UAE Corporate Tax

UAE Corporate Tax on Insurance Business

UAE Corporate Tax

The public consultation document issued by the Ministry of Finance has outlined the draft corporate income-tax (“CT”) provisions.

Outlined below are the key CT provisions requiring special considerations for an insurance business. Although the insurance sector is similar to the financial sector, it has some peculiarities and requires a careful examination regarding the impact of the proposed UAE CT.

Key Tax provisions


Focus points


Impact area


Specific CT rules for the treatment of unrealized gains/losses to determine the taxable income.


Unrealized gains/losses on capital items excluded for CT purposes.


Unrealized gains or losses


  • Revalued investments, assets and reserves created or reversed for accounting purposes.


Dividends and capital gains exempt subject to qualifying shareholdings.


Investment income


  • Dividend income earned from a foreign company.
  • Capital gains on the disposal of shares of UAE and foreign companies.


Elect to claim tax exemption or tax credit on income of foreign branches.


Election is irrevocable.


Foreign branch


  • Computation of tax cost under both of the methods.
  • Computation of the foreign tax credit as per the CT rules and the tax treaty provisions.


Interest expense deduction is limited to 30% of EBITDA.


EBITDA rule not to apply for insurance business.


Valid commercial reason and arm’s length for related party borrowings.


Interest expense deduction


  • Interest paid on related party borrowings.


Foreign company with:

  • Fixed place of business in the UAE.
  • Dependent agent in the UAE.


Permanent Establishment (“PE”) Risk


Foreign companies or branches of foreign companies that have:

  • Insurance income from UAE customers.
  • Business activities in the UAE.
  • Person acting on their behalf.
  • Person negotiating/concluding their contracts in the UAE.


Key Takeaways

CT regime 

The ever closer to implementation of the federal CT regime in the UAE will have a significant impact on the insurance business.

It is highly recommendable to evaluate the implications of the UAE CT on the businesses and also analyze the restructuring options in a proactive manner to be prepared for the implementation of the UAE CT.

It would also be advisable to streamline the tax governance and the accounting functions.

Contact Us

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