UAE corporate tax: Ministry clarifies organisations exempt from registration

The new corporate tax will be introduced in June

The federal corporate tax law brings companies with annual incomes exceeding Dh375,000 under the new tax regime. Silvia Razgova / The National

The UAE Ministry of Finance on Monday released details of public and private sector organisations that are exempted from tax registration for new corporate tax that will be introduced in June this year.

The ministry has issued Ministerial Decision No 43 of 2023, which explains who will be excluded from corporate tax registration.

A “non-resident” company will not be required to register for corporate tax if it earns UAE-sourced income but does not have a “permanent establishment in the country”, the ministry said.

Government and government-controlled organisations as well as extractive businesses and non-extractive natural resource businesses that meet the set conditions are not required to register under the UAE Corporate Tax Law, the ministry said.

Other exemptions are available to organisations such as pension or investment funds and public benefit organisations.

Existing free zone entities are also exempted from corporate tax because they are among the drivers of the UAE's economic growth, the ministry said in December.

Last year, the UAE introduced the federal corporate tax with a standard statutory rate of 9 per cent, which will come into effect for businesses whose financial year starts on or after June 1 this year.

In December, the country issued the federal corporate tax law, bringing the income of companies exceeding Dh375,000 ($102,000) into the corporate tax bracket.

“The [latest] decision is issued in accordance with Article 51 of the Corporate Tax Law, which requires taxable persons to register for corporate tax with the Federal Tax Authority, except in certain circumstances,” the ministry said on Monday.

“The exception stipulated in the decision is in line with international best practices.”

Last week, the ministry said small businesses in the UAE with revenue of Dh3 million or less can benefit from a new corporate tax relief programme.

The ministerial decision on Small Business Relief was issued in accordance with Article 21 of the corporate tax law, which treats the “taxable person as not having derived any taxable income in a given tax period where the revenue did not exceed a certain threshold”, the ministry said at the time.

“Small Business Relief is intended to support start-ups and other small or micro businesses by reducing their corporate tax burden and compliance costs.”

The UAE's corporate tax regime is based on a self-assessment principle, which means businesses are required to ensure that the documents submitted to the FTA are correct and comply with the law.