Under the UAE's Corporate Tax regime (effective for financial years starting on or after 1 June 2023), most businesses operating in the UAE are subject to corporate tax, but the law specifically lists certain categories of "Exempt Persons" who are not subject to it, or subject only under specific conditions. These include government entities and government-controlled entities, extractive and non-extractive natural resource businesses meeting specific conditions, qualifying public benefit entities, qualifying investment funds, and public/private pension or social security funds meeting specified conditions. Cabinet Decision No. 55 of 2025 later expanded this: foreign-incorporated entities wholly owned and controlled by a government entity, government-controlled entity, qualifying investment fund, or pension/social security fund can now also qualify, exemption is no longer limited to UAE-incorporated entities in those categories, applied retrospectively from 1 June 2023. Exemption isn't automatic for every category, some exempt categories must apply for and be granted exempt status by the Federal Tax Authority, and conditions must continue to be met to retain the exemption. This remains a narrow list, most ordinary UAE businesses, including small and medium enterprises, mainland companies, and most free zone companies (subject to the separate Qualifying Free Zone Person rules), are NOT exempt persons and must register for and comply with corporate tax, even if they ultimately owe zero tax after applying reliefs like Small Business Relief.
Example: A UAE government department providing a public service is generally an exempt person and outside the corporate tax regime, whereas a private trading company operating in Dubai, even a very small one, is not automatically exempt and must assess its corporate tax position.
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