Holding Company in the UAE
What the law allows
A holding company must be a joint stock company or a limited liability company, and its name must be followed by the words "holding company" on all papers and documents (Article 268).1
- Holding shares in joint stock companies and LLCs
- Lending to, guaranteeing and financing its subsidiaries
- Owning the real estate and movable assets it needs
- Managing its subsidiaries
- Owning patents, trademarks and designs and licensing them to subsidiaries or others
Source: Federal Decree-Law No. 32 of 2021 on Commercial Companies1
It may conduct its activities only through its subsidiaries (Article 269), and a subsidiary may not hold shares in its own holding company (Article 271). A subsidiary is a company more than 50% owned by another, or whose board it appoints.1,2
Corporate tax: the participation exemption
| Test | Requirement |
|---|---|
| Ownership | 5% or more of the shares or capital, or an acquisition cost of at least AED 4 million |
| Holding period | Held, or intended to be held, for at least 12 months without a break |
| Subject to tax | The subsidiary pays corporate tax, or a similar foreign tax, at 9% or more |
| Profits and liquidation | Entitled to at least 5% of profits and of liquidation proceeds |
| Assets | No more than 50% of the subsidiary's assets are holdings that would not qualify themselves |
Source: Federal Tax Authority: Exempt income, dividends and participation exemption guide4
When the tests are met, the exemption applies automatically, without an election. It covers foreign dividends and gains on selling the shares; dividends from UAE companies are exempt anyway. Interest or service fees a holding company earns from its subsidiaries remain taxable.4,3,5
For gains on a sale, the 12 months must actually have passed; an intention to hold is not enough.4
Where to set one up
Free zones and offshore registries also register companies whose purpose is holding shares; Jafza lists forming holding companies among the main uses of its offshore company.6
Choose the location by what the holding company must do: own UAE property, hold bank accounts, employ staff or sign contracts in the UAE. Take tax advice on substance and on the tax treaty that applies to each subsidiary.
Frequently Asked Questions
Are dividends received by a UAE holding company taxed?
Dividends from UAE companies are exempt. Foreign dividends and gains on shares are exempt under the participation exemption if the stake is at least 5% (or cost AED 4 million), is held for 12 months and the subsidiary is taxed at 9% or more.
Sources
- Federal Decree-Law No. 32 of 2021 on Commercial Companies
- Ministerial Decision No. 137 of 2024 (definitions of parent company and subsidiary)
- Federal Tax Authority: What is the participation exemption regime?
- Federal Tax Authority: Exempt income, dividends and participation exemption guide
- Federal Tax Authority: Corporate Tax general guide
- Jafza: How to set up an offshore company
Figures checked 21 October 2026. Prepared by Invest-Emirates.ae for general information. It is not investment, tax or legal advice; please confirm details with a qualified adviser before acting.