Spotlight on UAE Corporate Tax Exemptions: A Guide for UK Expats in Dubai

Thinking of moving to Dubai from the UK or already living here and running a business? Understanding the UAE’s new corporate tax regime is essential to stay compliant and make the most of the tax-saving opportunities available.

While the UAE has long been known for its tax-friendly policies, the introduction of corporate tax marks a new chapter in the country’s economic journey. But there’s good news—not all businesses are required to pay corporate tax. Several exemptions exist, especially for free zone entities, small businesses, and certain government or charitable organisations.

At The Tax Faculty, we specialise in supporting UK expats and international entrepreneurs in navigating the UAE’s evolving tax landscape. Here's everything you need to know about corporate tax exemptions in the UAE in 2025, who qualifies, and how to apply.

What is Corporate Tax in the UAE?

Corporate tax in the UAE is a federal tax levied on the taxable income of businesses, introduced to align with international standards, meet global transparency requirements (e.g., OECD BEPS framework), and support local economic growth.

Applicable Tax Rates (As of 2025):

• 0% on taxable income up to AED 375,000

• 9% on taxable income exceeding AED 375,000

• 15% for Multinational Enterprises (MNEs) with global revenues over EUR 750 million, as per the OECD Pillar Two rules (Global Minimum Tax)

Who Is Subject to Corporate Tax?

Corporate tax applies to:

• UAE-based companies and entities

• Free zone businesses (unless fully qualifying)

• Foreign companies with a permanent establishment (PE) in the UAE

• Individuals conducting business under a commercial licence (not salaried individuals)

UAE Corporate Tax Exemptions: Who Qualifies?

Let’s break down which businesses and entities can qualify for a corporate tax exemption in the UAE under the current legislation.

1. Qualifying Free Zone Persons (QFZPs) – 0% Corporate Tax

Free zone companies can benefit from a 0% tax rate on qualifying income if they meet all requirements under Ministerial Decision No. 265 of 2023 and maintain their Qualifying Free Zone Person status.

Conditions to Qualify:

• Must derive income from “Qualifying Activities” (e.g., manufacturing, logistics, fund management, tech R&D, goods trading between free zones or foreign markets)

• Maintain adequate economic substance in the UAE

• Comply with transfer pricing rules

• Maintain audited financial statements

• Non-qualifying income (e.g., UAE mainland income) may be subject to 9% tax

⚠️ Caution: Businesses that fail to meet these conditions will lose their QFZP status and be taxed at the standard 9%.

2. Small Business Relief (Income Under AED 3 Million) – Temporary Exemption (Until 31 December 2026)

Under Ministerial Decision No. 73 of 2023, small businesses with revenue below AED 3 million can benefit from a temporary tax relief, effectively reducing their corporate tax liability to zero.

Requirements:

• Must be a resident taxable person

• Must not be part of a multinational group

• Relief applies only until the tax period ending on or before 31 December 2026

📌 Note: Businesses must still file tax returns and maintain proper financial records.

3. Government and Government-Controlled Entities

Entities directly owned or controlled by the UAE government are exempt from corporate tax when conducting sovereign or mandated activities.

4. Extractive and Non-Extractive Natural Resource Businesses

• Entities engaged in extractive activities (e.g., oil, gas, mining) are exempt from federal corporate tax if already taxed at the emirate level.

• Non-extractive natural resource companies may also qualify if specific regulatory conditions are met.

5. Qualifying Public Benefit Entities and Charities

Non-profit organisations that are:

• Formally registered

• Listed in Cabinet Decision No. 37 of 2023

Not engaged in unrelated commercial activities (except incidental income)

📝 Must apply to and be approved by the Federal Tax Authority (FTA) to maintain exemption status.

6. Qualifying Investment Funds

Certain investment funds, such as REITs and regulated collective investment schemes, can apply for corporate tax exemption if they meet:

• Regulatory oversight by a licensed authority (e.g., DFSA, FSRA)

• Transparency and beneficial ownership criteria

• Limited direct control over investee businesses

7. Personal Income (Not Subject to Corporate Tax)

The UAE continues to not tax personal income for individuals unless they operate a business activity under a licence.

Exempt personal income includes:

• Salaries and wages

• Dividends

• Interest

• Capital gains

• Real estate investments (for individuals not engaged in business)

Required Documents to Apply for a Corporate Tax Exemption

To apply for exemption status with the Federal Tax Authority (FTA), you will typically need:

• Trade licence or business licence

• Certificate of incorporation

• Audited financial statements

• Revenue and activity breakdown

• Evidence of qualifying activity or entity status

• Application form through the FTA online portal

How to Apply for Corporate Tax Exemption in the UAE

Step 1: Confirm Eligibility

Determine whether your business fits within any of the exemption categories under UAE tax law.

Step 2: Register with the FTA

All businesses—including those eligible for exemption—must register for corporate tax via the FTA’s EmaraTax portal.

Step 3: Submit an Application

Apply for exemption with supporting documents, either through:

• FTA Portal (for most exemptions)

• Free Zone Authority (if operating in a free zone)

Step 4: Await Review

The FTA will evaluate your application for compliance with relevant laws and decisions.

Step 5: Receive Confirmation

If approved, you’ll receive an official Exemption Certificate or equivalent confirmation.

Step 6: Maintain Ongoing Compliance

• Submit annual returns (if required)

• Maintain audited records

• Update the FTA on any structural or operational changes

Thinking of Relocating to Dubai? Now's the Time

With its combination of tax reliefs, no personal income tax, and world-class infrastructure, the UAE remains one of the most attractive places to live and do business for UK nationals.

By understanding how corporate tax exemptions work in 2025, you can maximise your savings, minimise tax exposure, and confidently expand your business operations.