.
• Nine percent on Taxable Income that exceeds AED375,000.

UAE Corporate Tax exemptions

• Government entities.
• Government controlled entities.
• Person engaged in an extractive business.
• Person engaged in a non-extractive natural resource business.
• Qualifying public benefit entity.
• Qualifying investment fund.
• Public pension or social security fund that is subject to regulatory oversight of the competent state authority.
• Private pension or social security fund that is subject to regulatory oversight of the competent state authority.
• A juridical person incorporated in the State that is wholly owned and controlled by
• an Exempt Person that conducts any of the following:
• Undertakes part or whole of the activity of the Exempt Person.
• Is engaged exclusively in holding assets or investing funds for the benefit of
• the Exempt Person.
• Only carries out activities that are ancillary to those carried out by the Exempt Person.
• Any other Person as may be determined in a decision issued by the Cabinet at the suggestion of the Minister.