On 16 October 2023, the Federal Tax Authority (FTA) of the United Arab Emirates (UAE) released the Corporate Tax Guide on Exempt Income: Dividends and Participation Exemption.

This guide is designed to provide general guidance to Taxable Persons, helping them to understand the exemptions in the Corporate Tax Law for Dividends and other profit distributions, such as the Participation Exemption. The Participation Exemption permits certain income, such as Dividends and capital gains, to be exempt from Corporate Tax, where a Taxable Person holds a significant, long-term ownership interest in a juridical person. This guide explains some of the terms and conditions in the Corporate Tax Law, and covers the following:

  • How Dividends and other profit distributions are defined;
  •  Which income (and related expenditure) from a Participation is exempt;
  • Who is eligible for the exemption;
  • How the Participation Exemption operates; and
  • What are the related implications in terms of Tax Groups.

This guide does not cover unincorporated partnerships.