The introduction of the UAE Corporate Tax regime has brought clarity and structure to business taxation in the country. While most entities are subject to a standard tax rate of 9%, the law carves out several exemptions, particularly for sectors and entities that contribute to societal welfare or operate under regulatory frameworks. Among these are Public Benefit Entities, Pension Funds, and Investment Funds.
This blog outlines the eligibility, conditions, and process of securing exemptions under the UAE Corporate Tax Law. If your organization falls into one of these categories, it is vital to understand how to benefit from these exemptions—and how to remain compliant.
Looking for assistance in determining your exemption eligibility? PEAK Business Consultancy Services specializes in VAT and Corporate Tax advisory for UAE entities, helping you structure your operations in full compliance while optimizing tax exposure.
1. What Are Public Benefit Entities?
Public Benefit Entities (PBEs) are organizations that operate for a charitable, religious, cultural, social, or community service purpose. These include foundations, societies, and NGOs recognized by the UAE government or local authorities.
To qualify for corporate tax exemption, a Public Benefit Entity must be:
- Listed in a Cabinet Decision issued by the UAE government
- Operating exclusively for public welfare, without profit as a primary motive
- Not distributing profits to members, founders, or directors
Once approved, these entities are exempt from corporate tax but must still maintain adequate records and may be subject to reporting obligations.
2. Exemption for Pension Funds
Pension funds play a crucial role in supporting retired individuals and ensuring long-term social security. Under UAE Corporate Tax Law, pension funds may be exempt from corporate tax if they meet the conditions prescribed in the Executive Regulations.
Key requirements include:
- Registration and regulation under UAE laws (e.g., regulated by the Insurance Authority)
- Operating exclusively to manage retirement benefits
- Income solely derived from investments and contributions for pension purposes
- Prohibition of profit distribution to non-beneficiaries
Note: Pension funds must apply for exemption status with the Federal Tax Authority and receive approval through a formal decision.
Need help with exemption application? Let PEAK Business Consultancy Services guide you through document preparation, submission, and ongoing compliance for pension fund tax exemptions in the UAE.
3. Exemption for Investment Funds
Investment funds, such as mutual funds, real estate funds, and private equity funds, may also be exempt from UAE Corporate Tax provided they satisfy the specific criteria set out in the law and regulations.
To qualify for exemption, the fund must:
- Be regulated by a recognized authority such as the UAE Securities and Commodities Authority (SCA) or Dubai Financial Services Authority (DFSA)
- Operate in the interest of multiple investors
- Not be controlled by a single investor
- Meet additional conditions regarding legal form, fund size, and investor composition
Funds structured as partnerships or trusts may be treated as “transparent” for tax purposes, where the tax obligation passes to the investors instead of the fund entity itself.
4. The Application Process for Exempt Status
Exemption from corporate tax is not automatic. Eligible entities must follow these steps:
- Register with the FTA via the EmaraTax portal
- Submit an application for exemption, including supporting documents like:
- Charter documents
- Regulatory licenses
- Proof of activity and non-profit status
- List of board members and beneficiaries
- Wait for approval through a Cabinet Decision or Ministerial Directive
- Ensure compliance with ongoing disclosure and reporting requirements
Don’t know where to start? PEAK Business Consultancy Services can handle the entire process—from assessing eligibility to filing exemption applications and maintaining compliance with the FTA.
5. Ongoing Obligations Even After Exemption
Even though these entities are exempt from paying corporate tax, they are not exempt from regulatory and administrative obligations. This includes:
- Maintaining accurate and up-to-date financial records
- Filing information returns annually (if required)
- Remaining compliant with FTA notifications and reviews
- Notifying the FTA of any changes in their status or operations
Failure to comply with these obligations may result in revocation of exemption status or penalties under UAE law.
6. Benefits of Claiming Exemption
For qualifying entities, securing an exemption offers several advantages:
- Zero corporate tax liability on relevant income
- Operational efficiency as funds can be redirected to core objectives
- Reputational credibility and regulatory endorsement
- Long-term compliance certainty when structured correctly
However, claiming these benefits requires expert handling of the legal, financial, and procedural aspects of the exemption application.
7. How PEAK Business Consultancy Services Can Help
At PEAK Business Consultancy Services, we understand the complexity of the UAE tax framework and the precision required to secure and maintain exemptions.
We offer end-to-end services for:
- Identifying whether your entity qualifies for exemption
- Preparing and submitting all required applications
- Maintaining proper documentation and reporting
- Advising on risk areas and audit readiness
Whether you’re a nonprofit, pension fund, or regulated investment vehicle, we ensure your tax strategy aligns with UAE legal standards and your operational goals.
Conclusion
The UAE Corporate Tax regime offers important exemptions to entities that serve the public good or operate under regulated frameworks. Public Benefit Entities, Pension Funds, and Investment Funds must proactively apply for exemption and stay compliant with FTA expectations.
For tailored guidance, visit PEAK Business Consultancy Services. We help businesses, funds, and institutions across the UAE understand and optimize their tax obligations—and when applicable, secure valuable exemptions that support long-term growth and sustainability.
