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New UAE tax law: Cabinet announces major changes

The UAE Cabinet has announced major changes to tax laws, exempting certain companies from paying a mandatory corporate tax. According to the Ministry of Finance, the new decision by the UAE Cabinet gives tax exemption to Public Benefit Entities or companies and organisations promoting public welfare, philanthropy, community services or corporate and social responsibility. Exempted from UAE Corporate Tax are companies and organisations in these fields: religion, charity, science, education and culture. Corporate tax goes into effect in the UAE starting June 1. Companies with an income of below Dh375,000 will have zero percent tax fee, while companies with an income of above Dh375,000 will be levied 9 percent corporate tax. To be eligible for UAE Corporate Tax exemption, these entities must meet the conditions under the Corporate Tax Law and must continue to comply with all relevant federal and local laws. The Qualifying Public Benefit Entities should register with the Federal Tax Authority and obtain a tax registration number for corporate tax purposes. They must also notify the Ministry of Finance of any changes that impact their status as a Qualifying Public Benefit Entity. Under the Cabinet decision, donations and gifts will be allowed as deductible expenditure for corporate tTax purposes if these are made to a Public Benefit Entity that qualifies for tax exemption.

Other companies and entities exempted from UAE Corporate Tax

-Government entities -Government-controlled entities -Person engaged in an extractive business. -Person engaged in non-extractive natural resource business -Qualifying public benefit entity -Qualifying investment fund -Public pension or social security fund subject to state authority -Private pension or social security fund subject to state authority -Juridical person incorporated in the State that is wholly owned and controlled by an Exempt Person that conducts any of the following: Undertakes part or whole of the activity of the Exempt Person Engaged exclusively in holding assets or investing funds for benefit of Exempt Person Only carries out activities ancillary to those carried out by Exempt Person -Any other person as determined by Cabinet ICA/Expat Media
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