UAE Announces list of entities exempted from Corporate Tax

The Ministry of Finance of the UAE has recently announced exemptions for entities and non-resident persons from registration for corporate tax purposes, which will come into effect from June 1, 2023.

According to a statement issued by the Ministry of Finance, government entities, government-controlled entities, extractive businesses, and non-extractive natural resource businesses that meet the requirements of the corporate tax law have been exempted and are not required to register.

Furthermore, a non-resident individual is exempt from registration if he only derives money from the UAE and does not have a permanent establishment in the UAE.

The UAE has recently announced a slew of measures in advance of the implementation of corporate tax. A couple of weeks ago, the Ministry announced relief for small and micro businesses, startups, and freelancers under Ministerial Decision No. 73 of 2023, which states that businesses and individuals with revenues of Dh3 million or less can benefit from the Small Business Relief initiative, which is designed to help start-ups and other small businesses by lowering their corporate tax burden and compliance costs.

Non-resident companies that do not have a permanent establishment in the UAE are not required to register or pay UAE corporate tax. Furthermore, under UAE corporate tax law, government-controlled firms, natural resource businesses, and other organizations such as pension funds and investment funds will not be needed to register.

According to the Ministry of Finance, these organizations are exempt from registration since they are not subject to the 9% corporate tax until they meet the exemption standards under federal law.

It should be noted that a government entity or government-controlled firm will be forced to register for corporate tax if it engages in economic activities that are beyond its capability or outside of its mandated activities.