UAE recognizes importance of nonprofits with corporate tax breaks

Organizations must meet Article 9 of corporate tax law
UAE recognizes importance of nonprofits with corporate tax breaks
Tax breaks for public benefit entities in UAE

The UAE Cabinet has granted an exemption from the federal corporate tax law to organizations involved in philanthropy, community services, and corporate social responsibility, according to the country’s Ministry of Finance.

This decision reflects the vital role played by these entities in the UAE, which encompasses religious, charitable, scientific, educational, or cultural values.

To qualify for the exemption, organizations must meet the requirements specified in Article 9 of the corporate tax law and maintain compliance with applicable federal and local laws. They must also inform the ministry of any changes that may affect their status as a qualifying public benefit entity.

Read more: What you may not know about UAE’s new corporate tax relief program

The Cabinet may modify, add, or remove entities on the schedule of qualifying public benefit entities.

The corporate tax law, with a standard statutory rate of 9 percent, was introduced last year and applies to businesses with financial years starting on or after June 1, 2022.

Companies earning over 375,000 dirhams ($102,000) fall under the corporate tax bracket.

Several entities, including government entities and pension or investment funds, are exempt from the tax.

Existing free-zone entities, which are among the drivers of the UAE’s economic growth, are also exempt.

Public benefit entities must register with the Federal Tax Authority (FTA) and obtain a registration number for corporate tax purposes.

The Cabinet decision also allows donations to qualifying public benefit entities to be a deductible expense under Article 33 of the corporate tax law.

The UAE’s corporate tax regime is based on a self-assessment principle, requiring businesses to ensure that all documentation submitted to the FTA is correct and complies with the law.

To read further about the latest news on UAE corporate tax, click this link.

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