Introduction
The UAE has recently introduced the Corporate Tax Law (CT Law) which includes a number of exemptions for certain Persons. This article will provide an overview of the Persons who are exempt from UAE CT.
Government Entities
The first group of Persons exempt from UAE CT are Government Entities. These entities are defined as any departments, agencies, ministries, authorities and public institutions controlled by the Federal or Local Governments. These entities are exempt from paying UAE CT unless they conduct a Business or Business Activity under a Licence issued by a Licensing Authority.
Extractive Business
The second category of Persons exempt from UAE CT are those engaged in an Extractive Business. This involves exploration, extraction, removal, and production of the UAE’s natural resources. These Persons must meet certain conditions and inform the Ministry in an agreed form and manner.
Non-Extractive Natural Resource Business
The third category of Persons exempt from UAE CT are those engaged in a Non-Extractive Natural Resource Business. This involves separating, treating, refining, processing, storing, transporting, marketing or distributing the UAE’s natural resources. These Persons must also meet certain conditions and inform the Ministry in an agreed form and manner.
Qualifying Investment Funds
The fourth group of Persons exempt from UAE CT are Qualifying Investment Funds. These are funds that meet certain conditions, such as being subject to regulatory oversight of a competent authority in the UAE or a foreign competent authority, having interests in the fund traded on a Recognised Stock Exchange and having the main or principal purpose of the fund not to avoid UAE CT.
Public Benefit Entities
The fifth category of Persons exempt from UAE CT are Public Benefit Entities. These entities have certain purposes such as religious, charitable, artistic, cultural, educational or other similar purposes. They must be listed in a Cabinet Decision and meet certain conditions.
Pension and Social Security Funds, Wholly Owned Entities and Other Persons
Finally, the sixth category of Persons exempt from UAE CT are certain pension and social security funds, entities wholly owned and controlled by certain Exempt Persons, and certain other Persons as determined in a Cabinet Decision.
Conclusion
It is essential to understand the UAE CT Law and its exemptions in order to determine if a Person is taxable. In addition, Persons should carefully consider the rules to determine whether any of their Business or Business Activities will be taxable and assess whether the required information is available in respect of each taxable Business or Business Activity. Note that the UAE CT Law also provides other exemptions to certain Persons
