Do government entities pay Corporate Tax?

Article 5 – Government Entity 1. A Government Entity shall be exempt from Corporate Tax and the provisions of this Decree-Law shall not apply to it. 2. Notwithstanding Clause 1 of this Article, a Government Entity shall be subject to Federal Decree-Law No. 47 of 2022 and its amendments – Unofficial translation (as published by the Ministry of Finance) 10 the provisions of this Decree-Law if it conducts a Business or Business Activity under a Licence issued by a Licensing Authority. 3. Any Business or Business Activity conducted by a Government Entity under a Licence issued by a Licensing Authority shall be treated as an independent Business, and the Government Entity shall keep financial statements for this Business separately from the Government Entity’s other activities. 4. The Government Entity shall calculate the Taxable Income for its Business or Business Activity specified in Clause 2 of this Article independently for each Tax Period, in accordance with the provisions of this Decree-Law. 5. Transactions between the Business or Business Activity specified under Clause 2 of this Article and the other activities of the Government Entity shall be considered Related Party transactions subject to the provisions of Article 34 of this DecreeLaw. 6. A Government Entity may apply to the Authority for all its Businesses and Business Activities to be treated as a single Taxable Person for the purposes of this DecreeLaw subject to meeting the conditions to be prescribed by the Minister.

Article 1 – Definitions 1. In the application of the provisions of this Decision, the following words and expressions shall have the meanings assigned against each, unless the context otherwise requires: Federal Government Entity Local Government Entity : The Federal Government, ministries, government agencies, authorities and public institutions of the Federal Government. : The Local Governments, government departments, government agencies, authorities and public institutions of the Local Governments. Ministerial Decision No. 68 of 2023 – Unofficial translation 1 Representative Federal Government Entity Representative Local Government Entity : The Federal Government Entity that is mandated by the Federal Government to represent the Federal Government Entities that are treated as a single Taxable Person in accordance with the provisions of Article 2 of this Decision. : The Local Government Entity that is mandated by the Local Government to represent the Local Government Entities that are treated as a single Taxable Person in accordance with the provisions of Article 3 of this Decision. 2. Other words and expressions in this Decision shall have the same meanings specified in the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (referred to in this Decision as the “Corporate Tax Law”) unless the context requires otherwise.

23. Exempt Persons Persons who are exempt from Corporate Tax are referred to as Exempt Persons. Exempt Persons fall into the following categories:231 (a) Government Entities, (b) Government Controlled Entities, (c) Extractive Business, (d) Non-Extractive Natural Resource Business, (e) Qualifying Public Benefit Entities, (f) public and private pension or social security funds, (g) Qualifying Investment Funds, and (h) juridical persons incorporated in the UAE that are wholly owned and controlled by an Exempt Person specified in (a), (b), (f) and (g) above and conduct some specific activities of the Exempt Person. 23.1. Government Entity, Government Controlled Entity, Extractive Business and Non-Extractive Natural Resource Business Government Entity, Government Controlled Entity, Persons engaged in Extractive Business or a Non-Extractive Natural Resource Business are exempt from Corporate Tax. However, if these Persons conduct taxable Business, they will be a Taxable Person insofar as it relates to such taxable Business and will need to submit a Tax Return in respect of that taxable Business. Where a Government Entity or Government Controlled Entity is conducting multiple taxable Businesses, each taxable Business is treated as a separate Taxable Person. 232 Accordingly, a separate Tax Return must be filed for each taxable Business. However, a Government Entity or Government Controlled Entity may be treated as a single Taxable Person in respect of all its taxable Businesses in which case a single Tax Return can be filed. If you are a Government Entity, Government Controlled Entity, Persons engaged in Extractive Business or a Non-Extractive Natural Resource Business, the adjustments to be made to determine Taxable Income are the same as for other Taxable Persons, except for certain provisions. For example,233 • no relief for transfers within a Qualifying Group and Business Restructuring • no transfer of Tax Loss • cannot be member of a Tax Group. 231 Article 4 of the Corporate Tax Law. 232 Article 4(2) read with Articles 5(3) and 6(3) of the Corporate Tax Law. 233 Article 4(2) of the Corporate Tax Law. Corporate Tax Guide | Tax Returns | CTGTXR1 173