Corporate & VAT Tax for Embassies, Missions, and International Organizations
In the United Arab Emirates (UAE), embassies, consulates, diplomatic missions, and international organizations play a vital role in fostering global relations and cooperation. While these entities often enjoy certain diplomatic privileges, they are not entirely outside the scope of local taxation frameworks.
Understanding how corporate tax and Value Added Tax (VAT) apply—or do not apply—to these institutions is essential for ensuring legal compliance and maintaining good standing with UAE authorities.
1. Corporate Tax Exemptions for Diplomatic and International Entities
The UAE introduced a federal corporate tax system in 2023, applying to most businesses operating in the country. However, specific categories of entities are exempt from corporate tax under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses .
Exempt Entities Include:
- Embassies, Consulates, and Diplomatic Missions : Operating under the Vienna Convention on Diplomatic Relations.
- International Organizations : Such as UN agencies, World Bank, IMF, and other bodies recognized under international agreements.
- Representatives of Foreign States Performing Official Duties : Including accredited diplomatic staff.
These entities are generally exempt from paying UAE corporate tax , provided their activities remain within the scope of their official or diplomatic functions.
✅ Important Note: If an embassy or mission engages in commercial activities unrelated to its diplomatic purpose (e.g., renting out property or running a business), such activities may be subject to corporate tax.
2. VAT Treatment for Embassies and International Organizations
Under the UAE VAT regime—implemented since 2018—certain governmental and public benefit entities enjoy partial or full VAT exemptions. This also extends to some diplomatic and international bodies.
General VAT Rules:
- Standard VAT Rate : 5% on most goods and services.
- Registration Threshold : Mandatory if taxable supplies/receipts exceed AED 375,000 annually.
VAT Exemption for Diplomatic Entities:
- Embassies and Missions are typically exempt from VAT , especially on transactions related to their official duties.
- International Organizations may also qualify for zero-rated or exempt status , depending on the nature of their operations and any bilateral or multilateral agreements with the UAE government.
Eligible VAT Refunds:
- Diplomatic missions may apply for VAT refunds on eligible purchases made for official use through the Federal Tax Authority (FTA) .
To claim a refund, they must:
- Submit supporting documents like invoices, proof of payment, and a certificate from their home country confirming diplomatic status.