UAE's Ministry of Finance has announced a new corporate tax exemption, expanding eligibility to foreign entities wholly owned by exempted groups, reinforcing the country's competitive tax environment.

The Ministry of Finance (MoF) in the United Arab Emirates has announced a significant development with the issuance of Cabinet Decision No. (55) of 2025. This decision focuses on exempting certain persons from corporate tax under the Federal Decree-Law No. (47) of 2022 concerning the taxation of corporations and businesses.

The new provisions expand the scope of corporate tax exemption to include foreign entities that are wholly owned by specific exempted groups, including government entities, government-controlled entities, qualifying investment funds, and public pension or social security funds.

UAE Corporate Tax Exemption

However, the exemption comes with stipulations that must be met.

Previously, the corporate tax exemption was restricted to entities that were incorporated within the UAE, leaving foreign entities ineligible for the benefits, even if they were entirely owned by exempt entities or operated through branches in the UAE. This restriction limited the opportunities for such entities.

The extension of this tax exemption signifies a commitment to equal tax treatment for local and foreign entities owned by certain exempt groups, provided their operations fulfill the necessary criteria. This strategic move is designed to strengthen the UAE's appeal as a prime location for holding companies and aligns with the country's ongoing dedication to maintaining a competitive and fair tax landscape, in accordance with international best practices.