20-05-2025
UAE to exempt certain foreign-owned entities from corporate tax
The UAE Ministry of Finance has announced a significant expansion of its corporate tax exemption policy.
Effective immediately, foreign entities that are wholly owned by certain exempted entities, such as UAE government bodies, government-controlled entities, qualifying investment funds, and public pension or social security funds, are now eligible for corporate tax exemption, provided they meet specific conditions.
'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,' noted MoF.
'The extension of the exemption aims to ensure equal tax treatment between local and foreign entities owned by certain exempt entities,' MoF said in a statement sent to Khaleej Times.
MoF added the tax exemption '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.'
Thomas Vanhee, partner at Aurifer Middle East Tax Consultancy, told Khaleej Times,"The new regime appropriately realigns the exemption to include UAE entities wholly owned by foreign entities which would be eligible for a tax exemption in the UAE.
'The previous difference is therefore removed. This is especially relevant for entities held by foreign government entities, foreign funds, or foreign public pension funds,' added Vanhee, who is also an affiliate professor of tax law.
