UAE Corporate Tax Update: Ministerial Decision on Qualifying Public Benefit Entities

On 7th April 2023, The Cabinet of Ministers issued Cabinet Decision No. 37 of 2023 (‘the Decision’) to provide clarification regarding the Qualifying Public Benefit Entities as mentioned in the Federal Decree-Law No. 47 of 2022 on Taxation of Corporations and Businesses (‘the Corporate Tax Law [CT Law]’).

The CT Law, under Article 4 read with Article 9 exempts a Qualifying Public Benefit Entity (’QPBE’) from the applicability of corporate tax on satisfying certain conditions. The list of such entities was to be notified separately pursuant to the enactment of the CT law.

The subject Decision No. 37 provides for a list of entities that have been classified as QPBE¹. This decision shall become effective on the day following its publication in the Official Gazette.

A total of 521 entities have been notified as QPBE. A summary of the entities so classified as QPBE both under the Federal and Emirate level is provided below:

Key Aspects for Consideration:

• The Cabinet may, at the suggestion of the Minister, amend this list, whether by addition or deletion whenever considered necessary.
• Any change in the QPBE’s status which impacts the entity’s continuity to meet the conditions set out in the CT Law, should be communicated to the Ministry within 20 business days of such change.
• The Ministry and the Tax Authority may request a QPBE to provide all relevant documents, data, and information to verify that the QPBE meets the requirements stipulated in the CT Law. Hence, while QPBEs have been exempted from the applicability of the provisions of the CT law, they are still required to maintain the necessary documentation to support their exemption from the levy of corporate tax in the UAE.
• The Tax Authority may require such QPBEs to register for Corporate Tax, obtain a Tax Registration Number, and submit a Declaration in accordance with the provisions of Articles 51 and 53 of the CT Law. Necessary clarifications/ implementing decisions for implementation of the subject Decision No. 37 are likely to be issued in due course.
• Any donations, grants, or gifts made by any person to such notified QPBEs will not be considered as Non-Deductible Expenditure under Article 33 of the CT law for calculation of the Taxable Income.

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