The Corporate tax law provides an exemption to the businesses engaged in the extraction and exploitation of natural resources. Further, any income or share thereof earned by the government from extraction and exploitation of natural resources and income from royalties and fees levied by the government upon private companies would not fall under the corporate tax ambit. Oil, natural gas, water, and deposits of sand and rocks constitute the primary natural resources in the UAE. Extraction and exploitation of these natural resources are usually done by the wholly or partially owned companies under long-term concession agreements entered into with the respective Emirate government. It has to be noted that the exemption from corporate tax will not be available to suppliers, contractors, and subcontractors engaged by such companies. Income earned by them would be liable to corporate tax.
Qualifying public benefit entity
A Qualifying Public Benefit Entity shall be exempt from Corporate Tax where all of the following conditions are met:
(a) established and operated for any of the following:
Exclusively for religious, charitable, scientific, artistic, cultural, athletic, educational, healthcare, environmental, humanitarian, animal protection or other similar purposes.
As a professional entity, chamber of commerce, or a similar entity operated exclusively for the promotion of social welfare or public benefit.
(b) It does not conduct a Business or Business Activity, except for such activities that directly relate to or are aimed at fulfilling the purpose for which the entity was established.
(c) Its income or assets are used exclusively in the furtherance of the purpose for which it was established, or for the payment of any associated necessary and reasonable expenditure.
(d) No part of its income or assets is payable to, or otherwise available, for the personal benefit of any shareholder, member, trustee, founder or settlor that is not itself a Qualifying Public Benefit Entity, Government Entity or Government Controlled Entity.
(e) Any other conditions as may be prescribed in a decision issued by the Cabinet at the suggestion of the Minister.
If any organization engages in any such charitable activity, then it will be required to submit an application to the Ministry of Finance for exemption from corporate tax. If such an application is accepted, the income of such an organization would not be subject to corporate tax. However, if such an organization conducts any commercial activity not pertaining to the advancement of objects of the Charitable Organization, then the corporate tax would be levied upon the income earned from commercial activity.