Corporate tax in the UAE has been introduced to align the country with global taxation practices while ensuring sustainable economic growth. However, the government also recognizes that certain sectors and entities play a critical role in supporting national priorities, driving development, and contributing to the welfare of society. For this reason, specific exemptions from corporate tax have been introduced under the UAE Corporate Tax Law, providing relief to qualifying organizations and income sources.
These exemptions ensure that businesses essential to the economy, social welfare, and charitable purposes can continue to thrive without being burdened by additional tax obligations.
Certain types of businesses or organizations are exempt from UAE Corporate Tax given their importance and contribution to the social fabric and economy of the UAE. These are known as Exempt Persons and include:
Qualifying Investment Funds (exempt if they apply to the FTA and meet conditions)
Government Entities, Government-Controlled Entities listed in a Cabinet Decision, Extractive Businesses, and Non-Extractive Natural Resource Businesses may also be exempt from registration and filing requirements only if they do not conduct any taxable business activity. If they engage in taxable activities, registration and filing are required
The Corporate Tax Law also exempts certain types of income from Corporate Tax. This means that a Taxable Person will not be subject to Corporate Tax on such income and cannot claim a deduction for any related expenditure. Taxable Persons who earn exempt income will remain subject to Corporate Tax on their Taxable Income.
The main purpose of certain income being exempt from Corporate Tax is to prevent double taxation on certain types of income. Specifically, dividends and capital gains earned from domestic and foreign shareholdings will generally be listed under Corporate Tax Exempted Income. Furthermore, a Resident Person can elect, subject to certain conditions, not to consider income from a foreign Permanent Establishment for UAE Corporate Tax purposes.
Corporate Tax Exemptions in the UAE are designed to strike a balance between generating national revenue and supporting organizations that are vital to the country’s social and economic framework. While many entities may qualify for exemptions, the conditions and processes vary, making it essential for businesses to fully understand the regulations before making decisions.
At GAAP Associates, we assist businesses in identifying whether they qualify for exemptions, preparing the necessary applications, and ensuring full compliance with the UAE Corporate Tax Law. Our experts provide tailored guidance so you can focus on your operations while staying compliant
Corporate Tax exemptions apply to specific entities defined as “Exempt Persons” under the law. These include government-owned or government-controlled entities, businesses involved in extractive or natural-resource activities (if they meet certain conditions), publicly beneficial charitable or non-profit institutions, qualifying investment funds, and regulated pension or social security funds
No, they don’t automatically qualify. To be exempt, an extractive business must both hold the relevant license or concession from a local government and notify the Ministry of Finance in the prescribed form. Plus, they should already be effectively taxed under the relevant Emirate-level legislation.
Yes, non-extractive natural resource businesses can be exempt, but similar strict conditions apply. They must derive their income from a licensed concession or similar right, notify the Ministry of Finance, and meet criteria showing they are subject to local (Emirate-level) tax.
A public benefit entity may be exempt if it is established for religious, charitable, scientific, educational, humanitarian, cultural, or similar purposes and does not run a commercial business outside those mandated activities. In addition, only those public benefit entities listed in a Cabinet decision qualify for exemption
Yes, certain investment funds, called Qualifying Investment Funds, can apply for an exemption. But it’s not automatic: they need to apply to the Federal Tax Authority, and they must satisfy criteria such as regulatory oversight, a genuine investment purpose, and not being established simply to avoid tax
They can be. Both public and private pension/social security funds are eligible for Corporate Tax exemption if they are regulated by the relevant UAE authority and meet conditions prescribed by the Minister.
Yes. A company that is wholly owned and controlled by an exempt person (such as a government entity, qualifying fund, or pension fund) may itself be exempt, provided it only carries out activities that are part of or ancillary to the exempt parent’s purpose.
Yes. If an entity fails to meet the exemption conditions (for example, a fund stops being regulated or a public benefit entity starts commercial activities), it may cease being exempt retroactively from the start of the tax period
Yes, there are specific “exempt incomes”. For example, dividends received from a participating interest abroad, capital gains in certain cases, and income from a foreign permanent establishment may be exempt, but only under conditions set in Article 23 and Article 24 of the law.
To apply, your organization will typically need to submit a formal application to the Federal Tax Authority (FTA), demonstrating that it meets the required legal conditions (e.g., structure, purpose, governance). Some exempt categories, like investment funds and pension funds, must apply for exemption.
To apply, your organization will typically need to submit a formal application to the Federal Tax Authority (FTA), demonstrating that it meets the required legal conditions (e.g., structure, purpose, governance). Some exempt categories, like investment funds and pension funds, must apply for exemption.
Not always. Some exempt entities (like government-owned or extractive businesses that satisfy the exemption) may also be exempt from registration and filing obligations, but this depends on whether they conduct taxable business activities. According to a ministerial decision, some exempt persons don’t have to register.
GAAP Associates offers full support to organizations seeking exemption: we help you assess whether your business qualifies, prepare and submit the application to the FTA, ensure compliance with ongoing conditions, and guide you through any changes that might affect your exemption status.