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Corporate Tax Exemption

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Corporate Tax Exemption

Who is Exempted from UAE Corporate Tax

Certain types of businesses or organizations are exempt from UAE Corporate Tax given their importance and contribution to the social fabric and economy of the UAE. These are known as Exempt Persons and include: 

  • Government entities, Government Controlled entities that are specified in a Cabinet Decision 
  • Extractive business and non-extractive natural resources business (Exempted if notified to the Ministry of Finance and subject to the meeting certain conditions)
  • Qualifying public benefits entities (Exempt if listed in a Cabinet Decision)
  • Exempt if applied to and approved by the Federal Tax Authority (and Subject to meeting certain conditions)

In addition to not being subject to Corporate Tax, Government Entities, Government Controlled Entities that are specified in a Cabinet Decision, Extractive Businesses and Non-Extractive Natural Resource Businesses may also be exempted from any registration, filing and other compliance obligations imposed by the Corporate Tax Law, unless they engage in an activity which is within the charge of Corporate Tax.

Corporate Tax Exemption

What income is exempt from Corporate Tax?

The Corporate Tax Law also exempts certain types of income from Corporate Tax. This means that a Taxable Persons will not be subject to Corporate Tax on such income and cannot claim a deduction for any related expenditure. Taxable Persons who earn exempt income will remain subject to Corporate Tax on their Taxable Income.
The main purpose of certain income being exempt from Corporate Tax is to prevent double taxation on certain types of income. Specifically, dividends and capital gains earned from domestic and foreign shareholdings will generally be listing under Corporate Tax Exempted Income. Furthermore, a Resident Person can elect, subject to certain conditions, to not consider income from a foreign Permanent Establishment for UAE Corporate Tax purposes.

 

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