Exempt persons, as defined by Federal Decree No.47 of 2022 on the Taxation of Corporations and Businesses, enjoy a privileged status in terms of taxation under specific circumstances. Understanding the key elements is important for businesses seeking to optimize their tax positions and ensure regulatory adherence in a dynamic and ever-evolving fiscal landscape.
Entities that are eligible for exemption can apply under the UAE Corporate Tax Law. After meeting specific criteria, the Federal Tax Authority may grant exemption upon examination of the application. Businesses and organizations exempted from Corporate Tax due to their significant importance and contributions to the UAE economy are subject to conditions set by the Ministry of Finance and are referred to as Exempt Persons which encompass:
Apart from being exempt from Corporate Tax, Government Entities, Government Controlled Entities outlined in the Cabinet Decision, Extractive Businesses, and Non-Extractive Natural Resource Businesses may also enjoy relief from registration, filing, and other compliance requirements stipulated by the Corporate Tax Law. However, this exemption is contingent upon their non-engagement in activities subject to Corporate Tax.
Under the specified clauses of Federal Decree-Law No. 47 of 2022, the exemption from Corporate Tax becomes effective either from the commencement of the Tax Period stated in the application or any alternative date determined by the Authority. However, if an Exempt Person fails to satisfy the conditions outlined in the relevant provisions of the Decree-Law during a Tax Period, they will lose their exempt status from the beginning of that Tax Period.
To address specific situations, the Minister has the authority to define conditions allowing a Person to either maintain their Exempt Person status or cease being one from a different date. These instances include scenarios where failure to meet conditions results in the liquidation or termination of the Person, where the failure is temporary and can be promptly rectified with appropriate monitoring procedures in place, and any other situations as prescribed by the Minister.
Businesses operating in the UAE are advised to assess their tax obligations and seek guidance from tax consultants to ensure compliance. The UAE government has provided documents outlining which businesses are subject to corporate tax and which are exempt.
For an assessment of your eligibility as an exempt person or alignment with the specific criteria delineated in corporate tax law, our dedicated team at AccountAbility is here to help. Our professional services are designed to ensure compliance with applicable laws in a time-efficient manner. Feel free to contact us for expert assistance, and thorough guidance, safeguarding your interests and preventing any missed opportunities.
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