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Background

The United Arab Emirates’ (“UAE”) Ministry of Finance (“MoF”) issued the Federal Decree-Law No. 47 of 2022 (“Corporate-tax Law / CT Law”) on 3 October 2022 (published in public domain in December 2022).

CT Law, inter alia, provides for exemption from CT to specified bodies upon meeting of certain condition. The provisions relating to exemption are contained in Article 4 of the CT Law.

Qualifying Public Benefit Entities (“QPBE”) are among the few bodies which have exemption from CT under Article 4 of the CT Law. The conditions for availing such exemption are contained in Article 9 of the CT Law.

Recently, MOF has issued Cabinet Decision No. 37 of 2023 (“the Decision”) listing down the QPBEs and providing other administrative aspects.

The key highlights of the Decision are discussed below:

Qualifying Public Benefit Entities:

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• The Decision provides the names of over 500 bodies (registered at Federal and Emirates level) which are considered as QPBEs for the purpose of CT Law. Names of the individual QPBEs can be perused in the schedule annexed to the Decision.

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• The list includes:
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  • 198 bodies registered with Federal Government Authorities
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  • 95 bodies registered with Government Authorities of Emirate of Abu Dhabi
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  • 53 bodies registered with Government Authorities of Emirate of Dubai
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  • 94 bodies registered with Government Authorities of Emirate of Sharjah
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  • 25 bodies registered with Government Authorities of Emirate of Ajman
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  • 15 bodies registered with Government Authorities of Emirate of Umm Al Quwain
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  • 11 bodies registered with Government Authorities of Emirate of Ras Al Khaimah
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  • 30 bodies registered with Government Authorities of Emirate of Fujairah

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• Further, the respective government authority has been made responsible to notify within 20 days (in prescribed form and manner) the MOF of any changes occurring to the QPBE that impact the latter’s continuity in meeting the conditions set out in the Article 9 of the CT Law.

Other Administrative aspects:

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• Amendment to the Decision and / or list of QPBEs can be made by:
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  • Cabinet at the suggestion of the Minister of Finance
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  • Any Government Entity on application before the MOF subject to provision of requisite information / documents (applicable only in relation to amendment to list of QPBEs)

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• QPBE to furnish all the relevant information and documents to MOF and FTA to enable them to verify the fulfillment of all the conditions prescribed in Article 9 of the CT Law

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• Government entities to extend full cooperation with the MOF and FTA in relation to any information and documents relating to QPBEs and its activities

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• MOF and FTA may exchange any information and documents relating to QPBEs and its activities for the purpose of implementing this Decision

PB Comments:

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• Bodies registered for the welfare of the society and expecting exemption from CT may ensure their name is included in the list of QPBEs.
  

  In case they are not listed as QPBEs, appropriate action could be taken.

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• QPBEs shall ensure to adhere to all the conditions of Article 9 of the CT Law and maintain necessary information and documents thereof, to remain eligible for the exemption from CT Law.

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• QPBEs may require to take registration for CT purpose for the purpose of availing the exemption. More clarity is expected in coming months in relation to the same.

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• Taxable person making donation or providing any grants to public welfare organization shall ensure that such organization is listed as QPBE, to avail tax deduction of such donation / grant.

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• It is also expected that government authorities at Federal / Emirate level would put in place more measures to monitor the activities of such QPBEs.