UAE corporate tax for ADGM entities — a founder briefing

The United Arab Emirates applies a federal corporate tax. For most persons in scope, taxable income above the published threshold is charged at 9%. Forming in ADGM does not switch that tax off. ADGM is a free zone, and free-zone companies may qualify for a 0% rate on qualifying income if — and only if — they meet the Qualifying Free Zone Person tests in force at the time.

Three ideas to keep separate

• Standard 9% on taxable income (after any threshold the FTA still publishes for that period).
• Small-business or other reliefs — they have income caps, elections, and sunset dates. Check tax.gov.ae; do not copy a 2023 blog post.
• Qualifying Free Zone Person: 0% on qualifying income, 9% on non-qualifying income, plus substance, de minimis, and transfer-pricing documentation.

What “qualifying” usually turns on

In outline: you are a free-zone person, you maintain adequate substance in the zone, your income is of a type the law treats as qualifying, and non-qualifying income stays inside the de minimis limit. Holding companies, headquarters, and IP structures are fact-specific. A single mainland customer contract or a poorly documented related-party charge can push you out of the 0% story.

What every ADGM company should still do

• Register with the Federal Tax Authority when required, even if you expect a 0% year.
• Keep books that a return can be built from — invoices, related-party agreements, and a simple transfer-pricing file if you have group flows.
• Calendar the return. Missing a filing is a separate problem from the rate debate.
• Treat VAT as its own regime. Corporate tax registration is not a VAT registration.

SPVs are not a loophole

A holding SPV can be a clean legal wrapper and still have corporate-tax work: registration, a return, and an analysis of whether dividend or gain income is qualifying. Do not tell investors “ADGM SPV means 0% tax.” Tell them you will take advice on the current FTA position.