Exemption from UAE Corporate Tax to Charities and Public Benefit Organisations
Introduction
Generally, charities and public benefit organisations play a vital role in social causes in every country. The reason is that the Government of every country undertakes several activities to benefit the people. Charities and public benefit organisations that work towards the welfare of the people also partly resolve these issues. Therefore, there is an exemption from Corporate Tax for charitable and public benefit organisations , subject to certain conditions in their home countries.
The UAE Government also recognises the importance of such organisations and proposes to provide them exemption from the UAE corporate tax in the draft Public consultation document.
Exemption from UAE Corporate Tax to Charities and Public Benefit Organisations – Not Automatic
Under the UAE Corporate Tax law, the exemption from Corporate Tax to charitable and public benefit organisations is not automatic. However, they can make an application seeking such an exemption to authorities.
The following categories of organisations are eligible for making an application to claim exemption from
Corporate Tax : –
- Social and cultural organisation:
- Religious organisation:
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These organisations are eligible to claim exemption provided they are formed for carrying out social, cultural, religious, charitable or other public benefit activities.
Procedure to get an exemption from Corporate Tax
1. Application to Ministry of finance
The organisations mentioned above can make an application to the Ministry of Finance in order to claim exemption from UAE corporate tax.
2. Approval by a Cabinet Decision
If the application made by the charities and public benefit organisations is approved, such organisation will be listed in a Cabinet Decision, which would be issued at the request of the Ministry of Finance.
The decision on whether an organisation qualifies for a CT exemption or not, shall be the discretion of the Ministry of Finance.
Organisations carrying non-stated purpose activities
No exemption from UAE CT will be available to organisations that undertake the following:
- Commercial activities which are not directly related to their stated purpose or
- Where income and donations received by such organisations are, or may be used for the personal gain of persons associated with the organisation (e.g., the founders and fiduciaries).
Periodic information requirement
Charities and public benefit organisations that are approved for the exemptions will need to comply with periodic reporting throughout their existence.
Conclusion
Given the important role played by the charities and public benefit organisations, the exemption from Corporate Tax to Charities and Public Benefit Organisations would go a long way in achieving the social objectives.
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