The UAE’s Ministry of Finance announced today the issuance of Cabinet Decision No. (55) of 2025 on exempting certain persons from corporate tax for the purposes of Federal Decree-Law No. (47) of 2022 on the taxation of corporations and businesses.
The decision expands the scope of the corporate tax exemption to include foreign entities that are wholly owned by certain exempted entities such as government entities, government-controlled entities, qualifying investment funds and public pension or social security funds, subject to meeting the relevant conditions.
Prior to the latest decision, the corporate tax exemption was limited to entities incorporated within the UAE. Foreign entities, even if wholly owned by certain exempt entities, or even if they operated through branches in the UAE, were not eligible for exemption.
The extension of the exemption to include such incorporated foreign entities, provided their activities meet the relevant conditions, aims to ensure equal tax treatment between local and foreign entities owned by certain exempt entities.
It also 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.
Earlier this month, the UAE’s Federal Tax Authority announced its implementation of a UAE Cabinet Decision to exempt certain corporate taxpayers from administrative penalties due to the late submission of registration applications, within the specified deadline.
To qualify for the waiver of the penalty, the taxable person must submit their Tax Return within a period not exceeding seven months from the end of their first Tax Period, instead of the usual nine months.
