Qualifying Public Benefit Entities (QPBEs) are one of the businesses exempt from paying corporate tax (CT) in the UAE. However, an exemption does not mean there’s no liability or requirement. Public benefit businesses must fulfil some requirements and meet some conditions to qualify as exempt entities for CT in the UAE.
Let’s navigate the implications and conditions for QPBEs under the CT law with Tax Gian. Our professional corporate tax consultants in the UAE can provide you with additional guidance based on your needs.
What is a Qualifying Public Benefit Entity (QPBE)?
Qualifying public benefit entities, or QPBEs, are those businesses that work for public welfare. They are involved in community services, promote philanthropy and encourage corporate social responsibility. Charities, school welfare programs, trust clubs, sport clubs, government-sourced funds, and religious institutions are significant examples of such organisations.
The role of QPBEs is crucial and widely acknowledged in the UAE. However, not all public benefit entities fall under the umbrella of CT exemptions. According to the CT law, only those organisations are considered QPBEs that are listed in the Cabinet Decision no. 37 of 2023.
List of QPBEs
The Cabinet Decision no. 37 of 2023 has provided a comprehensive list of entities that are QPBEs and fall under the scope of the CT exemption. To be exempt, it is crucial for businesses to be a member of any of these lists. There are a total of 521 entities that are QPBEs across the UAE. The categorisation is done on an emirate basis:
- 198 Federal Entities
- 30 Entities in Fujairah
- 11 Entities in Ras Al Khaimah
- 15 Entities in Umm Al Quwain
- 25 Entities in Ajman
- 94 Entities in Sharjah
- 53 Entities in Dubai
- 95 Entities in Abu Dhabi
Meanwhile, the Cabinet can alter, add or subtract any entity in the list at any time upon orders from the Ministry of Finance. Ask for better insights on how this works from corporate tax consultants in the UAE.
CT liability for QPBEs
- QPBEs have to register for CT in the UAE.
- QPBEs will obtain a TRN (Tax Registration Certificate).
- QPBEs will not have to pay CT and are exempt.
- QPBEs will have to apply to the Authority to claim the CT exemption.
- The Authority can ask the QPBE to file annual declarations in order to provide evidence that they still qualify for the CT exemption.
CT Exemption Conditions for QPBEs
The QPBEs have to meet the following conditions in order to qualify for CT exemption in the UAE;
- It must be founded and it must operate solely for activities that are humanitarian, environmental, healthcare, educational, athletic, cultural, artistic, scientific, charitable, religious, animal welfare or similar other purposes. Or it must be a professional entity that promotes public or social welfare only.
- It must not conduct any commercial activities. Those directly relevant to their said business purposes are allowed.
- It must use all of its assets and income for its said purposes and to pay related expenses.
- It must not use any assets or income for personal expenses or gains of any owner, trustee, shareholder or founder.
- It must be listed in the Cabinet Decision no. 37 of 2023 and must follow all of its requirements.
Check with corporate tax consultants in Dubai to see if you meet the conditions and apply for exemption with the experts’ help.
More Regulations for QPBEs
- The exempt status of the QPBE will take effect from the start of the taxable period in which the QPBE is added to the list of Cabinet Decision, or the Ministry can specify any other date for the QPBE.
- The FTA has the authority to ask the QPBE for annual declarations or for any additional information to determine whether the entity still meets the requirements for CT exemption.
- Any changes that occur to the QPBE that can impact the entity’s status or ability to meet the CT requirements must be immediately reported to the Ministry within 20 business days.
- QPBEs must provide the authorities with all necessary documentation, information and data required to assess whether it meets the CT requirements and criteria for exemption.
- Gifts, grants, or donations to any QPBE listed in the Cabinet Decision are considered deductible expenditure for CT purposes
Still have questions? Ask directly from corporate tax consultants in Dubai.
How can Tax Gian help?
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