Tax & compliance
Who is exempt from UAE corporate tax
Genuine exemptions exist and they are narrower than the internet suggests. Being exempt is not the same as having nothing to file, and most 'exempt' companies are not exempt at all.
The rule
What the law actually requires.
The corporate tax law exempts specific categories rather than specific companies. Government entities and government-controlled entities are exempt. So are extractive and non-extractive natural resource businesses, which are taxed at emirate level instead. Qualifying public benefit entities are exempt on application and listing. Qualifying investment funds, public and private pension and social security funds, and certain wholly-owned UAE subsidiaries of exempt persons can be exempt subject to conditions and, in most cases, an application to the FTA.
What is not on that list is the thing most people mean. A free zone company is not exempt — it is a taxable person that may pay 0% on qualifying income. A company under AED 3 million of revenue is not exempt — it may elect Small Business Relief, until that ends. An offshore company is not exempt by virtue of being offshore. A dormant company is not exempt. And in almost every case the exemption or relief must be claimed, which means being registered and filing. Companies that conclude they are outside the system and do nothing are the ones collecting AED 10,000 penalties.
Thresholds and deadlines
- Government entities
- Exempt, with conditions on commercial activity
- Natural resource businesses
- Exempt federally; taxed at emirate level
- Public benefit entities
- Exempt on application and cabinet listing
- Qualifying investment funds
- Exempt subject to conditions and application
- Pension and social security funds
- Exempt subject to conditions
- Not exempt
- Free zone companies, small companies, offshore vehicles, dormant companies
The compliance calendar
What to do
The filing, step by step.
- Check the entity against the exempt categoriesThe list is short and specific. Most companies believing themselves exempt are relying on a relief or a 0% rate instead.
- Apply where application is requiredPublic benefit entities and qualifying investment funds must apply and be listed or approved. Exemption is not self-assessed.
- Register regardlessRegistration obligations generally continue, and exempt persons may still have to file annual declarations.
- Watch conditions on commercial activityGovernment and public benefit exemptions can be lost where commercial activity outside the exempt purpose is carried on.
- Do not confuse exemption with a 0% rateThey have entirely different mechanics and entirely different filing consequences.
Related
Questions
No. A Qualifying Free Zone Person pays 0% on qualifying income and 9% on non-qualifying income, and must register, keep audited accounts and file.
No. Dormancy is not an exemption and does not remove the registration or filing obligation.
Many must still register and submit annual declarations. Exemption from tax is not exemption from administration.
Not by virtue of being offshore. Its position depends on residence and on whether it carries on business in the UAE.
One question
Where does your company stand right now?
Then the thing to verify is qualifying status rather than the rate. Qualifying Free Zone Person is a set of conditions tested every year — substance, qualifying income, the de minimis threshold, audited accounts — and failing any one of them costs the 0% rate for that year and the four that follow.
The QFZP conditions in fullOr just ask usThen Small Business Relief has probably been carrying you, and it ends for tax periods after 31 December 2026. There is no announced extension. The first return without it is the one that surprises people, and the planning has to happen before the period starts rather than at filing.
What happens when the relief endsOr just ask usThen deal with that first. Registration is mandatory for loss-making and dormant companies too, the penalty for missing the window is AED 10,000, and it has been issued to companies with no revenue at all. It is the most avoidable fine in the system.
Deadlines and penaltiesOr just ask us