FTA Decision 15 2026 Lists UAE Corporate Tax Exempt Activities

FTA Decision No. 15 of 2026 grants corporate tax exemptions to specific qualifying activities in the UAE, provided they meet the substance and eligibility criteria set out in Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and the accompanying Cabinet Decision No. 85 of 2022.

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WHAT ACTIVITIES ARE LISTED AS QUALIFYING FOR THE CORPORATE TAX EXEMPTION UNDER FTA DECISION NO. 15 OF 2026

The decision expressly exempts income derived from the following activities when they are carried out by a juridical person that satisfies the economic substance test: (i) qualifying income from international shipping and air transport; (ii) income from the operation of qualifying infrastructure projects such as utilities, renewable energy plants, and telecommunications networks; (iii) revenue from qualifying financial services including banking, insurance, and reinsurance conducted under a licence issued by the UAE Central Bank or the Insurance Authority; (iv) earnings from qualifying holding company activities where the holding company owns at least 5 % of the share capital of a subsidiary that carries out an exempt activity; (v) profits from qualifying intellectual property (IP) development and exploitation, provided the IP is created or substantially enhanced in the UAE and the related expenditure meets the nexus approach; (vi) income from qualifying headquarters activities that involve strategic management, risk-management, treasury, and financing functions for a multinational group; (vii) gains from qualifying treasury and centre-of-excellence functions that provide shared services to affiliated entities; (viii) revenue from qualifying research and development (R&D) conducted in UAE-based facilities that meet the minimum spend threshold; (ix) earnings from qualifying Islamic finance activities that comply with Sharia-principles and are licensed by the relevant authority; (x) income from qualifying logistics and warehousing operations that support international trade and are located within designated free zones or approved mainland logistics hubs.

Each category is subject to specific conditions outlined in the decision, including minimum annual expenditure, minimum qualifying asset thresholds, and the requirement that the activity be conducted through a UAE-registered entity that maintains adequate premises, qualified employees, and operating expenditures in the UAE. The Arabic text of UAE legislation as published in the Official Gazette prevails over any translation.

HOW DOES A COMPANY DEMONSTRATE ECONOMIC SUBSTANCE TO BENEFIT FROM THE EXEMPTION

To benefit from the exemption, a company must satisfy the economic substance test prescribed in Article 6 of Federal Decree-Law No. 47 of 2022 and further detailed in Ministerial Decision No. 100 of 2023. The test requires that the entity: (i) conducts the relevant core income-generating activity in the UAE; (ii) is directed and managed in the UAE; (iii) maintains adequate operating expenditures in the UAE, including staff costs, office rent, and utilities; (iv) employs a sufficient number of qualified full-time employees physically present in the UAE to carry out the activity; (v) holds adequate physical assets in the UAE, such as office space, equipment, or intellectual property, that are commensurate with the level of activity; (vi) prepares and maintains adequate documentation evidencing the above, including board minutes, employment contracts, expense records, and asset registers.

The decision specifies quantitative thresholds for certain activities: for example, a qualifying shipping company must incur at least AED 10 million of operating expenditure in the UAE per fiscal year and employ a minimum of five UAE-based seafarers or maritime professionals. A qualifying IP company must incur qualifying R&D expenditure of not less than AED 5 million per year and have at least two UAE-based employees involved in the creation or enhancement of the IP. Failure to meet any of these thresholds results in the denial of the exemption for the relevant fiscal year, and the taxpayer becomes subject to the standard corporate tax rate of 9 % on its taxable income.

WHAT DOCUMENTATION MUST BE SUBMITTED TO THE FTA TO CLAIM THE EXEMPTION

A taxpayer seeking the exemption must submit an annual Economic Substance Report (ESR) to the Federal Tax Authority (FTA) within twelve months following the end of the relevant fiscal year, as required by Article 12 of Federal Decree-Law No. 47 of 2022. The ESR must contain: (i) a description of the relevant activity and the legal basis for the exemption claimed under FTA Decision No. 15 of 2026; (ii) details of the UAE-based premises used, including address, size, and lease agreements; (iii) a breakdown of operating expenditures incurred in the UAE, distinguishing between staff costs, rent, utilities, and other overheads; (iv) a list of full-time employees employed in the UAE, their qualifications, and the proportion of time devoted to the exempt activity; (v) a schedule of qualifying assets located in the UAE, with valuation and usage details; (vi) copies of board resolutions authorising the activity and confirming that strategic decisions are made in the UAE; (vii) any licences, permits, or approvals obtained from UAE regulators that are necessary to conduct the activity.

The FTA may request additional information or conduct an on-site verification to confirm compliance. If the FTA determines that the substance requirements are not met, it will issue a notice of assessment and the taxpayer will have thirty days to file an objection, after which the matter may be referred to the Tax Disputes Resolution Committee.

HOW CAN A MULTINATIONAL GROUP STRUCTURE ITS OPERATIONS TO MAXIMISE THE BENEFIT OF THE EXEMPTION

A multinational group can optimise its tax position by allocating functions, assets, and risks to UAE entities in accordance with the OECD BEPS Action 8-10 guidance and the specific requirements of FTA Decision No. 15 of 2026. Common structures include: (i) establishing a UAE holding company that owns shares in operating subsidiaries abroad and receives qualifying dividends, interest, or royalties that are exempt under the holding-company provision; (ii) locating the group's treasury, risk-management, and central financing functions in a UAE entity that meets the headquarters exemption criteria, thereby centralising cash-pooling, foreign-exchange hedging, and inter-company lending activities; (iii) setting up a UAE-based IP holding company that acquires, develops, and licences patents, trademarks, or copyrights to group entities, provided the IP creation or enhancement occurs in the UAE and the nexus approach is satisfied; (iv) creating a UAE logistics hub that provides warehousing, consolidation, and distribution services for the group's international supply chain, qualifying under the logistics exemption if the entity maintains sufficient UAE-based staff, premises, and operating expenditure; (v) establishing a UAE R&D centre that undertakes qualifying innovation projects for the group, benefitting from the R&D exemption if the expenditure thresholds and employee qualifications are met.

Each structure must be documented with inter-company agreements that reflect the actual performance of functions, the assumption of risks, and the use of assets. Transfer pricing documentation must support that the remuneration for each function is commensurate with the value contributed, in line with Article 55 of Federal Decree-Law No. 47 of 2022.

FREQUENTLY ASKED QUESTIONS

What is the legal basis for the corporate tax exemption under FTA Decision No. 15 of 2026?
The exemption derives from FTA Decision No. 15 of 2026, which interprets the scope of exempt income under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and Cabinet Decision No. 85 of 2022. The decision lists qualifying activities and sets out the substance conditions that must be satisfied.

Does the exemption apply to free-zone companies only?
No. The exemption applies to any juridical person registered in the UAE, whether in a free zone, on the mainland, or in a financial district, provided the entity meets the economic substance requirements and carries out one of the qualifying activities listed in the decision.

What happens if a company fails to meet the substance test after claiming the exemption?
If the FTA determines that the substance requirements are not satisfied, the exemption will be withdrawn for the relevant fiscal year, and the company will become liable to pay corporate tax at the standard rate of 9 % on its taxable income, plus any applicable penalties and interest as stipulated in Federal Decree-Law No. 47 of 2022.

Are there any sector-specific reporting thresholds?
Yes. Certain qualifying activities have minimum expenditure or asset thresholds. For example, qualifying shipping entities must incur at least AED 10 million of UAE-based operating expenditure per year, while qualifying IP entities must incur no less than AED 5 million of qualifying R&D expenditure annually and employ at least two UAE-based employees directly involved in the IP creation.

Can a company claim the exemption for multiple activities simultaneously?
A company may claim the exemption for each qualifying activity it conducts, provided it maintains separate substance evidence for each activity. The FTA reviews the ESR on an activity-by-activity basis, and failure to meet the substance test for one activity does not automatically affect the eligibility of another, unless the same resources are improperly allocated.

Is professional advice required to structure operations for the exemption?
While not mandatory, engaging a qualified tax adviser is strongly recommended to ensure that the entity's structure, agreements, and substance evidence align with the requirements of FTA Decision No. 15 of 2026 and the broader UAE corporate tax regime, thereby minimising the risk of denial or subsequent assessment.

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