Who all are covered under the above provisions ?
The following person shall be covered under the category of Government and Government owned entities UAE Corporate Tax, and will accordingly be exempt from UAE corporate tax : –
- The Federal Government
- The Emirate Governments
- Departments, authorities and other public institutions of The Federal Government
- Departments, authorities and other public institutions of The Emirate Government
The exemption available to them is automatic, and there is no further action required to be undertaken to claim exemption.
Entities wholly owned by the Government and their subsidiaries
Further, entities wholly owned by the Government that carry out a Sovereign or a Mandated activity, and that are listed in a cabinet decisions would also be exempt from the applicability of the UAE Corporate tax , in respect of such activities. However, the UAE subsidiaries of such Government-owned companies, that undertake part or whole of the sovereign or mandated activity or ancillary activities would need to apply for an exemption from UAE CT.
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UAE Corporate Tax on Commercial activities carried out by the Government and Government owned entities
The draft of the UAE corporate tax law provides, that, where the Government conducts commercial activities , which may be conducted by the Government themselves, or they may enter into Association with third parties for conducting such commercial activity, the profits derived from such commercial activity will be liable corporate tax. In addition to this, any business activity , which is directly carried out by the Government under a trade licence , will be within the scope of the UAE CT regime.
If the Government owned entities are liable to corporate taxation, rate of tax that will apply shall be similar to those applicable to other companies. However, if on application, specific exemption is provided to some of these entities, which are otherwise not exempt from corporate tax, the rate of taxation may be reduced to 0%.
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