What is an Exempt Person for Corporate Tax?

Article 2 – Exemption from Corporate Tax For the purposes of paragraph (i) of Clause 1 of Article 4 of Federal Decree-Law No. 47 of 2022 referred to above, a Taxable Person incorporated or established under the applicable legislation of a foreign jurisdiction that is wholly owned and controlled by an Exempt Person specified in paragraphs (a), (b), (f) and (g) of Clause 1 of Article 4 of Federal Decree-Law No. 47 of 2022 referred to above shall be exempt from Corporate Tax, provided it conducts any of the following: 1. Only undertakes part or whole of the activity of the Exempt Person. 2. Is engaged exclusively in holding assets or investing funds for the benefit of the Exempt Person. 3. Only carries out activities that are ancillary to those carried out by the Exempt Person. Cabinet Decision No. 55 of 2025 – As published by the Ministry of Finance 1

Article 4 – Exempt Person 1. The following Persons shall be exempt from Corporate Tax: a. A Government Entity. b. A Government Controlled Entity. c. A Person engaged in an Extractive Business, that meets the conditions of Article 7 of this Decree-Law. d. A Person engaged in a Non-Extractive Natural Resource Business, that meets the conditions of Article 8 of this Decree-Law. e. A Qualifying Public Benefit Entity under Article 9 of this Decree-Law. f. A Qualifying Investment Fund under Article 10 of this Decree-Law. g. A public pension or social security fund, or a private pension or social security fund that is subject to regulatory oversight of the competent authority in the State and that meets any other conditions that may be prescribed by the Minister. h. A juridical person incorporated in the State that is wholly owned and controlled by an Exempt Person specified in paragraphs (a), (b), (f) and (g) of Clause 1 of this Article and conducts any of the following: 1) Undertakes part or whole of the activity of the Exempt Person. 2) Is engaged exclusively in holding assets or investing funds for the benefit of the Exempt Person. 3) Only carries out activities that are ancillary to those carried out by the 3 Clause added as per Federal Decree-Law No. 60 of 2023, and shall come into effect as of the date specified in a decision issued by the Cabinet at the suggestion of the Minister. Federal Decree-Law No. 47 of 2022 and its amendments – Unofficial translation (as published by the Ministry of Finance) 9 Exempt Person. i. Any other Person as may be determined in a decision issued by the Cabinet at the suggestion of the Minister. 2. A Person under paragraphs (a), (b), (c) and (d) of Clause 1 of this Article that is a Taxable Person insofar as it relates to any Business or Business Activity under Articles 5, 6, 7 or 8 of this Decree-Law, respectively, shall be treated as an Exempt Person for the purposes of Articles 26, 27, 38 and 40 of this Decree-Law. 3. Persons specified in paragraphs (f), (g), (h) and (i) of Clause 1 of this Article, as applicable, are required to apply to the Authority to be exempt from Corporate Tax in the form and manner and within the timeline prescribed by the Authority in this regard. 4. The exemption from Corporate Tax under paragraphs (f), (g), (h) and (i) of Clause 1 of this Article, as applicable, shall be effective from the beginning of the Tax Period specified in the application, or any other date determined by the Authority. 5. In the event that the Exempt Person failed to meet any of the conditions under the relevant provisions of this Decree-Law at any particular time during a Tax Period, such Person shall cease to be an Exempt Person for the purposes of this Decree-Law from the beginning of that Tax Period. 6. For the purposes of Clause 5 of this Article, the Minister may prescribe the conditions under which a Person may continue to be an Exempt Person, or cease to be an Exempt Person from a different date, in any of the following instances: a. Failure to meet the conditions is the result of the liquidation or termination of the Person. b. Failure to meet the conditions is of a temporary nature and will be promptly rectified, and appropriate procedures are in place to monitor the compliance with the relevant conditions of this Decree-Law. c. Any other instances as may be prescribed by the Minister.

5. Taxable Persons and Exempt Persons Who is a Taxable Person? Under the Corporate Tax Law, a Taxable Person is either a Resident Person or a NonResident Person. Whether a Person is a Resident or Non-Resident determines the scope of their tax obligations. A Resident Person can be: 1. A juridical person incorporated or otherwise established or recognised under the applicable legislation in the UAE (including a Person incorporated, established or otherwise registered in a Free Zone);8 2. A juridical person incorporated or otherwise established or recognised under the applicable legislation outside the UAE but “effectively managed and controlled” in the UAE;9 or 3. A natural person that conducts a taxable Business or Business Activity in the UAE in accordance with the provisions of Cabinet Decision No. 49 of 2023.10 A Resident juridical person must register for Corporate Tax. Further guidance on Natural Persons will be issued in the near future. Example 1: Juridical person incorporated in the UAE Company A is a limited liability company incorporated in the UAE. As a company incorporated in the UAE, the company would be considered a Resident Person under the Corporate Tax Law and will be required to register for Corporate Tax. Who is an Exempt Person? Certain Persons, referred to as Exempt Persons, will be exempt from Corporate Tax. Exempt Persons fall into one of four categories: 1. Automatically Exempt Persons; 2. Exempt if they notify the Ministry of Finance, and meet relevant conditions; 3. Exempt if listed in a Cabinet Decision and meet relevant conditions; and 4. Exempt upon application to, and approval by, the FTA. 8 Article 11(3)(a) of the Corporate Tax Law. 9 Article 11(3)(b) of the Corporate Tax Law. 10 Article 11(3)(c) and Article 11(6) of the Corporate Tax Law. Corporate Tax Guide I Registration of Resident Juridical Persons I CTGRJP1 16

Article 4 – Instances for Ceasing to Deem the Person as an Exempt Person from a Different Date For the purposes of paragraph (c) of Clause 6 of Article 4 of the Corporate Tax Law, the Person shall cease to be deemed as an Exempt Person starting from the day it fails to meet the conditions to be exempt under the relevant provisions of the Corporate Tax Law, in case it can be reasonably concluded that the main purpose or one of the main purposes of this cessation is to obtain a Corporate Tax advantage as specified in Clause 2 of Article 50 of the Corporate Tax Law that is not consistent with the intentions or purposes of the Corporate Tax Law.

7. Corporate Tax consequences of benefitting from Exempt Person status A Person who qualifies as an Exempt Person under one of the categories covered in this guide, following its application being approved by the FTA, is not subject to Corporate Tax on any of its income, i.e. is completely exempt from Corporate Tax, provided they continue to meet all the requirements for exemption throughout the Tax Period. 7.1. No availability of Small Business Relief Small Business Relief is a Corporate Tax relief that allows eligible Taxable Persons to be treated as having no Taxable Income for the relevant Tax Period. Small Business Relief does not apply to the Exempt Persons covered in this guide. 7.2. No availability of Qualifying Group Relief or Business Restructuring Relief An Exempt Person cannot be a member of a Qualifying Group.42 One of the conditions for Business Restructuring Relief is that the transferor or transferee is not an Exempt Person.43 As a result, Qualifying Group Relief and Business Restructuring Relief are not available to the Exempt Persons covered in this guide. 7.3. No transfer of Tax Loss Under the Corporate Tax Law, Tax Losses or a portion thereof may be offset against the Taxable Income of another Taxable Person upon satisfaction of certain conditions.44 One of the conditions is that the transferor or transferee is not an Exempt Person.45 Therefore, Exempt Persons covered in this guide cannot transfer any Tax Losses from their activities or Business operations to a Taxable Person.46 7.4. Exempt Person cannot be a member of a Tax Group The Tax Group provision is intended to allow for the grouping of entities which are subject to Corporate Tax in the same manner. In line with this principle, an Exempt Person under Article 4 of the Corporate Tax Law cannot form or join a Tax Group.47 42 Article 26(2)(c) of the Corporate Tax Law. 43 Article 27(2)(c) of the Corporate Tax Law. 44 Article 38(1) of the Corporate Tax Law. 45 Article 38(1)(e) of the Corporate Tax Law. 46 Article 4(2) of the Corporate Tax Law. 47 Article 40(1)(e) of the Corporate Tax Law. Corporate Tax Guide | Public Benefit Entities, Pension Funds & Social Security Funds | CTGEPF1 22