Is a company owned by the government subject to Corporate Tax?

5.2.3. Exempt Persons if listed in a Cabinet Decision and meet relevant conditions Government Controlled Entities A Government Controlled Entity is any juridical person, directly or indirectly wholly owned and controlled by a Government Entity, as specified in a decision issued by the Cabinet at the suggestion of the Minister.17 Government Controlled Entities that conduct Mandated Activities and are listed in a Cabinet Decision will be exempt from Corporate Tax.18 However, a Government Controlled Entity that conducts Business that is not its Mandated Activity will be subject to Corporate Tax in relation to that activity and must register for Corporate Tax. 19 Example 6: A Government Controlled Entity that undertakes Mandated Activities Company R is incorporated in Abu Dhabi, and is wholly owned and controlled by Abu Dhabi’s Department “D”. Company R is listed in a Cabinet Decision as a Government Controlled Entity along with its Mandated Activities. Company R does not conduct any other Business Activities. As Company R and all of its activities are listed in a Cabinet Decision, the entity will be exempt from Corporate Tax and will not be required to register for Corporate Tax. Example 7: A Government Controlled Entity that undertakes both Mandated Activities and non-Mandated Activities Company S is an entity wholly owned and controlled by the Department “D” in Sharjah. The entity conducts Mandated Activities and is listed in a Cabinet Decision as a Government Controlled Entity. Company S also conducts non-Mandated Activities. As Company S conducts non-Mandated Activities, these Business Activities will be taxable. Company S will be required to register for Corporate Tax. Any income earned and relevant expenses incurred for the Mandated Activities will be exempt from Corporate Tax. 17 Article 1 of the Corporate Tax Law. 18 Article 6(1) of the Corporate Tax Law. 19 Article 6(2) of the Corporate Tax Law. Corporate Tax Guide I Registration of Resident Juridical Persons I CTGRJP1 19

Additionally, a Non-Extractive Natural Resource Business must not derive income from Persons outside of the scope of Corporate Tax (e.g. natural persons who do not undertake a Business or Business Activity).84 This limits the exemption to Businesses that engage solely in transactions with other businesses, as opposed to with an end customer or consumer. Thus, if the Person derives income from any person who is not within the scope of the Corporate Tax Law (e.g. natural persons who do not undertake a Business or Business Activity) or from any other Person that is not a business or other organised entity, this exemption from Corporate Tax will not be available. 5.7.4. Exempt if listed in a Cabinet Decision and meet relevant conditions Government Controlled Entities Government Controlled Entities are juridical persons that are directly or indirectly wholly owned and controlled by one or more Government Entities and are listed in a Cabinet Decision. Government Controlled Entities need to be wholly owned and controlled by a Government Entity. Such entities may be set up where, for reasons of accountability or management, these entities need to be legally separated from the Government Entity. A Mandated Activity is any activity conducted by a Government Controlled Entity in accordance with the legal instrument establishing or regulating the entity, that is specified in a decision issued by the Cabinet. Not all activities of a Government Controlled Entity would automatically be considered a Mandated Activity. If a Government Controlled Entity conducts Business or Business Activities that is not its mandated activities, it shall be subject Corporate Tax on those Business or Business Activities. Qualifying Public Benefit Entities Qualifying Public Benefit Entities that meet the necessary requirements can apply to the Ministry to be listed in a Cabinet Decision and be exempt from Corporate Tax. Cabinet Decision No. 37 of 2023 has been published and lists all entities considered as Qualifying Public Benefit Entities. 84 Article 8(1)(b) of the Corporate Tax Law. General Corporate Tax Guide | Corporate Tax | CTGGCT1 41