Who gets an automatic exemption from corporate tax?

Government entities get automatic exemptions, as they work for the public and don’t do business for profit.

What’s an extractive business in UAE tax law?

Extractive businesses work with oil, gas, or minerals and can get exemptions if they pay Emirate-level tax and follow all rules.

Can investment funds get corporate tax exemptions?

Yes, if a fund is regulated, traded on an exchange, and meets all rules, it can apply for exemption.

How do public benefit entities stay exempt?

Non-profits and charities on the Cabinet’s list stay exempt, so they can serve the public better.

Can a subsidiary get a tax exemption?

If an exempt group owns a company and the company only helps the main group’s work, it can be exempt, too.

Exempted Persons in UAE CT Law | Corporate Tax Rules

Exempted Persons in UAE Corporate Tax Law

Understanding Who Is Exempt From Corporate Tax

Many companies and people in the UAE need to pay corporate tax, but some don’t. These are called “exempted persons.” Mubarak Al Ketbi (MAK) Auditing always helps businesses know their tax status and follow the law. If you want to grow your business safely, you must understand which rules apply to you.

What Is a Corporate Tax Exemption?

A corporate tax exemption is a rule that lets some organizations pay no tax or less tax on their income. The UAE government gives exemptions to support jobs, investments, and growth in the country. You can find four ways a person or company might get an exemption. Let’s look at each one in detail.

Types of Exempted Persons in UAE CT Law

1. Automatic Exemption

Some organizations never need to pay corporate tax. These include government entities. A government entity always gets an exemption because it works for the country and helps the public. Its main job is to serve people, so taxing it would not make sense.

2. Exemption If Notified to the Ministry of Finance

Some businesses can get an exemption if they tell the Ministry of Finance and follow special rules.

Extractive Businesses: These companies work with oil, gas, or minerals. The UAE wants these businesses to keep investing, so it lets them skip corporate tax if they pay an Emirate-level tax instead.
Non-Extractive Natural Resource Businesses: These companies also work with natural resources, but not oil or gas. They get an exemption for the same reasons as extractive companies. But they must meet conditions set by the government.

3. Exemption If Listed in the Cabinet Decision

The UAE government makes a list of entities that can get an exemption by law.

Qualifying Public Benefit Entities: These are groups like charities or non-profit organizations that work for the public good. The government lets them stay tax-free, so they can help people more.
Government-Controlled Entities: Sometimes, the government owns or controls a company. If that company is listed in the official Cabinet decision, it can get a tax exemption. But if it’s not on the list, it must follow other rules.

4. Exemption Claimed Through Application

Some entities can apply to the Federal Tax Authority to get an exemption.

Qualifying Investment Funds: These funds help grow the UAE’s economy. To get an exemption, a fund must:
- Be regulated by the right authority in the UAE.
- Trade its shares on a stock exchange or use another approved method.
- Not exist only to avoid taxes.
- Meet any other rules set by the Minister.
Public or Private Social Security Funds: These funds, for retirement or social security, can get exemptions if they are checked and approved by the right government office.

5. Subsidiaries of Exempt Organizations

If an exempt organization owns a company in the UAE, that company might also be exempt. The rules are:

The company must help with the exempt person’s main business.
It only holds assets or invests money for the exempt organization.
It does not do business that isn’t linked to the main exempt entity.

Why Does the UAE Exempt Some Entities?

The government doesn’t want the same income taxed twice. This can hurt the economy and make it harder for businesses to work. Sometimes, exemptions also support important jobs and encourage more people to invest money or create new companies.

Some reasons for exemptions are: