UAE - Issuance of Cabinet Decision No. 55 of 2025 - Corporate Tax Exemption

26 May 2025 – On 14 May 2025, Cabinet Decision (CD) No. 55 of 2025 (the Decision) was issued. The Decision expands the scope of Corporate Tax (CT) exemption for certain juridical persons incorporated outside the United Arab Emirates (UAE) and is made effective retrospectively from 1 June 2023.

Key Provisions

Pursuant to the provision under Article 4(1)(i) of the UAE Corporate Tax Law (CT Law), the Decision extends the CT exemption to juridical persons incorporated outside the UAE, akin to the existing provisions prescribed for juridical persons incorporated in the UAE provided that they are wholly owned and controlled by another Exempt Person (Exempt Owner).

The tax exemption is made available subject to meeting the prescribed conditions under Article 4(1)(h) of the CT Law, requiring the foreign juridical person to conduct any of the following:

• Undertake part or all of the activity of the Exempt Owner.
• Exclusively hold assets or invest funds for the benefit of Exempt Owner.
• Carry out activities that support the activities of the Exempt Owner.

This Decision primarily affects foreign juridical person(s) having its place of effective management and control (POEM) in the UAE.

Entities previously excluded from availing the tax exemption solely because they were incorporated outside the UAE can now reassess if they can avail the CT exemption by fulfilling the afore-mentioned conditions.

Action Points

• Review of Corporate Structure: Foreign juridical person(s) owned by an Exempt Owner and having its POEM in the UAE should reassess their eligibility for CT exemption.
• Impact of Retrospective Amendment: Given the retrospective amendment, CT registrations and filing obligations may have to be revisited and may require amendment(s).
• Compliance and Documentation: Eligible foreign juridical person(s) must ensure compliance with the prescribed conditions listed above and maintain thorough documentation to substantiate their POEM in the UAE.

Conclusion

This Decision provides a welcome relief, and it helps establish parity in the tax treatment of entities incorporated within and outside the UAE, provided they are owned and controlled by Exempt Persons. 

It provides a significant opportunity for foreign entities owned by an Exempt Owner and having its POEM in the UAE to avail tax exemption. 

Stakeholders are advised to promptly review the implications of the Decision on their business operations and tax strategies.

For detailed analysis and assistance, please reach out to your usual Deloitte contact.