Participation Exemption in the UAE for  international businesses

Participation Exemption In The The UAE

For International Business

Participation Exemption in the UAE for  international businesses

The Participation Exemption is an exemption from Corporate Tax (“CT”) granted on dividends and other gains arising from the shareholding of a taxable person. As per Article 23 of the Federal Decree Law No. 47 of 2022 on Taxation of Corporation and Business, a Participation Exemption is provided to a taxpayer with Participation Interest (“PI”) i.e., at least 5% ownership interest in the shares or capital of a juridical person (“Participation”).


  • Elimination of double taxation on the profits earned from investment in shares.
  • Designing an equitable and streamlined tax system enhances the jurisdiction's attractiveness.


a)    Hold or has the intention to hold the PI for at least 12 months.

b)   Participation (other than qualifying free zone or exempt person) is subject to CT or any other similar tax of not less than 9%.

c)    Taxable person is entitled to 5% of the distributed profits and liquidation proceeds.

d)   No more than 50% of the participation’s assets consist of ownership interest or entitlements that would not qualify for exemption under CT.

Denial of exemption in specified cases

  • No exemption for 2 years if the participation interest is acquired in exchange of ownership interest not meeting the exemption conditions or transfer that was exempted under Article 26 or 27 of the CT Law.
  • Any income previously exempted will be included in the tax computation of the tax period in which the ownership interest drops below 5% if PI is not held for at least 12 consecutive months.

How can Crowe help

  1. Analysis of existing business structures, including ownership structures to evaluate the applicability of the participation exemption.
  2. Assessing any gaps in meeting the participation exemption conditions and providing recommendations to bridge the gap.
  3. Determining the exempt and non-exempt income to assess the potential tax costs arising in connection thereof.
  4. Advising on taxation of dividends and capital gains on shares under the UAE CT law and applicable tax treaty.


Contact Us

Markus Susilo
Markus Susilo
Partner- Payroll and Indirect Tax
Alessandro Valente
Alessandro Valente
Director - International Tax Service & Transfer Pricing