The UAE Corporate Tax regime is built to promote economic competitiveness while ensuring fairness and transparency. Although most businesses are subject to the standard 9% corporate tax, several categories still enjoy full exemptions or special relief treatments based on their legal status, sector, or type of income.
This article breaks down every exemption and relief under the UAE Corporate Tax Law — making it simple for businesses to identify whether they qualify, and how they can benefit.
Table of Contents
Full Corporate Tax Exemptions
Entities in this category pay 0% corporate tax because they are legally exempt.
Government Entities
Federal and Emirate-level government bodies are fully exempt from Corporate Tax.
Examples:
- Ministries
- Municipalities
- Government departments
Government-Controlled Entities (Cabinet-Listed)
Certain state-owned enterprises performing sovereign or strategic functions are exempt if they appear in an approved Cabinet list.
Extractive Businesses
Companies involved in:
- Oil and gas extraction
- Natural resource exploration or production
Non-Extractive Natural Resource Businesses
Businesses supporting natural resource operations (but not directly extracting) may also qualify, provided they fall under specific concession or regulatory frameworks.
Qualifying Public Benefit Entities
Charities, foundations, and non-profit organisations dedicated to public welfare qualify only if they are approved by Cabinet decision.
Examples:
- Registered charities
- Public benefit associations
- Government-supported philanthropic organisations
Public & Private Pension / Social Security Funds
Both types of pension schemes are exempt, including:
- Government pension funds
- Approved private retirement funds
- Social insurance schemes
Qualifying Investment Funds
Investment funds may qualify for full exemption if they meet conditions related to:
- Licensing and regulatory oversight
- Investor composition
- Management requirements
- Registration with the FTA
These rules ensure only genuine investment funds benefit.
Corporate Tax Reliefs (Partial or Conditional Relief)
These do not provide full exemption, but they reduce tax or allow tax-neutral transactions.
Small Business Relief (SBR)
Available to businesses with revenue AED 3 million for the relevant tax period (until 2026).
If eligible, the business is treated as earning no taxable income.
Benefits:
- 0% corporate tax
- Simplified record-keeping
- Lower compliance burden
Free Zone 0% Qualifying Income Regime
Free Zone Persons may pay 0% tax on qualifying income, provided they:
- Maintain adequate substance
- Earn income from qualifying activities
- Meet transfer pricing rules
- Avoid disqualifying transactions with mainland businesses
- Non-qualifying income is taxed at 9%.
Transfer of Business Relief
Tax-neutral treatment for asset or business transfers between related parties.
- No gains or losses are recognized during the transfer.
Restructuring Relief
Applies to mergers, share swaps, and legal restructures.
The goal is to avoid triggering tax when businesses reorganize under economic rationales.
Participation Exemption
Dividends and capital gains from foreign subsidiaries may be 100% exempt if:
- The UAE entity has a minimum 5% ownership
- The subsidiary is subject to a similar tax rate abroad (≥ 9%)
- Shares are held for at least 12 months
Foreign Permanent Establishment (PE) Exemption
A UAE business may elect to exclude income from its foreign branch, preventing double taxation of overseas profits.
Who Does Not Qualify for Exemptions or Reliefs?
The following categories generally do not receive exemptions:
- Free Zone companies earning disqualifying/non-qualifying income
- Businesses exceeding AED 3 million revenue (no SBR)
- Non-approved charities or private groups
- Companies failing substance or compliance conditions
Key Takeaways
The UAE Corporate Tax framework favours compliance, investment, and structured growth.
Exemptions and reliefs are precise not automatic and require careful eligibility checks.
Proper classification under the law can reduce tax liability and enhance business efficiency.
Companies should conduct a Corporate Tax Impact Assessment to avoid misinterpretation or penalties.
