The companies that are resident in the UAE will be subject to corporate tax on their worldwide income, including capital gains. However, certain forms of income will be exempt from the UAE corporate tax to avoid instances of double taxation. The following incomes are exempted from corporate tax in the UAE:
• Income earned by UAE companies from investments in other companies, and operations conducted outside the UAE through foreign subsidiaries or foreign branches
• A UAE corporate shareholder will be exempt from corporate tax on corporate tax dividends received and capital gains earned from the sale of shares of a subsidiary company
• All domestic dividends earned from UAE companies, including dividends paid by a Free Zone Person that benefits from the 0% CT regime
• Dividends paid by foreign companies, and capital gains from the sale of shares in both UAE and foreign companies under certain conditions.
• Capital gains on the disposal of shares in a Free Zone Person will be exempt from the UAE corporate tax if the Free Zone Person is a holding company and substantially all of its income is derived from shareholdings in subsidiary companies that meet the participation exemption conditions set out in the consultation document
