MoF expands tax exemption to foreign-owned entities tied to exempt persons: The Finance Ministry (MoF) has issued a new cabinet decision expanding corporate tax exemptions to include foreign entities wholly owned by exempt entities — such as government entities, government-controlled entities, qualifying investment funds, and public pension or social security funds — provided they meet relevant conditions, Wam reports.

Previously, exemptions were limited to UAE-incorporated entities, excluding foreign companies even if fully owned by exempt persons or operating through UAE branches.

The rationale: The update removes this restriction to ensure equal tax treatment between domestic and foreign structures under common exempt ownership. It also reinforces the UAE’s position as a holding company hub and brings its framework further in line with international tax standards, according to Wam.

ICYMI- The move follows a string of tax relief measures rolled out since the UAE’s 9% federal corporate tax came into effect in June 2023. These included the exemptions for Qualifying Investment Funds and Qualifying Limited Partnerships, grace periods to fix ownership breaches, and partial taxation of real estate income exceeding set thresholds. Further amendments eased compliance for domestic entities, foreign partnerships, and family foundations.

Foreign investors have been a focus: Recent rules allow foreign partnerships to qualify for tax transparency if holding the same status in their home country. Non-resident investors generally remain exempt unless a nexus is created through dividend distributions or other trigger events. Some foreign-owned investment entities have also been exempted from the 15% minimum top-up tax, with carve-outs linked to payroll and asset-based substance tests.

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