How does Corporate Tax Apply to a Qualifying Public Benefit Entity?

According to the federal decree law no. 47 governing corporate tax in UAE, corporate tax will not apply to a “qualifying public benefit entity” in UAE. The legislation has put forth the following conditions that decide the exemption of these qualifying public benefit entities from corporation tax;

  • A qualifying public benefit entity will remain exempted from corporation tax if it is designated and operates purely for animal protection, humanitarian, environmental, healthcare, educational, athletic, cultural, artistic, scientific, charitable, religious, and similar purposes.
  • A qualifying public benefit entity will remain exempted from corporation tax if it is designated and operates purely as a commerce chamber or professional firm that works solely to promote public benefits and social welfare.
  • A qualifying public benefit entity will remain out of the scope of corporate tax as long as it keeps doing the activities that it was designated to do and does not do other business activities. Doing other business activities than those mentioned in the legislation for a qualifying public benefit entity will attract the FTA and tax imposition on the entity.
  • All the revenue and income that is earned by such an entity should solely be used in running and progressing the public benefit business if the entity wants to remain out of the corporate tax scope.
  • A qualifying public benefit entity cannot pay from its income any settlor, founder, trustee, member, or shareholder that is not a government-controlled firm, government firm, or another public benefit entity.
  • The regulatory authority which is the federal tax authority can require any type of information from an entity that appears to be a qualifying public benefit entity. 

Read more: Who is Exempt from the UAE Corporate Tax?

Consult Top Tax Agents in the UAE Today! 

Essentially, it is advisable for registered corporations in the UAE to seek professional advice from top tax agents to effectively combat any tax complexities and to enforce full compliance with the set Federal Tax Authority regulations and standards. So, get in touch with us at Corporate Tax UAE and we shall be glad to assist you.

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