Under the UAE's Corporate Tax Law, certain organizations are completely exempt from corporate tax. It is vital to distinguish this from being subject to a 0% tax rate.
An Exempt Person is entirely outside the corporate tax system and generally does not need to register or file returns. A Taxable Person is inside the system and must register and file, even if they pay no tax due to the 0% rate on income up to AED 375,000 or through a special status like a Qualifying Free Zone Person.
Exemptions are granted to organizations that serve a public function or are already subject to other specific tax regimes. They fall into two main types: those exempt automatically and those requiring an application or official listing.
These entities are exempt by their nature without needing to apply to the Federal Tax Authority (FTA).
These entities must meet specific conditions and either be listed in a Cabinet Decision or apply for and receive approval from the FTA.
Confusing these statuses is a common mistake. This table shows the main differences.
The entity must be listed in the relevant Cabinet Decision and operate for public welfare without distributing profits to its members or shareholders.
No. The corporate tax exemption is separate from VAT. For instance, an exempt entity may still be required to register for and pay VAT if it makes taxable supplies that exceed the VAT registration threshold.
Generally, exemption applies to UAE-based entities. A foreign company is only subject to UAE corporate tax if it has a permanent establishment in the UAE or derives state-sourced income.
Mostafa is a seasoned Tax Consultant with over 5 years years of experience gained in diverse taxations matters. He has vast expertise in settling tax disputes with the Federal Tax Authority and handling of tax procedures in compliance with tax laws. He is adept in investigating underlying tax intricacies and offering expert tax advisory. He is also well-versed in conducting tax analysis’s and negotiations with the Tax Regulators, upon tax preparation and filing. Mostafa specializes in the areas of Tax law, Auditing, Accounting and Banking law.