What exemptions exist under UAE Corporate Tax?
WHAT EXEMPTIONS EXIST UNDER UAE CORPORATE TAX?
What exemptions exist under UAE Corporate Tax? Learn which persons, income, and entities are exempt and how to stay compliant. TAXESMAN explains.
What Exemptions Exist Under UAE Corporate Tax?
What exemptions exist under UAE Corporate Tax?
The UAE Corporate Tax regime includes several important exemptions, covering specific persons, entities, and types of income, provided strict conditions are met.
This question matters because many business owners in Dubai, Abu Dhabi, Sharjah, and free zones assume they are automatically exempt. In reality, exemptions under UAE Corporate Tax are limited, conditional, and must be properly assessed.
In this article, you will learn what exemptions exist under UAE Corporate Tax, who can benefit from them, and how to apply them correctly without risking non-compliance. If you want clarity, TAXESMAN is here to help.
What Exemptions Exist Under UAE Corporate Tax for Certain Persons?
One of the key exemptions under UAE Corporate Tax applies to specific categories of persons, not income types.
Government entities and government-controlled entities
Certain government entities and government-controlled entities may be exempt from Corporate Tax, subject to meeting the conditions set by the Federal Tax Authority (FTA).
This exemption is designed to support public-interest functions rather than commercial profit-making.
If you work with or operate a government-related entity, TAXESMAN can help confirm whether the exemption applies.
What Exemptions Exist Under UAE Corporate Tax for Individuals?
Another important area when asking what exemptions exist under UAE Corporate Tax relates to individuals.
In general:
- Individuals are not subject to Corporate Tax on personal income
- Employment income and personal investment income are typically outside the Corporate Tax scope
However, once an individual conducts a business or commercial activity, Corporate Tax may apply.
If you are a freelancer or consultant unsure where you stand, TAXESMAN can assess your situation clearly.
What Exemptions Exist Under UAE Corporate Tax for Qualifying Free Zone Persons?
Free zone companies often ask this question.
Qualifying Free Zone Persons (QFZP)
A Qualifying Free Zone Person may benefit from a 0% Corporate Tax rate on qualifying income, provided all conditions are met.
This is not a blanket exemption. It depends on:
- The nature of the income
- The type of activity
- Compliance with substance and reporting requirements
Non-qualifying income may still be taxed at the standard Corporate Tax rate.
If you operate in a free zone, TAXESMAN can help you determine whether you qualify and how to stay compliant.
What Income-Based Exemptions Exist Under UAE Corporate Tax?
Some exemptions relate to types of income, rather than the person earning it.
Participation exemption
The UAE Corporate Tax regime includes a participation exemption for certain:
- Dividends received from qualifying shareholdings
- Capital gains from the sale of qualifying shares
This exemption is designed to avoid double taxation and support holding structures.
If your business receives dividends or holds shares in other companies, TAXESMAN can review whether this exemption applies.
What Exemptions Exist Under UAE Corporate Tax for Non-Profit Entities?
Certain non-profit and public benefit entities may qualify for exemption, provided they:
- Are established for qualifying public or social purposes
- Meet registration and operational conditions set by the FTA
This exemption is not automatic and typically requires formal recognition.
If you are involved in a non-profit or foundation, TAXESMAN can guide you through the exemption process.
Practical Examples: What Exemptions Exist Under UAE Corporate Tax?
Dubai example: Holding company
A Dubai-based holding company receives dividends from subsidiaries.
If participation exemption conditions are met, this income may be exempt from Corporate Tax.
Abu Dhabi example: Free zone logistics company
A free zone logistics company earns income from qualifying activities.
Part of the income may fall under the 0% regime, while other income may be taxable.
Sharjah example: Individual consultant
An individual earns only salary income and no business income.
Corporate Tax does not apply, as personal employment income is outside scope.
If you have mixed income, TAXESMAN can help separate it properly.
Common Mistakes When Relying on Corporate Tax Exemptions
When searching what exemptions exist under UAE Corporate Tax, many businesses make these mistakes:
- Assuming free zone status means full exemption
- Treating dividends as automatically exempt
- Ignoring registration and reporting requirements
- Failing to document exemption eligibility
These errors can trigger penalties later.
If you want peace of mind, TAXESMAN is here to help.
What Exemptions Exist Under UAE Corporate Tax?
To recap, what exemptions exist under UAE Corporate Tax?
The UAE Corporate Tax system provides exemptions for certain persons (such as government and qualifying entities) and types of income (such as qualifying dividends and gains), as well as 0% treatment for qualifying free zone income, subject to strict conditions.
Exemptions are powerful but risky if misunderstood. Let TAXESMAN assess your eligibility, apply exemptions correctly, and keep you compliant.
FAQs: What Exemptions Exist Under UAE Corporate Tax?
What exemptions exist under UAE Corporate Tax?
Exemptions may apply to government entities, qualifying free zone persons, certain individuals, non-profit entities, and specific income like qualifying dividends.
Are free zone companies fully exempt from Corporate Tax?
No. Only qualifying income may benefit from a 0% rate if conditions are met.
Are individuals exempt from Corporate Tax?
Individuals are generally exempt on personal income, but business activities may still be taxable.
Are dividends exempt under UAE Corporate Tax?
Certain dividends may be exempt under the participation exemption, subject to conditions.
Who can help confirm Corporate Tax exemptions?
TAXESMAN provides expert guidance on Corporate Tax exemptions and compliance in the UAE.