UAE Corporate Tax:- Public and Community Welfares Updates 2023

Ministry of Finance

The United Arab Emirates has declared that public and community welfare organizations will be exempt from paying corporate taxes.

Corporate tax is a matter of great concern for businesses in the UAE, especially for entities that seek to contribute to the welfare of society. However, it is reassuring that the Ministry of Finance has recently announced corporate tax exemptions for public and community welfare entities that meet certain criteria.

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This announcement is part of the government’s efforts to support and encourage organizations that play a vital role in improving the quality of life for the people in the UAE. You can Read the Complete Guide with Laws on UAE Corporate Tax 2023 to get you a better understanding.

Entities that are focused on public welfare, philanthropy, community services, or corporate and social responsibility are eligible for tax exemptions. The decision of the Ministry of Finance to provide these exemptions is a recognition of the vital role played by these organizations in advancing charitable, scientific, educational, or cultural values, among others. A few more exemptions from UAE Corporate Tax also mentioned which entities are exempt from UAE corporate Tax.

The corporate tax exemption is an important incentive that can help organizations continue to pursue their goals of providing public and community welfare services. This decision by the government of the UAE is a clear signal that the country values the contributions of these entities to society.

Download the Guide Below for Complete information on the UAE corporate TAX LAWS published by Ministry of Finance in UAE.

To be eligible for the exemption, entities must meet the conditions outlined in Article 9 of the Corporate Tax Law and must continue to comply with all relevant federal and local laws.

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They must also notify the Ministry of Finance of any changes that may impact their status as a Qualifying Public Benefit Entity. Moreover, they must register with the Federal Tax Authority and obtain a Tax registration number for Corporate Tax purposes.

The Cabinet may amend the schedule of Qualifying Public Benefit Entities at the suggestion of the Minister by modifying, adding, or removing entities. An entity that is listed in the schedule annexed to the decision must make a notification of any change occurring to the entity.

It is important to note that various reporting obligations apply to Qualifying Public Benefit Entities, primarily to ensure that they continue to meet the criteria for approval. To provide further clarity and transparency to taxpayers regarding their deductible expenditure under Article 33 of the Corporate Tax Law, the Ministry of Finance allows donations and gifts as deductible expenditure for Corporate Tax purposes if they are made to a Qualifying Public Benefit Entity listed in the Cabinet Decision.

In addition to corporate tax exemptions for public and community welfare entities, the Ministry of Finance has also announced exemptions for non-resident persons, government entities, government-controlled entities, as well as extractive businesses and non-extractive natural resource businesses.

In conclusion, the corporate tax exemption announced by the Ministry of Finance for public and community welfare entities is a positive step that will incentivize more organizations to engage in activities that contribute to the well-being of society. It is an excellent opportunity for these entities to continue their valuable work and to help the UAE become a better place for all. The government’s support for these organizations sends a clear message that it is committed to promoting a culture of philanthropy and social welfare.

How much is corporate tax in UAE?

Starting June 1st, 2023, there will be 9%Tax Applied under certain conditions for Businesses in UAE.

Do companies pay tax in the UAE?

In Dubai, corporations are obligated to pay taxes on their income, but there are exceptions. As of the start of 2023, a recent tax law has been implemented, which imposes a 9% corporate tax on companies whose earnings surpass AED 375,000 (equivalent to approximately USD 100,000).

Is corporate tax going to happen in UAE?

Yes, the United Arab Emirates (UAE) is set to implement corporate tax starting from June 1, 2023. A federal decree-law was issued in December 2022 to establish a 9 percent corporate tax rate on taxable business profits that exceed AED 375,000. This means that companies in the UAE will be required to pay corporate taxes on their profits, subject to certain exemptions and regulations.

What is the corporate tax rate in UAE 2023?

According to the Cabinet of Ministers Decision No. 116, which was released on January 16, 2023, a standard corporate tax rate of 9% will be imposed on taxable income exceeding AED 375,000. However, taxable income not exceeding this threshold will be subject to a 0% corporate tax rate. This decision outlines the tax regulations for businesses in the United Arab Emirates and provides specific details on how the corporate tax will be implemented.

Is UAE corporate tax free?

In accordance with the tax regulations set by the Cabinet of Ministers Decision No. 116, if a business' taxable income does not exceed AED 375,000, then it will not be subject to any corporate tax and will be taxed at a rate of 0%. However, if the taxable income of the business surpasses AED 375,000, then a corporate tax of 9% will be imposed on the amount exceeding the threshold. This means that companies in the United Arab Emirates will only be required to pay corporate tax on the portion of their taxable income that exceeds AED 375,000.

Who is exempt from UAE corporate tax?

Companies that are non-resident and do not have a permanent establishment in the United Arab Emirates (UAE) will not be obligated to register or pay UAE corporate tax, according to the tax regulations. This means that if a company does not have a physical presence or operations within the UAE, they will not be required to pay corporate tax in the country.

Who pays corporate tax in UAE?

Foreign entities and individuals will only be subject to UAE corporate tax if they engage in ongoing or regular trade or business activities within the UAE. This includes banking operations as well as businesses involved in real estate management, construction, development, agency, and brokerage activities. If a foreign entity or individual conducts any of these activities in the UAE, they will be required to register for corporate tax and pay taxes on their taxable income in accordance with the regulations set by the UAE government.

What are the benefits of corporate tax in UAE?

The implementation of corporate tax in the UAE offers a number of benefits to the country's economy and businesses operating within its borders. Despite being one of the lowest tax rates in the world, the introduction of corporate tax will help increase the revenue of the UAE, which is crucial for the country to remain competitive in the global business and investment environment. Additionally, corporate tax will reduce the compliance burden on businesses, making it easier for them to operate and plan their finances. Overall, the introduction of corporate tax is expected to have a positive impact on the UAE's economy by providing the government with a stable source of revenue and creating a more favorable business environment for companies.

Who are eligible for corporate tax in UAE?

The calculation of corporate tax in the UAE is based on a rate of 9% of the net profit shown in a company's financial statements. However, this corporate tax rate will only be applicable if the taxable net profit exceeds 375,000 AED. If a company's taxable net profit is equal to or below 375,000 AED, it will not be subject to corporate tax. This means that companies in the UAE will only be required to pay corporate tax on the portion of their taxable income that exceeds the specified threshold.

Is the UAE no longer tax-free?

UAE had introduced VAT of 5% and now Corporate Tax of 9% for compaines exceeding 100,000 USD in Net Income.

What are tax exempt in UAE?

There are certain types of goods and services that are exempted from UAE corporate tax. These include exports of goods and services to destinations outside of the Gulf Cooperation Council (GCC), international transportation, and related supplies. Additionally, supplies of certain sea, air, and land means of transportation, such as aircraft and ships, are also exempted from corporate tax. Furthermore, investment-grade precious metals, such as gold and silver of 99% purity, are also exempted from corporate tax in the UAE.
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