Is a holding company subject to Corporate Tax?

Answered by FinTaxIQ - TI from the Federal Tax Authority’s own law · 11 October 2026. Guidance, not tax advice: rely on the official text.

FinTaxIQ - TI AssistantDepends on your situationTI Pro

It depends on what you mean: a UAE holding company is generally subject to Corporate Tax like any other business, but income from qualifying shareholdings (dividends and capital gains) can be exempt if specific conditions are met.

Show the full answerShow less

The detail

A holding company is a Taxable Person and subject to Corporate Tax on its income in the same way as any other business; there is no blanket exemption for holding companies as such. However, dividends and gains from a 'Participating Interest' can fall under the participation exemption in Article 23 of the Corporate Tax Law, and if the holding company itself is the Participation being tested, it must meet the holding company conditions to satisfy the subject-to-tax test for that exemption.1 2

What the law says

A holding company is treated as meeting the subject-to-tax test for participation exemption only if it is directed and managed abroad, complies with local filing/record requirements there, has adequate personnel and premises relative to its activity, and conducts no activity beyond acquiring and holding shares or equitable interests.1 2
It is also treated as satisfying that test if, on average over the current and preceding Tax Period, 50% or more of its income consists of dividends, capital gains and other income from Participating Interests.1 2

What it depends on

These conditions apply only where the holding company itself is the foreign Participation being tested for the participation exemption, not to UAE holding companies' general tax status.1 2
Ministerial Decision No. 302 of 2024 restates and updates the same conditions originally set out in Ministerial Decision No. 116 of 2023.2

Check before you rely on it

Confirm whether the holding company itself is a UAE taxable entity or a foreign Participation being assessed for exemption
Check what share of its income comes from dividends, capital gains or other Participating Interest income over the current and prior Tax Period
Check whether it carries on any activity beyond acquiring/holding shares or equitable interests

Note: If you are asking whether holding companies are Exempt Persons outright, that is a different question answered by the general exempt-person list in the Corporate Tax Law, which does not include ordinary holding companies.

Sources (2) — read the official text

1Ministerial Decision 116/2023Article 7Ministerial Decision

Article 7 – Conditions for Holding Companies

Read the article
Article 7 – Conditions for Holding Companies 1. For the purposes of paragraph (a) of Clause 3 of Article 23 of the Corporate Tax Law, the Participation must satisfy all of the following conditions: a. Be directed and managed in the relevant other country or foreign territory. b. Comply with the requirement to submit any documents, records or information to the relevant authority under the laws and regulations applicable to such Participation in the relevant other country or foreign territory. Ministerial Decision No. 116 of 2023 – As published by Ministry of Finance 6 c. Have adequate personnel and premises for the acquisition and holding of the shares or equitable interests in the relevant other country or foreign territory, having regard to the level of activity carried on by the Participation and the extent to which those activities are performed on behalf or for the benefit of the Participation by another Person in that other country or foreign territory. d. Not conduct any other activities other than those that are incidental or ancillary to the acquisition and holding of shares or equitable interests. 2. A Participation shall be considered as having met the condition of paragraph (b) of Clause 3 of Article 23 of the Corporate Tax Law where its income during the relevant Tax Period and the preceding Tax Period on average consisted of (50%) fifty percent or more of Dividends, capital gains and other income from Participating Interests.

Official PDF, pp. 6–7Captured from the FTA website on 9 Sep 2026
2Ministerial Decision 302/2024Article 7Ministerial Decision

Article 7 – Conditions for Holding Companies

Read the article
Article 7 – Conditions for Holding Companies 1. For the purposes of paragraph (a) of Clause (3) of Article (23) of the Corporate Tax Law, the Participation must satisfy all of the following conditions: a. Be directed and managed in the relevant other country or foreign territory. b. Comply with the requirement to submit any documents, records or information to the relevant authority under the laws and regulations applicable to such Participation in the relevant other country or foreign territory. c. Have adequate personnel and premises for the acquisition and holding of the shares or equitable interests in the relevant other country or foreign territory, having regard to the level of activity carried on by the Participation and the extent to which those activities are performed on behalf or for the benefit of the Participation by another Person in that other country or foreign territory. d. Not conduct any other activities other than those that are incidental or ancillary to the acquisition and holding of shares or equitable interests. Ministerial Decision No. 302 of 2024 – As published by the Ministry of Finance 7 2. A Participation shall be considered as having met the condition of paragraph (b) of Clause (3) of Article (23) of the Corporate Tax Law where (50%) fifty percent or more of its income during the relevant Tax Period and the preceding Tax Period on average consisted of Dividends, capital gains and other income from Participating Interests.

Official PDF, pp. 7–8Captured from the FTA website on 9 Sep 2026

Helpful?

What the law says:
- A holding company is treated as meeting the subject-to-tax test for participation exemption only if it is directed and managed abroad, complies with local filing/record requirements there, has adequate personnel and premises relative to its activity, and conducts no activity beyond acquiring and holding shares or equitable interests. [1, 2]
- It is also treated as satisfying that test if, on average over the current and preceding Tax Period, 50% or more of its income consists of dividends, capital gains and other income from Participating Interests. [1, 2]

What it depends on:
- These conditions apply only where the holding company itself is the foreign Participation being tested for the participation exemption, not to UAE holding companies' general tax status. [1, 2]
- Ministerial Decision No. 302 of 2024 restates and updates the same conditions originally set out in Ministerial Decision No. 116 of 2023. [2]

Check before you rely on it:
- Confirm whether the holding company itself is a UAE taxable entity or a foreign Participation being assessed for exemption
- Check what share of its income comes from dividends, capital gains or other Participating Interest income over the current and prior Tax Period
- Check whether it carries on any activity beyond acquiring/holding shares or equitable interests

Note: If you are asking whether holding companies are Exempt Persons outright, that is a different question answered by the general exempt-person list in the Corporate Tax Law, which does not include ordinary holding companies.

Sources:
1. Ministerial Decision 116/2023 — Article 7
2. Ministerial Decision 302/2024 — Article 7

Written by AI from the FTA sources above and checked before display. Not tax advice or official FTA information - confirm with a tax adviser before you act. Full disclaimer

Is a holding company subject to Corporate Tax?

The detail

What the law says

What it depends on

Check before you rely on it

Ask your own question

Related questions