Holding company in the United Arab Emirates: 9% tax, participation exemption and free zones

In brief

The Emirates introduced a corporate income tax in 2023. The country remains attractive for holding companies thanks to a participation exemption, but the tax now exists and free zones require real substance.

Taxation of the company

The corporate income tax rate is 9 %verified on 12/10/2026. Withholding tax on dividends, interest and royalties paid to non-residents is 0 %verified on 12/10/2026 according to the Ministry of Finance. A company in a qualifying free zone may benefit from a zero rate on its qualifying income, with any other income taxed at the normal rate. This status is conditional: real substance on the spot, qualifying income, compliance with the rules of the authorities. A breach can cause it to be lost from the start of the period.

The participation exemption

Dividends and capital gains on participations are exempt if the holding reaches 5 %verified on 12/10/2026 of the capital for 12 monthsverified on 12/10/2026 (or the intention to maintain it), if the subsidiary bears a tax of at least 9 %verified on 12/10/2026, and subject to conditions on profit entitlements and on the nature of the subsidiary's assets. The tax condition is deemed to be met for subsidiaries in qualifying free zones and certain exempt entities.

Who it suits

The Emirates suit entrepreneurs who genuinely settle there and develop an activity there, with a company that has local resources. A company without substance does not meet the free zone conditions.

Compared with Andorra

Andorra's rate (10 %verified on 09/10/2026) is close to the Emirati rate (9 %verified on 12/10/2026), and both countries exempt participations under comparable conditions of holding, period and subsidiary's tax. The differences lie in proximity to France, the tax treaty, access to banking and the residency regime of the partner. See the holding company in Andorra.

For a French resident

The Emirati nominal rate is less than half the French rate of 25 %verified on 09/10/2026 (comparison threshold: 12.5 %verified on 12/10/2026), which exposes the company to the privileged tax regime of article 238 A if the tax actually borne remains low.

To be checked

The figures on this page come from foreign firms and administrations, checked on 12 October 2026: they are dated in our database and must be confirmed with a local adviser before any decision. This page is a guide, not tax advice. The substance conditions and the tolerance thresholds for non-qualifying income in a free zone are the subject of diverging sources: we do not publish them.

The other countries

Comparison of countries for a holding company, holding company in Andorra, Luxembourg, Netherlands, Malta. Test the Andorran conditions in the holding company simulator.