Case scenario on Article 5– Government Entity

1. PSR (Government Entity) having two Units as follow:
   1. Unit ‘X’ engage in Business activity and earned income form the said activity of AED    80 Lakh
   2. Unit ‘Y’ engage in other than business activity and having income of AED 60 Lakh. Determine whether the income of PSR is Exempt?

 Ans.  As per the Provision of the Article 5, Government Entity is Exempt from Corporate Tax    However if any Government entity conduct any business activity then such activity shall be treated as independent business and liable to corporate Tax.

In the given scenario, Unit ‘Y’  is engage in other than business activity and all income of Unit ‘Y’ shall be Exempt from Corporate Tax.

         Unit ‘X’ is engaged in business activity and hence it shall be treated as independent business    therefore income of Unit ‘X’ shall be liable to Corporate Tax.