UAE expands corporate tax exemption to government-owned foreign firms

Dubai: The UAE is making it easier for businesses and certain entities to navigate the country’s new corporate tax system, with fresh changes announced to widen tax exemptions and reduce financial penalties.

The Ministry of Finance announced that some foreign companies—if fully owned by UAE government entities, investment funds, or public pension funds—can now qualify for corporate tax exemption. This was not allowed before, even if these foreign firms operated in the UAE through local branches.

This change ensures equal tax treatment for both UAE-based and foreign-based entities owned by exempt organisations, provided they meet specific conditions. It also supports the UAE’s goal of creating a fair, competitive, and business-friendly tax environment.

The move comes shortly after another major relief measure: the UAE will waive penalties for companies that missed the corporate tax registration deadline, as long as they file their returns within seven months of their first tax period. The Federal Tax Authority (FTA) will also refund fines already paid by businesses that meet these conditions.

Together, these measures are part of a broader push to ease the rollout of corporate tax, reduce pressure on companies, and promote early compliance during the law’s first year in effect.