The UAE corporate tax was introduced in June 2023 in line with international tax policies. Whereas, certain entities qualify for corporate tax exemption if they meet the exemption criterion, as provided by the Federal Tax Authority. This article details the entities that qualify for corporate tax exemption in UAE.
Who can apply for corporate tax exemption?
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Government entities and subsidiaries
Government-owned entities either 100% or partially owned entities.
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Qualifying public benefit entities
Entities or organization operates wholly for public benefit purposes, like charities, Nonprofit organization. But they have to satisfy few conditions which outlined in federal Decree law 47 of 2022.
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Qualifying investment fund
Certain funds which help to achieve global and economical goal in UAE knows as qualifying investment fund and they have to meet specific requirement. Those funds are exempt from taxation in UAE.
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Business engages with natural resource extraction
A person engaged in natural resource extraction businesses such as oil, Gas, Dimond or any other natural resources are qualifying for corporate tax exemption but should have a license from the relevant government authority.
How to apply for corporate tax exemption
1st Step – Determine eligibility
Identify your business eligibility based on Federal Decree Law 47 of 2022. Some exemptions required certain conditions to satisfy. Thus, businesses are advised to seek the expert services of premier Tax Consultants in UAE to seamlessly determine if they qualify for exemption under UAE corporate tax.
2nd Step – Get ready relevant documents.
The tax exemption election process may require the following supporting documents
- Business License
- Business certificate of incorporation
- Financial statement
- Proof of compliance
- Supporting evidence for exemption (public benefit, Natural resource)
3rd Step – Application submission to FTA
- Visit the FTA website and register your business for corporate tax
- Complete exemption request application
- Attached all the relevant information to the portal
- Submit the application.
4th Step – Await approval
FTA take some time to review your application together with supporting document you uploaded. If they want additional information, FTA requires additional information. Once approved your application, you can enjoy tax exemption.
5th Step – Maintain Compliance
Even if your business qualifies for exemption, maintaining a compliance document is required. From time to time FTA may requires information to ensure the businesses is satisfying the exemption criteria.
How Farahat & Co can help
Premier Tax Consultants at Farahat & Co. can seamlessly help businesses to determine their taxability and exemption status for corporate tax purposes. Thus, businesses are advised to seek the expert services of premier Tax Consultants in UAE. Contact us today and we shall be glad to assist you.
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Accurate application submission
We can gather minimal information from our clients and help to submit accurate applications without rejecting or avoiding errors and delay
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Cristal’s clear eligibility assessment
We will evaluate your business structure and operation in detail and provide guidance on whether the company can apply for the exemption without wasting time.
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Continues compliance support
We help to guide our customers to maintain compliance requirement and necessary action need to do timely basis. Sometime law might change the eligibility criteria. Farahat & Co. helps businesses to timely meet corporate tax requirements.
FAQ.
- Q – Can all businesses apply for corporate tax exemption in the UAE?
A – No, corporate tax exemptions are limited to specific entities such as government-owned businesses, qualifying public benefit entities, investment funds, and certain free zone companies.
- Q – What is the qualifying income for free zone companies?
A – Qualifying income is not an exemption. It is liable but the rate of 0%. Such qualifying income refers to income generated by free zone entity from activities within a free zone or from transactions with entities outside the UAE.
- Q – How long does it take to get a corporate tax exemption approval?
A – Maximum 20 working days. Some time it will approve before 20 days based on the complexity of your application and the documentation submitted.
- Q – Do exempt entities need to file corporate tax returns?
A – Yes, exempt entities are required to file tax returns or reports to maintain their exemption status. Exemption is just a saving of money but all other compliance part (Return Filling) needs to be attempted like nonexempt company.
- Q – Can a corporate tax consultant help with the application process?
A – Absolutely. Corporate tax consultants simplify the process by ensuring accurate submissions, assessing eligibility, and providing ongoing compliance support.