MoF expands scope of corporate tax exemption

Expanded scope of exemption

The decision expands the scope of the corporate tax exemption to include foreign entities that are wholly owned by certain exempted entities — such as government entities, government-controlled entities, qualifying investment funds, and public pension or social security funds, subject to meeting the relevant conditions.

Previous limitations on foreign entities

Prior to the issuance of Cabinet Decision No. (55) of 2025, the corporate tax exemption was limited to entities incorporated within the UAE. Foreign entities, even if wholly owned by certain exempt entities (such as government entities, government-controlled entities, qualifying investment funds, and public pension or social security funds), or even if they operated through branches in the UAE, were not eligible for exemption.

Aiming for fair tax treatment

The extension of the exemption to include such incorporated foreign entities — provided their activities meet the relevant conditions — aims to ensure equal tax treatment between local and foreign entities owned by certain exempt entities. It also reinforces the UAE’s position as an attractive destination for holding companies and reflects the country’s commitment to fostering a fair and competitive tax environment in line with international best practices.