Who is Exempt from the UAE Corporate Tax ?

UAE government issued the Federal Decree-Law No. 47 of 2022 on the Taxation of Enterprises and Firms (hereafter known as the "Corporate Tax Law"). For financial years beginning on or after 1 June 2023, the Corporate Tax Law serves as the legal foundation for the adoption and execution of a Federal Corporate Tax ("Corporate Tax") in the UAE. To assist the UAE in achieving its economic goals and hasten its growth and transition, the corporate tax was introduced. Along with the UAE's wide web of double taxation agreements, the assurance of a viable corporation tax structure that complies with international norms would solidify the UAE's stance as a top commercial and industrial destination. The Corporate Income Tax UAE framework draws from the finest standards internationally and encompasses concepts that are widely recognized and valued due to the UAE's status as a hub for worldwide commerce and finance. This guarantees that the Corporate Tax in UAE will be transparent in its ramifications and easy to understand. Now, let's take a deeper look at the entities that are exempted from it according to the most recent updates;

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Who is exempt from corporate tax in UAE?

security funds and public pensions in the UAE are exempt from corporate tax once the application has been submitted and approved by the federal tax authority.

The UAE Corporate Tax law exempts certain entities and types of income from taxation. These exemptions include:

1. Government Entities: Federal and Emirate government entities, including ministries, departments, agencies, and other public institutions.
2. Government Controlled Entities: Companies wholly owned by the UAE government that carry out sovereign or mandated activities.
3. Extractive Businesses: Businesses engaged in the extraction of natural resources such as oil and gas, provided they meet specific conditions and continue to be subject to Emirate-level taxation.
4. Non-Extractive Natural Resource Businesses: Businesses involved in non-extractive activities related to natural resources that meet specific criteria and are taxed at the Emirate level.
5. Charities and Public Benefit Organizations: Entities that are registered as charities or public benefit organizations and meet the conditions set by the Ministry of Finance.
6. Investment Funds: Qualifying investment funds, including regulated mutual funds, real estate investment trusts (REITs), and private equity funds, provided they meet certain conditions.
7. Pension and Social Security Funds: Government or private pension and social security funds that meet the criteria set by the Ministry of Finance.
8. Wholly-Owned UAE Subsidiaries: Subsidiaries that are wholly owned by exempt entities and conduct activities that are integral or ancillary to the activities of the parent entity.
9. Via the Federal Tax Authority(FTA), they are qualified to apply for exemption from the corporation tax system. For investment assets that meet their requirements, the FTA will allow tax exemption.

These exemptions are designed to support key sectors of the economy and promote social welfare. Entities claiming an exemption must comply with the specific requirements and conditions set out in the UAE Corporate Tax law.

Read More: Will foreign companies be subject to the UAE corporate tax?

To apply for corporate tax registration, you can get help from a corporate tax advisor in the UAE. It is better to register on time by keeping in view the business’s financial year.

issuance of the corporate tax is affecting your business

All organizations in the UAE (including free zone firms, private enterprises, and persons conducting business in the UAE) and international companies with a foothold in the UAE are impacted by the release of the corporate taxation Law in the UAE, which constitutes a fundamental shift to the UAE tax environment. To be competitive and maintain tax efficiency, all firms need to comprehend the Corporate Tax requirements and weigh their ramifications. Businesses will have to comply with the new tax laws and regulations, and they will also have to pay corporate taxes.

Now, it has become crucial for all businesses to immediately avail corporate tax advisory services in their respective zones to assure compliance as with officially published corporate tax law. You can go for the best Corporate tax advisors to get expert opinions and the latest updates. 

Read More: Will a UAE Free Zone Business Be Required to Register and File a Corporate Tax (CT) return?

Top Tax Consultants in the UAE:

Corporate Tax UAE is a trusted interface that cultivates the best solutions for any tax-related intricacies, we have an onboard expert team that is determined to meet the client’s specified needs. To stay compliant with the Federal Tax Authority’s regulations and standards, do not hesitate to get in touch with us at Corporate Tax UAE!