The UAE has recently released a new legislation of the corporate tax and it will come into force from June 2023. While under the UAE corporate tax law, corporations earning over AED 375,000 of taxable profits will be required to pay a tax of 9%, several entities are tax-exempt. This Tax Consultant Dubai aims to cover all aspects related to corporate tax exemptions in the UAE.
The UAE corporate tax law has some exceptions that allow some entities not to be subjected to the corporate tax. These tax-free entities in UAE include:
One of the vital supports public benefit entities offer in the UAE is to offer services on education, health, or any charitable work. Due to their social relevance, the government have ensured that they fall under the lists of activities that may not be subjected to UAE corporate tax. To qualify for this exemption, a public benefit entity must meet all the following conditions:
Read more: What expenses are deductible under UAE corporate tax?
Entity | Tax Exemption | Conditions |
---|---|---|
Small Businesses | 0% tax on taxable income up to AED 375,000 | Taxable income less than AED 375,000 |
UAE Government and Government-Controlled Entities | 100% tax exemption | Conducting no business activity under a license issued by a suitable licensing authority |
Businesses Engaged in Natural Resource Extraction | Emirate-level corporate tax | Directly or indirectly holding or having an interest in a right, concession, or license issued by a Local Government |
Non-Extractive Natural Resource Businesses | Emirate-level corporate tax | Directly or indirectly holding an interest in a right, concession, or license issued by a Local Government |
Qualifying Public Benefit Entities | 100% tax exemption | Created and run exclusively for charitable, religious, cultural, athletic, healthcare, educational purposes |
Qualifying Investment Funds | Tax relief | Under the regulatory supervision of an authority in the UAE or a recognized foreign authority |
Foreign Branch Profits | 100% tax exemption | Foreign branch located in a jurisdiction that has a tax treaty with the UAE and subject to tax in that jurisdiction |
Dividends | 100% tax exemption | Received from another UAE corporation |
Capital Gains | 100% tax exemption | Shares held for at least 12 months |
Read More: Tax Exemptions for Residential Properties in the UAE
Read more: How Can a Tax Consultant Help Your Corporate Tax Preparation in UAE?
The UAE corporate tax law offers several Corporate Tax Exemptions in UAE to relevant companies of which include, small corporations, government agencies, public interest organizations, and investment funds. By knowing these, business entities are in a position to align its tax planning and compliance to its maximum efficiency. However, it is advised to talk to a corporate tax consultant in UAE for more information.