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UAE Corporate Tax Exemptions 2026: Complete List

15 min read

Quick Answer: Under Federal Decree-Law No. 47 of 2022, nine categories of entities are exempt from UAE corporate tax: government entities, government-controlled entities, extractive businesses, non-extractive natural resource businesses, qualifying public benefit entities, qualifying investment funds, pension funds, wholly-owned subsidiaries of exempt persons, and qualifying sports entities under Cabinet Decision No. 1 of 2026. Free zone companies are not exempt but may pay 0% on qualifying income as a Qualifying Free Zone Person (QFZP). Small Business Relief is available for businesses with revenue under AED 3 million through 31 December 2026.

UAE Corporate Tax Exemptions 2026: Who Is Fully Exempt?

UAE corporate tax exemptions 2026 cover nine categories of entities under Federal Decree-Law No. 47 of 2022 that are either automatically exempt or can apply to the Federal Tax Authority (FTA) for exemption. As of 2026, the list has expanded to include qualifying sports entities under Cabinet Decision No. 1 of 2026.

In this guide, Qaspro Global breaks down every UAE corporate tax exemption including who qualifies, the conditions you must meet, how to apply, and the deadlines you cannot miss. Whether you are a government-owned entity, a free zone company, a charitable organisation, or a small business, this is the definitive reference for 2026. For the broader picture of all taxes in Dubai, including VAT, excise tax, and what remains untaxed, see our guide: Is Dubai Tax Free in 2026? And if you need help navigating these exemptions with the FTA, see our guide on how to choose a tax consultant in Dubai.

How Does UAE Corporate Tax Work? Quick Overview

The UAE corporate tax rate is 9% on taxable income exceeding AED 375,000 and 0% on taxable income up to AED 375,000, effective for financial years starting on or after 1 June 2023. The tax applies to all businesses and commercial activities conducted in the UAE, unless the entity qualifies for an exemption under Article 4 of Federal Decree-Law No. 47 of 2022.

There are two types of relief from corporate tax:

Exempt person status — the entity is fully exempt and does not pay corporate tax at all
Preferential rate (0%) — the entity is taxable but pays 0% on qualifying income (e.g., Qualifying Free Zone Persons)

Both types are covered in this guide. Understanding which category applies to your business is critical to avoiding unnecessary tax payments and FTA penalties. First, make sure your business is registered for corporate tax with the FTA — even exempt persons may have a registration obligation. For businesses that operate multiple entities, also read our guide on UAE corporate tax group relief, which explains how related companies can file as one entity and pool losses.

What Are the Categories of Exempt Persons Under UAE Corporate Tax Law?

Article 4(1) of Federal Decree-Law No. 47 of 2022 lists nine categories of exempt persons. Qaspro Global advises businesses to check this list carefully — many entities assume they must pay corporate tax when they actually qualify for exemption. The full list is:

#	Exempt Person Category	Legal Basis	Exemption Type
1	UAE Government entities	Article 4(1)(a)	Automatic
2	Government-controlled entities (listed by Cabinet Decision)	Article 4(1)(b)	Automatic (if listed)
3	Extractive businesses	Article 4(1)(c) / Article 7	Notify Ministry
4	Non-extractive natural resource businesses	Article 4(1)(d) / Article 8	Notify Ministry
5	Qualifying public benefit entities	Article 4(1)(e)	Listed by Cabinet Decision
6	Qualifying investment funds	Article 4(1)(f)	Apply to FTA
7	Public or private pension and social security funds	Article 4(1)(g)	Apply to FTA
8	Juridical persons wholly owned by exempt persons	Article 4(1)(h)	Apply to FTA
9	Other persons determined by Cabinet Decision (including sports entities)	Article 4(1)(i)	Apply to FTA

Each category has specific conditions. Below, we explain each one in detail.

Are UAE Government Entities Exempt from Corporate Tax?

Yes. UAE federal and local government entities are automatically exempt from corporate tax under Article 4(1)(a) of Federal Decree-Law No. 47 of 2022. This includes ministries, departments, authorities, agencies, and any other public body of the federal or emirate government.

However, there is one critical exception: if a government entity conducts a business or business activity under a licence, it becomes subject to corporate tax on that activity. For example, a government-owned entity that operates a commercial hotel or runs a retail business under a trade licence must register and pay corporate tax on that income.

Government-controlled entities listed in Cabinet Decision No. 56 of 2023 are also automatically exempt. These are entities where the government owns at least 50% or exercises effective control. The Cabinet periodically updates this list.

How Are Extractive Businesses Exempt from Corporate Tax?

Extractive businesses — those engaged in the exploration, extraction, or production of natural resources such as oil, gas, and minerals — may be exempt under Article 4(1)(c) read with Article 7 of the Corporate Tax Law. The exemption applies because these businesses are already subject to emirate-level taxation (concession-based royalties and taxes).

To qualify, the extractive business must:

Hold a right, concession, or licence granted by a local government
Be subject to taxation under emirate-level legislation
Notify the Ministry of Finance of its extractive business status

Non-extractive natural resource businesses (e.g., water, forestry, agriculture) follow similar rules under Article 8. The key requirement is local government authorisation and notification to the Ministry.

What Is a Qualifying Public Benefit Entity for Corporate Tax Purposes?

A qualifying public benefit entity is a non-profit organisation listed in Cabinet Decision No. 37 of 2023 that operates exclusively for religious, charitable, scientific, artistic, cultural, athletic, educational, healthcare, or other public benefit purposes. These entities are exempt from corporate tax under Article 4(1)(e).

Important conditions:

The entity must be specifically listed in the Cabinet Decision — simply being a non-profit is not enough
Listed entities must still register with the FTA and obtain a Tax Registration Number (TRN)
An entity not listed in the Cabinet Decision is a taxable person, not an exempt person
The entity must not conduct activities unrelated to its stated public benefit purpose

Qaspro Global recommends that all charitable and non-profit organisations check Cabinet Decision No. 37 of 2023 to confirm whether they are listed. If not listed, they must register for corporate tax and file returns like any other business.

Are Investment Funds Exempt from UAE Corporate Tax?

Qualifying investment funds can apply to the FTA for exempt person status under Article 4(1)(f). The FTA assesses whether the fund meets conditions set out in Ministerial Decision No. 34 of 2023, including:

The fund must be regulated by a competent authority in the UAE (e.g., SCA, DFSA, FSRA)
Interests in the fund must be traded on a recognised stock exchange, or the fund must be marketed and made available to investors who are not related parties
The primary purpose must be investment and not the avoidance of corporate tax
The fund must be managed by an investment manager that is an independent person

REITs (Real Estate Investment Trusts) that qualify as exempt investment funds have special rules from 2025 onwards: investors in an exempt REIT are taxed on a pro-rata basis on 80% of the immovable property income generated by the REIT.

Are Pension Funds and Social Security Funds Exempt?

Yes. Public and private pension funds and social security funds that meet regulatory conditions are eligible for exempt person status under Article 4(1)(g). The fund must apply to the FTA for exemption and demonstrate that it operates under the supervision of a competent authority.

This exemption covers the General Pension and Social Security Authority (GPSSA), Abu Dhabi Pension Fund, and similar emirate-level pension schemes, as well as private pension funds that meet the criteria.

What About Wholly-Owned Subsidiaries of Exempt Persons?

A juridical person that is wholly owned and controlled, directly or indirectly, by an exempt person may also apply for exempt person status under Article 4(1)(h). This ensures that subsidiaries of government entities, pension funds, or investment funds can also benefit from the exemption, provided they meet the conditions and apply to the FTA.

Which Sports Entities Are Exempt Under Cabinet Decision No. 1 of 2026?

Cabinet Decision No. 1 of 2026, issued on 12 January 2026 and announced by the Ministry of Finance on 9 February 2026, introduced a new corporate tax exemption for qualifying sports entities. This is the most recent addition to the exempt persons list under Article 4(1)(i).

Two types of entities qualify:

Sports Entities — wholly owned and fully controlled (directly or indirectly) by an International Sports Entity
Supporting Entities — wholly owned and fully controlled (directly or indirectly) by an International Sports Entity, established exclusively to carry out supporting activities

This exemption reflects the UAE’s strategy to attract major international sporting organisations, federations, and their operational entities. Qualifying sports entities must apply to the FTA for exempt person status.

How Does the Free Zone 0% Corporate Tax Rate Work?

Free zone companies are not fully exempt — they are taxable persons. However, a free zone entity that qualifies as a Qualifying Free Zone Person (QFZP) under Article 18 pays 0% corporate tax on qualifying income and 9% on non-qualifying income. Free zone companies must also register for VAT separately if their taxable supplies exceed AED 375,000.

To maintain QFZP status, the entity must:

Maintain adequate substance in the UAE (employees, assets, expenditure)
Derive “qualifying income” as defined by Ministerial Decision No. 265 of 2023
Not have elected to be subject to the standard 9% rate
Comply with transfer pricing documentation requirements
Prepare audited financial statements — a mandatory condition for QFZP status under Ministerial Decision No. 84 of 2025

Important 2024 update — ESR abolished: The old Economic Substance Regulations (ESR) that previously required free zone companies to file annual substance reports have been officially abolished by Cabinet Decision No. 98 of 2024 for financial years ending after 31 December 2022. No ESR filings are required for FY2023 and beyond. The QFZP substance conditions listed above now serve as the only substance framework that applies to UAE free zone businesses.

Note: QFZP companies cannot join a UAE Tax Group. If you run both QFZP and non-QFZP entities, only the non-QFZP entities can be included in a Tax Group for consolidated filing and loss pooling.

Qualifying income includes income from transactions with other free zone persons, income from qualifying activities (manufacturing, logistics, distribution, etc.), and certain income from transactions with mainland persons that does not relate to excluded activities.

Factor	Exempt Person	QFZP (Free Zone 0%)
Tax status	Not a taxable person	Taxable person with 0% rate
Filing requirement	May still need to register	Must register and file returns
Qualifying income	All income exempt	Only qualifying income at 0%
Non-qualifying income	N/A	Taxed at 9%
Audited financials	Not required for exemption	Mandatory requirement
Transfer pricing	Not applicable	Must comply

What Is Small Business Relief and Who Can Claim It?

Small Business Relief (SBR) under Article 21 allows UAE tax resident persons with annual revenue not exceeding AED 3 million to elect to be treated as having no taxable income. This relief is available for tax periods starting on or after 1 June 2023 and ending on or before 31 December 2026.

Key conditions:

Revenue must not exceed AED 3 million in the relevant tax period and all previous tax periods
The person must be a UAE tax resident (not a non-resident)
The person must not be a Qualifying Free Zone Person
The person must not be part of a Multinational Enterprise Group with consolidated revenue exceeding AED 3.15 billion

Important limitations: electing SBR means you cannot carry forward tax losses, cannot claim group relief, and transfer pricing rules do not apply. Once revenue exceeds AED 3 million in any period, SBR is permanently lost for that period and all future periods.

What Income Is Exempt from Corporate Tax Even for Taxable Persons?

Even if your business is a taxable person (not an exempt person), certain types of income are exempt under Articles 22-24 of the Corporate Tax Law:

Dividends from UAE resident companies — fully exempt from corporate tax
Participation exemption — income from qualifying shareholdings (generally 5%+ ownership held for 12+ months) in UAE or foreign companies is exempt
Income from foreign permanent establishments — if the business elects to exempt the income of a foreign branch, that income is not subject to UAE corporate tax (but losses are also not deductible)
Income of a non-resident from international transportation — aircraft and shipping income operated internationally

These exemptions prevent double taxation and encourage cross-border investment. Qaspro Global advises businesses with foreign subsidiaries or shareholdings to review whether the participation exemption applies to their structure.

How Do You Apply for Exempt Person Status with the FTA?

The application process depends on your category:

Automatic Exemption (No Application Needed)

Government entities and government-controlled entities listed in Cabinet Decision No. 56 of 2023 are automatically exempt. No application to the FTA is required, but they may still need to register for corporate tax purposes.

Notification to the Ministry of Finance

Extractive and non-extractive natural resource businesses must notify the Ministry of Finance of their exempt status. This is not an application for approval — it is a formal notification that conditions are met.

Application to the FTA

Investment funds, pension funds, wholly-owned subsidiaries of exempt persons, and sports entities must apply to the FTA through the EmaraTax portal. The application must include:

Evidence of meeting the relevant conditions
Supporting documentation (constitutional documents, regulatory approvals, ownership structure)
Declaration that the entity meets all prescribed conditions

The FTA may revoke exempt person status if conditions are no longer met.

What Are the Penalties for Getting Corporate Tax Exemptions Wrong?

Claiming exempt status incorrectly — or failing to register when required — carries significant penalties under Federal Decree-Law No. 47 of 2022 and the Administrative Penalties regime:

AED 10,000 penalty for failure to register for corporate tax on time
AED 10,000 for late filing of a corporate tax return (first offence), AED 50,000 for repeat offences within 24 months
AED 500 per month (up to AED 50,000) for failure to maintain records
Up to 300% of the underpaid tax for deliberate tax evasion

If your entity incorrectly claims exempt status and the FTA determines you were a taxable person, you will owe the full 9% corporate tax plus penalties and interest from the date the tax was originally due. Good accounting records and a monthly bookkeeping routine are essential to demonstrate your compliance position if the FTA ever queries your status.

Frequently Asked Questions

Is my free zone company exempt from UAE corporate tax?

No. Free zone companies are taxable persons, not exempt persons. However, a Qualifying Free Zone Person (QFZP) pays 0% corporate tax on qualifying income under Article 18 of Federal Decree-Law No. 47 of 2022. Non-qualifying income is taxed at 9%. Note that QFZP companies cannot join a UAE Tax Group.

Do exempt persons still need to register for corporate tax?

Some do. Qualifying public benefit entities listed in Cabinet Decision No. 37 of 2023 must register with the FTA and obtain a Tax Registration Number (TRN). Investment funds, pension funds, and sports entities must also register as part of their exemption application. Government entities may need to register if they conduct licensed business activities.

Can a small business with zero revenue claim an exemption?

A business with zero revenue can elect Small Business Relief under Article 21 if its revenue is below AED 3 million. However, it must still register for corporate tax and file a return. Having a trade licence creates a filing obligation regardless of revenue.

What happens if my exempt status is revoked by the FTA?

If the FTA revokes your exempt person status, you become a taxable person from the date of revocation. You must then file corporate tax returns and pay the 9% rate on all taxable income. Penalties may apply if you failed to register and file during the period of incorrect exemption.

Are charities automatically exempt from corporate tax in the UAE?

No. Only charities specifically listed in Cabinet Decision No. 37 of 2023 are exempt. Unlisted charities and non-profits are taxable persons and must register for corporate tax, file returns, and pay the 9% rate on taxable income exceeding AED 375,000.

Is dividend income exempt from UAE corporate tax?

Yes. Dividends received from UAE resident companies are fully exempt under Article 22 of the Corporate Tax Law. Dividends from foreign companies may also be exempt under the participation exemption if the shareholding meets the 5% ownership threshold held for at least 12 months.

When does Small Business Relief expire?

Small Business Relief is available for tax periods ending on or before 31 December 2026. After that date, all businesses with taxable income exceeding AED 375,000 will pay the standard 9% rate regardless of revenue size. The Ministry of Finance has not announced an extension.

How do sports entities apply for corporate tax exemption in 2026?

Sports entities qualifying under Cabinet Decision No. 1 of 2026 must apply to the FTA through the EmaraTax portal. The entity must be wholly owned and fully controlled by an International Sports Entity and must demonstrate that it meets all prescribed conditions. Supporting entities established exclusively for supporting activities also qualify.

Need Expert Help?

Qaspro Global’s corporate tax consultants, led by Muhammad Qasim FCCA with 16 years of experience including 12 years in the UAE, can help you determine whether your business qualifies for exempt person status, QFZP treatment, or Small Business Relief — and handle the full application process with the FTA. Contact Qaspro Global today for a free consultation.