Holding company accounting and Corporate Tax in the UAE

Last reviewed: 12 November 2026

Holding companies are often set up to own shares in operating companies in the UAE and abroad, to keep assets separate, or to prepare for investors and succession. Their books look simple — dividends in, a few costs out, some loans between group companies — but the Corporate Tax return depends on getting the details right.

"Our income is only dividends, so we don't need to file" — not quite

A company set up in the UAE is a taxable person for Corporate Tax unless it falls into a narrow exempt category. A holding company must register and file a return for every tax period, within nine months of its year end, even when all of its income is exempt. The exemption is claimed in the return; it is not automatic for filing purposes. Missing registration or the return can lead to penalties, whatever the tax due.

When dividends and gains are exempt

• Dividends from UAE companies are exempt, with no minimum holding or holding period.
• Dividends from foreign companies, and gains on selling a shareholding, are exempt under the participation exemption when its conditions are met. The main ones are:
  • at least 5% ownership — or an acquisition cost of at least AED 4 million;
  • held for at least 12 months without interruption, or intended to be;
  • the company owned is subject to Corporate Tax or a similar tax at a rate of at least 9%; and
  • no more than 50% of that company's assets are interests that would not qualify themselves.
• Income that fails these tests — for example dividends from a foreign company that pays little or no tax — is taxable at the normal rates, so each shareholding is checked separately.

What a holding company's books need

Related-party and transfer pricing disclosures

Transactions between a holding company and its subsidiaries must be at arm's length. Where the total value of related-party transactions in the year — including loans — exceeds AED 40 million, a transfer pricing disclosure form is filed with the Corporate Tax return. Payments to the owners, directors and their relatives (connected persons) must also be at market value to be deductible. See transfer pricing.

Tax groups

A UAE holding company that owns at least 95% of its UAE subsidiaries can apply to form a tax group and file one Corporate Tax return for the group. All members need the same financial year and accounting standards, and exempt persons and Qualifying Free Zone Persons cannot join. Whether a group saves tax or just adds work depends on the figures, so we model it before you apply.

Free zone and offshore holding companies

Holding shares for investment is a qualifying activity, so a free zone holding company can be a Qualifying Free Zone Person if it meets all the conditions — including audited financial statements. Many free zone authorities also ask for audited accounts when the licence is renewed. RAK ICC companies follow the same Corporate Tax rules on dividends and gains; see accounting in Ras Al Khaimah and our pages for IFZA and DMCC companies.

VAT

Dividends are outside the scope of VAT. A holding company that only receives dividends usually makes no taxable supplies, so it generally cannot register for VAT or recover VAT on its costs (unless, for example, it buys services from abroad above the registration threshold). If it charges management fees to its subsidiaries, those fees are usually subject to VAT at 5%, and registration — or a VAT group with its UAE subsidiaries — may become possible. We check this when we take on the company.

Owners abroad

Many holding companies are owned from the United Kingdom and elsewhere. We work remotely — documents through our client portal, books in cloud software and meetings on Microsoft Teams or Zoom. See UAE companies for UK owners.

Sources: Federal Decree-Law No. 47 of 2022 on Corporate Tax (Articles 22, 23, 34 to 36, 40 and 55); Ministerial Decision No. 116 of 2023 (participation exemption); Ministerial Decision No. 82 of 2023 (audited financial statements); Ministerial Decision No. 97 of 2023 (transfer pricing documentation); Cabinet Decision No. 100 of 2023 and Ministerial Decision No. 229 of 2025 (qualifying activities); Federal Decree-Law No. 8 of 2017 on VAT, as amended.