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.
