+9714250025197142500251+      WhatsApp

Exempt businesses under corporate tax in UAE

Under corporate tax in UAE, specific conditions have been established for businesses to qualify for exemption from corporate tax. The criterion includes the determination of the nature of the business activity, the type of industry sector, and the business’s size, to mention a few. To add on, taxable persons must meet distinct requirements related to their financial records, reporting obligations, and ensuring compliance with the corporate tax regulation. Therefore, taxable persons are advised to seek the expert services of top Tax Consultants in UAE to ensure compliance with the corporate tax law.  

Activities and entities that qualify for corporate tax exemption

Entities and activities that qualify for corporate tax exemption include: 

  • Government businesses and organizations.
  • Government-controlled businesses and organizations.
  • Businesses and organizations involved in extractive and non-extractive businesses, specifically natural resources.
  • Businesses providing public benefits.
  • Some investment fund businesses.
  • Social security and pensions controlling entities.
  • Legal persons in UAE that are completely governed by exempt businesses.
  • Companies with taxable income below AED 375,000 enjoy a 0% tax rate.

Compliance and Reporting Obligations for Exempt Businesses

To maintain the exempt status, taxable persons are required to ensure transparency and compliance and to meet reporting obligations in their financial activities. To add on, taxable persons are required to maintain accurate records, submit periodic reports, and adhere to specific tax filing procedures. 

Review and audit procedures for exempt Businesses

Review and audit procedures for corporate tax purposes ensure compliance with the tax regulation and maintain the integrity of the taxation system. Exempt businesses are also required to undergo periodic reviews and audits conducted by the relevant authorities to verify the accuracy and completeness of their financial records and tax filings. These reviews and audits include assessments of eligibility for exemption, examination of documentation, and evaluation of adherence to the specified criteria. Therefore, it is essential for exempt businesses to maintain proper records during these reviews and audit processes to demonstrate compliance.

Read more: UAE Corporate Tax Registration Exemptions

Periodic evaluation and renewal of exemption status

Periodic evaluations assess various factors such as financial performance, operational activities, and eligibility criteria. The purpose is to determine whether the exempt businesses continue to meet the requirements for maintaining their exemption status. If the evaluation is successful, the exemption status is renewed for the designated period. This periodic assessment and renewal process ensures fair and transparent corporate tax practices.

Revocation of Exemption: Understanding the Consequences

In cases where exempt businesses fail to comply with the provisions of the corporate tax law in the UAE or violate the conditions of their exemption status, the authorities hold the right to revoke the exemption. The revocation can result in various consequences such as the imposition of corporate tax liabilities, penalties, or other legal actions. It is crucial for exemption of businesses to adhere to the prescribed rules and maintain compliance to avoid the risk of exemption revocation. 

Read more: How to Register for Corporate tax in UAE?

Advantages and implications of exemption for businesses

Exemption from corporate tax in the UAE reduces the financial burden upon taxable persons, allowing exempt businesses to allocate resources more efficiently and invest in growth and expansion. However, taxable persons are required to maintain compliance and meet reporting requirements to keep the exemption status. 

Choose a corporate tax consultant in UAE

For taxable persons to establish their exemption status in compliance with the corporate tax law, taxable persons are advised to seek the expert services of top Tax Consultants in Dubai. Therefore, contact us today and we shall be glad to assist you.    

Mostafa is a qualified Corporate Tax Consultant with over 5 years of experience gained in diverse intricate tax matters, he has high expertise in conducting tax negotiations and investigations with the Federal Tax Authority and other external Tax Bodies. He has vast experience in reviewing and drafting tax documents. Mostafa has also advised on a plethora of tax matters, he draws much attention to tax filing procedures and to offering professional investigations to underlining tax complexities. Read more