We're a government entity that also sells a service — do we pay Corporate Tax or not?

Article 4 of the Corporate Tax Law treats a Government Entity as an automatically exempt person, with no prior registration or Federal Tax Authority approval needed for the exemption to apply. The logic is straightforward: a body carrying out its core sovereign and public-service functions shouldn't be taxed on that governmental activity itself.

The complication appears when a Government Entity carries out a commercial activity under a license from a licensing authority, or an activity that falls outside its defined Mandated Activity. In that case, the activity is treated as a separate, independent business and becomes subject to Corporate Tax like any other taxable person — meaning separate financial records, an independently computed taxable income, and related-party rules applying between the exempt part and the taxable part.

RASEEKH helps government and semi-government bodies draw that line precisely between exempt and taxable activity, and set up a properly separated accounting structure that protects their exempt status and reduces the risk of misclassification by the tax authority.