What are Public Benefit Entities (PBEs)? 

Public Benefit Entities, often referred to as PBEs, are organizations that play a vital role in the social and cultural fabric of the UAE. They are established to serve the greater good, focusing on
activities that benefit the public and the community as a whole. PBEs encompass a wide range of entities, including non-profits, charities, community organizations, religious institutions, educational institutions, and more.

Tax Exemptions for PBEs

One of the most significant incentives for PBEs in the UAE is the exemption from Corporate Tax. However, this exemption comes with certain conditions. To be eligible for tax exemption, a PBE must meet specific criteria:
Exclusivity: PBEs must be exclusively dedicated to a public benefit activity. These activities fall under categories like religious, charitable, scientific, artistic, cultural, athletic, educational, healthcare, environmental, humanitarian, and animal protection, among others.
Non-Business Activities: PBEs should refrain from conducting business or business activities not related to their charitable or public benefit purposes.
Financial Transparency: PBEs must use their income and assets solely for the purposes for which they were established or as payment for necessary and reasonable expenses.
Non-Personal Benefit: The income and assets of PBEs cannot be used for the personal benefit of their shareholders, members, trustees, founders, or settlors unless they are also recognized as Qualifying Public Benefit Entities or are associated with Government Entities or Government Controlled Entities.

Becoming a Qualifying Public Benefit Entity (QPBE)

To secure tax exemption status, PBEs must apply to the Ministry of Finance to be listed in a relevant Cabinet Decision, such as Cabinet Decision No. 37 of 2023. Once listed, they are recognized as Qualifying Public Benefit Entities and become exempt from Corporate Tax, starting from the relevant Tax Period. This recognition not only brings financial benefits but also enhances the organization's credibility and appeal to potential donors and supporters. 

Compliance and Monitoring

To ensure continued compliance with exemption requirements, the Federal Tax Authority (FTA) may request information or records from QPBEs. This may include financial documents, agreements, and details of employees, officers, and fiduciaries. It is crucial for QPBEs to provide the requested information within the specified timeline to maintain their tax-exempt status.

Record-Keeping

Record-keeping for Qualifying Public Benefit Entities (QPBEs) is crucial for maintaining transparency and accountability in their operations. Accurate and thorough record-keeping not only helps with compliance but also provides a solid foundation for effective decision-making and demonstrates good governance for QPBEs.