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Yes, in many cases. A company incorporated in the UAE is generally within the UAE Corporate Tax regime even if all of its shareholders are foreign. Foreign ownership by itself does not create an exemption. Whether Corporate Tax is actually payable depends on the company’s taxable income (income after the adjustments required by the Corporate Tax Law), free zone status, available exemptions and other provisions of the Corporate Tax Law.
The key point is to separate foreign ownership from foreign incorporation. A UAE-incorporated LLC owned by overseas shareholders is not treated the same way as a company incorporated outside the UAE that merely has customers, property, a branch or other activities in the UAE.
Key Takeaways
- A UAE company remains within Corporate Tax even if it is 100% foreign-owned.
- For a standard UAE company, taxable income up to AED 375,000 is subject to 0%, and the portion of taxable income above AED 375,000 is generally subject to 9%.
- A qualifying free zone person (a Free Zone business that meets the conditions for the special Corporate Tax regime) can benefit from 0% on qualifying income (income that meets the conditions for the 0% Free Zone rate), subject to the applicable conditions.
- A company incorporated outside the UAE must be assessed under the separate resident and non-resident Corporate Tax rules.
- The targeted exemption for certain foreign entities under Cabinet Decision No. 55 of 2025 is not a general exemption for foreign-owned businesses. The FTA also lists FTA Decision No. 15 of 2026 as a decision on provisions on exemption from Corporate Tax.
Table of Contents
What Does "Foreign-Owned Company" Mean for UAE Corporate Tax?
For Corporate Tax purposes, “foreign-owned company” can describe two very different situations: a company incorporated in the UAE whose shareholders are overseas persons, or a company incorporated outside the UAE that has a presence or taxable connection with the UAE. The tax analysis differs significantly between these two cases.
Scenario 1
UAE-incorporated, foreign-owned
Typical Example
Dubai mainland LLC or UAE free zone company owned by non-UAE shareholders
Corporate Tax Starting Point
Generally a UAE resident juridical person (for example, a company or other entity with separate legal personality treated as UAE resident for Corporate Tax purposes) within Corporate Tax.
Scenario 2
Foreign-incorporated company
Typical Example
Overseas company with a UAE branch, permanent establishment, management presence or other taxable nexus
Corporate Tax Starting Point
Resident or non-resident rules must be tested based on the facts.
Do UAE Companies Owned by Foreign Shareholders Pay Corporate Tax?
A company incorporated or otherwise established in the UAE is generally a resident juridical person (for example, a company or other entity with separate legal personality treated as UAE resident for Corporate Tax purposes). The residence or nationality of its shareholders does not by itself change this position. The company must determine its taxable income and apply the relevant UAE Corporate Tax rules, subject to any exemption, relief or free zone treatment that applies.
The FTA expressly states that UAE Corporate Tax does not differentiate based on the nationality or residence of the founders or ultimate owners of a UAE entity. This means a UAE LLC owned by individuals or companies in the UK, India, Europe, the United States or elsewhere can still be subject to UAE Corporate Tax in the same way as a UAE-owned company.
If the entity has not yet completed its registration obligations, see Beaufort Associates’ Corporate Tax registration services for support with assessing the registration position and preparing the application.
What Corporate Tax Rate Applies?
For a standard company within the Corporate Tax regime, the general rates are 0% on the portion of taxable income up to AED 375,000 and 9% on the portion exceeding AED 375,000. These rates apply to taxable income, not revenue. The final taxable income may differ from accounting profit because the Corporate Tax Law requires tax adjustments, exemptions, deductions and other rules to be considered.
Large multinational groups: A separate UAE Domestic Minimum Top-up Tax (a minimum-tax regime for large multinational groups) can apply to UAE constituent entities (group entities within the Top-up Tax rules) of multinational enterprise groups with annual global revenue of EUR 750 million or more in at least two of the four financial years immediately preceding the tested financial year. The UAE DMTT applies for financial years starting on or after 1 January 2025, so large foreign-owned groups should assess these rules separately from the standard Corporate Tax rates.
What if the Company is in a UAE Free Zone?
Foreign ownership does not automatically give a free zone company a 0% Corporate Tax rate. A free zone company is still within the Corporate Tax regime. A qualifying free zone person (a Free Zone business that meets the conditions for the special Corporate Tax regime) may benefit from 0% on qualifying income (income that meets the conditions for the 0% Free Zone rate), while taxable income that is not qualifying income is generally subject to 9%. The qualifying conditions must be reviewed for each tax period (the financial period for which Corporate Tax is calculated and filed).
Free zone status and foreign ownership are therefore separate issues. The business must consider its activities, customers, qualifying and excluded activities, sufficient substance in the UAE, transfer pricing requirements and the de minimis rules (limits on non-qualifying revenue) where relevant.
Where the treatment is not straightforward, Beaufort Associates’ Corporate Tax consultancy in the UAE can help review the company’s structure and the Corporate Tax treatment of its income.
Does a Foreign Company Outside the UAE Have to Pay UAE Corporate Tax?
A company incorporated outside the UAE is not automatically subject to UAE Corporate Tax simply because it is foreign-owned or earns some income connected with the UAE. The analysis depends on whether it is treated as a UAE resident person, has a permanent establishment (a taxable business presence in the UAE) or another taxable nexus (a taxable connection to the UAE under specific Corporate Tax rules), or falls within another specific rule.
A foreign juridical person (for example, a company or other entity with separate legal personality incorporated outside the UAE) that is effectively managed and controlled in the UAE can be treated as a UAE resident person. A non-resident foreign company may also come within Corporate Tax where it has a permanent establishment or another taxable nexus in the UAE under the applicable legislation.
The FTA also states that merely earning UAE-sourced income does not, by itself, mean a foreign entity must register and file a UAE Corporate Tax return. The precise position depends on the type of income and the relevant resident, permanent establishment, nexus and withholding tax rules.
What Changed in September 2026 for Certain Foreign Entities?
FTA Decision No. 15 of 2026 was issued on 8 September 2026 and published on 15 September 2026. The FTA lists it as a decision on provisions on exemption from Corporate Tax. The targeted foreign-entity exemption discussed below arises under Cabinet Decision No. 55 of 2025 and is not a general exemption for ordinary foreign-owned UAE companies.
Cabinet Decision No. 55 of 2025 extended a Corporate Tax exemption to certain foreign entities that are wholly owned and controlled by specified exempt persons, subject to strict conditions. Those owners can include government entities, government-controlled entities, qualifying investment funds, and qualifying public or private pension and social security funds, depending on the relevant category and conditions.
The foreign entity must also meet the activity conditions in Cabinet Decision No. 55 of 2025. Broadly, it must undertake part or all of the exempt person’s activity, exclusively hold assets or invest funds for the exempt person, or carry out only activities ancillary to those of the exempt person.
Important: this targeted exemption does not mean that a normal UAE company becomes exempt because its shareholders are foreign. It applies only to specified entities that satisfy the relevant ownership, control and activity conditions.
What Corporate Tax Obligations Can Apply to a Foreign-Owned UAE Company?
A foreign-owned UAE company that is within Corporate Tax may need to register, maintain appropriate accounting and tax records, calculate taxable income, consider elections and reliefs, file a Corporate Tax return and pay any Corporate Tax due within the statutory timelines. Ownership by foreign shareholders does not remove these compliance obligations.
- Corporate Tax registration and maintenance of accurate EmaraTax details.
- Preparation of financial information and tax adjustments required to determine taxable income.
- Review of exempt income, deductions, related-party transactions (for example, transactions with a parent, subsidiary, shareholder or commonly controlled business where the legal definition is met), connected-person payments (for example, payments to an owner or director where the Corporate Tax rules apply) and transfer pricing requirements where relevant.
- Assessment of free zone treatment where the business is established in a UAE free zone.
- Filing the Corporate Tax return and paying any Corporate Tax due, generally within nine months from the end of the tax period.
- Retaining required supporting records generally for seven years following the end of the relevant tax period.
For businesses approaching their filing deadline, Beaufort Associates’ Corporate Tax return filing services in the UAE cover return preparation, review of tax adjustments and filing support based on the information and records provided by the business.
Examples of How the Rules Can Apply
The same foreign ownership can lead to different Corporate Tax outcomes depending on where the entity is incorporated and how it operates. The following simplified examples show why shareholder nationality alone is not enough to determine the Corporate Tax position.
Example 1
Foreign-owned mainland LLC
Facts
A Dubai LLC is 100% owned by overseas shareholders.
Likely Starting Point
The LLC is generally a UAE resident juridical person (for example, a company or other entity with separate legal personality treated as UAE resident for Corporate Tax purposes) and within Corporate Tax.
Example 2
Foreign-owned free zone company
Facts
A UAE free zone company is owned by a foreign parent.
Likely Starting Point
It remains within Corporate Tax. Qualifying free zone person treatment may apply only if all conditions are met.
Example 3
Overseas company with UAE operations
Facts
A company incorporated abroad has operations or management activity in the UAE.
Likely Starting Point
Resident, permanent establishment and nexus rules must be tested based on the facts.
Example 4
Foreign entity owned by an exempt person
Facts
A foreign entity is wholly owned and controlled by a specified exempt person and meets the activity conditions.
Likely Starting Point
It may qualify for the specific exemption, subject to the legislation and any applicable FTA exemption procedures.
How Beaufort Associates Can Help Foreign-Owned Businesses
Beaufort Associates can help foreign-owned mainland, free zone and cross-border businesses determine how the UAE Corporate Tax rules apply to their structure. The work can include registration, tax position reviews, free zone analysis, return preparation and filing, and support with specific Corporate Tax questions or FTA requirements.
Cross-border ownership often creates additional questions around management and control, permanent establishments, related-party transactions, transfer pricing, foreign income and free zone treatment. These issues should be reviewed against the actual legal structure and business activity rather than assuming that foreign ownership creates a different tax rate.
Businesses that need broader support can review Beaufort Associates’ Corporate Tax services in the UAE for registration, filing, consultancy and ongoing compliance assistance.
Frequently Asked Questions
Do Foreign-Owned LLCs in the UAE Pay Corporate Tax?
Generally, yes. A UAE-incorporated LLC is normally a UAE resident juridical person (for example, a company or other entity with separate legal personality treated as UAE resident for Corporate Tax purposes) regardless of whether its shareholders are UAE nationals or foreign persons. Whether Corporate Tax is actually payable depends on its taxable income and any applicable exemptions, reliefs or special regimes.
Does the Nationality of the Shareholder Change the UAE Corporate Tax Rate?
No. The FTA states that the UAE Corporate Tax regime does not differentiate based on the nationality or residence of the founders or ultimate owners of a UAE entity. The company’s own tax status and taxable income determine the treatment.
Can a Foreign-Owned Free Zone Company Pay 0% Corporate Tax?
It can qualify for 0% on qualifying income if it meets all conditions to be a qualifying free zone person (a Free Zone business that meets the conditions for the special Corporate Tax regime). Foreign ownership alone does not provide the 0% rate, and taxable income that is not qualifying income is generally subject to 9%.
Can a Foreign Company Without a UAE Subsidiary Be Subject to UAE Corporate Tax?
Yes, depending on the facts. A foreign company may be within UAE Corporate Tax if it is effectively managed and controlled in the UAE, has a permanent establishment (a taxable business presence in the UAE), or has another taxable nexus (a taxable connection to the UAE under specific Corporate Tax rules). Merely earning UAE-sourced income does not by itself require Corporate Tax registration and filing according to the FTA.
Did FTA Decision No. 15 of 2026 Exempt Foreign-Owned Companies From Corporate Tax?
No. The FTA lists FTA Decision No. 15 of 2026 as a decision on provisions on exemption from Corporate Tax. The foreign-entity exemption under Cabinet Decision No. 55 of 2025 is limited to specified foreign entities that meet the required ownership, control and activity conditions; it is not a general exemption for ordinary foreign-owned UAE companies.
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Last Reviewed on 11th September, 2026
This page sets out our understanding of corporate tax based on the legislation and guidance in force at the date of last review. The position may change, and the application to a particular set of facts may require further analysis. Nothing on this page constitutes professional, legal or tax advice. Beaufort Associates accepts no liability for action taken or not taken in reliance on this page. Please contact us for advice tailored to your circumstances.
Sources
Primary sources referenced on this page:
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, as amended
- Cabinet Decision No. 116 of 2022 on the Applicable Taxable Income Threshold for Corporate Tax
- Cabinet Decision No. 35 of 2025 Regarding the Determination of the Non-Resident Person's Nexus in the State
- Cabinet Decision No. 55 of 2025 on Exempting Certain Persons from Corporate Tax
- Ministerial Decision No. 229 of 2025 on Qualifying Activities and Excluded Activities
- Federal Tax Authority Decision No. 6 of 2026 on Determining the Additional Procedures for the Compliance of QFZP
- Federal Tax Authority Decision No. 15 of 2026 on Provisions on Exemption from Corporate Tax
- Federal Tax Authority - Corporate Tax FAQs
- Cabinet Decision No. 142 of 2024 on the Imposition of Top-up Tax on Multinational Enterprises
- Ministry of Finance - UAE Top-up Tax (DMTT): https://mof.gov.ae/en/public-finance/tax/top-up-tax/
We have referenced the legislation in force as at the last review date. The UAE tax framework is evolving; later changes may affect the position. Speak with us for advice on your specific circumstances.
