The UAE corporate tax regime is designed to incorporate best practices worldwide and decrease the burden of compliance on different types of businesses. The regime also covers corporate tax concerning charities and public benefit organizations.
This article is going to uncover whether the corporate tax in UAE is applicable to charities and under what conditions are they not exempt.
Does UAE Corporate Tax Apply to Charities and Public Benefit Organizations?
The UAE has always carried out CSR (Corporate social responsibility), volunteering as well as community service activities and includes a large number of charitable and public-benefit institutions.
Such institutions play an indispensable role in fostering public or social welfare as well as shared or group interests, in partnership with the government.
Therefore, the UAE government recognizes the importance of such organizations and offers them an exemption from the UAE corporate tax in the draft Public Consultation document.
Whether a company is eligible for Corporate tax exemption in the UAE or not is determined by the Ministry of Finance.
Such organizations whether created for social, religious, cultural, charitable or public benefit can apply to the Ministry of Finance (MoF) for exemption from UAE corporate tax.
Process of Getting an Exemption from Corporate Tax for Charities
Make an Application to the Ministry of Finance
Organizations such as social, cultural and religious organizations as mentioned above can apply to the Ministry of Finance in order to claim exemption from corporate tax.
Receive Approval by a Cabinet Decision
If the institution or organization receives approval, it shall be listed in a Cabinet Decision made at the appeal of the Ministry of Finance.
Charities That Are “Not Exempt” from Corporate Tax
If such organizations as mentioned above are involved in commercial activities that are varying from the above-stated purposes, or their earnings and charity donations are used for personal gain of any individual who is part of the organization such as the founders and fiduciaries, then such organizations will in no way be exempt from the UAE corporate tax.
This ensures that fraudulent activities carried out by disguising as charities and public benefit organizations are eradicated and a fair, harmonious and law-abiding economy is formed.
Corporate Tax in UAE
The proposed UAE corporate tax law takes into consideration and puts forth control measures when it comes to charity and aims to support social, economic and humanitarian development and is aligned with the Emirati values and ethos. It also ensures that charitable and government fronts are not used to disguise illicit activities.
Have any more questions concerning Corporate tax in UAE? Reach out to Corporate tax UAE expert consultant today!
Abrar Ahmad holds a Master’s as well as an MPhil in Finance and has an extensive experience of 10+ years in managing all aspects of Taxation, VAT Consulting and Accounting. He also carries with him a working knowledge of corporate tax and has helped drive value and growth to the businesses of numerous clients.