Introduction: Navigating Corporate Tax Exemptions UAE in 2025
With evolving tax legislation, understanding corporate tax exemptions UAE and tapping into available UAE corporate tax relief is more important than ever. From free zone benefits to foreign entity exemptions, MH Solutions UAE is here to guide businesses with expert corporate tax planning UAE.
Who Is Eligible for UAE Corporate Tax Relief?
The UAE’s corporate tax system offers reliefs and exemptions to support key business sectors. Here’s a snapshot of who qualifies:
1. Qualifying Free Zone Persons (QFZPs)
- Benefit from a 0% corporate tax rate.
- Must earn qualifying income within the free zone or from overseas clients.
- Engaging with the UAE mainland? Ensure the income falls under exempt categories or face 9% taxation.
2. Government and Public Sector Entities
- Fully exempt if wholly owned by the government and involved in sovereign or public benefit activities.
3. Natural Resource Sectors
- Extractive and non-extractive businesses (e.g., oil and gas) remain taxed at the emirate level, not federal.
4. Non-Profit Organizations
- Charities and non-profits with public benefit purposes may be exempt upon FTA approval.
5. Small Businesses Below the Threshold
- Businesses earning under AED 375,000 annually are exempt from corporate tax.
- Registration may still be required to comply with FTA rules.
6. Foreign Juridical Persons (New 2025 Exemption)
- Under Cabinet Decision No. 55 of 2025, foreign-incorporated companies wholly owned by another exempt entity may now qualify.
- Applies retrospectively from June 1, 2023.
What Income Types Are Exempt?
- Dividend Income from qualifying shareholdings
- Capital Gains from business investments
- Group Reorganizations & Intra-group Transactions (subject to specific conditions)
- No Withholding Tax on cross-border or domestic payments
Recent Reliefs and Incentives for 2025
- Small Business Relief: Simplified tax treatment until December 31, 2026.
- Refundable Tax Credits: For entities investing in high-value job creation.
- Domestic Minimum Top-Up Tax (DMTT): Large MNEs (revenue €750M+) must meet a 15% minimum rate even if in free zones.
Mandatory Corporate Tax Participants
Entities that must comply regardless of exemption eligibility:
- Mainland Businesses: Taxed at 9% on profits above AED 375,000.
- Free Zone Companies with Non-Qualifying Income
- Foreign Entities with UAE-sourced Income or Permanent Establishment
- Freelancers & Sole Proprietors: With business turnover above AED 1 million.
Proactive Corporate Tax Planning UAE: Actionable Steps
- Review Eligibility: Regularly assess exemptions with professional support.
- Organize Documentation: Maintain records to demonstrate compliance.
- Stay Informed: Monitor FTA updates and Cabinet Decisions.
- Engage Professionals: MH Solutions UAE simplifies everything from planning to reporting.
How MH Solutions UAE Helps
- Eligibility Assessment: Determine your exemption or relief status.
- FTA Registration & Advisory: Ensure proper filing and compliance.
- Strategic Tax Planning: Structure your business to maximize benefits.
- Ongoing Support: Adapt your tax strategy as rules evolve.
FAQs
Q1: Are all free zone companies exempt from tax?
No. Only those meeting strict QFZP criteria remain tax-exempt.
Q2: Can foreign companies qualify for UAE tax exemption?
Yes, under new 2025 rules, if they meet ownership and control criteria.
Q3: Is tax exemption automatic?
No. FTA approval and documented compliance are essential.
Q4: How does MH Solutions UAE support businesses?
We provide complete tax advisory services—from eligibility checks to full FTA compliance management.
Ready to Maximize Your Corporate Tax Relief?
Visit mhsolutionuae.com or call +971 555594403 to consult with MH Solutions UAE and ensure your tax strategy is optimized for 2025 and beyond.