UAE participation exemption checker
Dividends and capital gains from a shareholding are exempt from UAE corporate tax if you hold at least 5% (or the stake cost AED 4 million or more) for at least 12 months, the subsidiary is subject to corporate tax of at least 9% where it is based, and no more than half of its assets are holdings that would not qualify themselves.
Reviewed by Countify's ACCA/FCCA chartered certified accountants · Updated
- Dividends and gains exempt
- Yes
Dividends, gains on disposal and foreign exchange gains on the holding are exempt from UAE corporate tax.
Results are estimates for general information, not tailored advice.
Participation exemption outcomes
Held for over 12 months, subject to 9%+ tax, asset test met.
| Holding | Dividends and gains exempt |
|---|---|
| 3% costing AED 1m | No |
| 3% costing AED 5m | Yes |
| 20% costing AED 500,000 | Yes |
A small stake can still qualify if it cost AED 4 million or more.
The conditions
All of these must be met for a Participating Interest:
- 5% or more ownership, or an acquisition cost of at least AED 4 million
- Held, or intended to be held, for an uninterrupted 12 months
- Subsidiary subject to corporate tax at 9% or more in its country (UAE subsidiaries pass)
- The asset test: no more than 50% of the subsidiary's assets are interests that would not qualify
Dividends from UAE companies
Dividends from UAE resident companies are exempt anyway, whatever the shareholding. The participation exemption matters mainly for foreign subsidiaries and for capital gains on selling shares. See the taxable income calculator for how exempt income is deducted.
Legal basis
We review this calculator whenever the FTA or Ministry of Finance issues a new decision or clarification.
Frequently asked questions
Are dividends taxable in the UAE?
Dividends from UAE companies are exempt. Foreign dividends are exempt if the participation exemption conditions are met.
Is there a minimum holding period?
Yes, 12 months, which can be met after the dividend if you intend to keep the stake that long.
Corporate tax registration and returns
We register you, prepare the tax computation and file your corporate tax return, with Small Business Relief, QFZP and loss elections handled correctly.