Application of Corporate Tax for DIFC & ADGM

Corporate Tax in the U.A.E. applies 1) not only to mainland businesses, but also to 2) all of the Free Zones. This includes even specialized and independent free zones such as 1) the DIFC (or Dubai International Financial Center), 2) as well as ADGM (otherwise known as the Abu Dhabi Global Markets).  

This is so, although, these 2 Free Zones are, for the most part, independent legal jurisdictions, with their own laws and their own courts. However, for the purposes of the UAE Corporate Tax, the DIFC and ADGM are subject to the Federal Law, much the same way as other free zones are. 

Therefore, moving businesses from a free zone into the DIFC or ADGM jurisdictions, for potential tax optimization – as some businesses have considered – will be of no utility, as the laws will apply equally. 

This is in accordance with the UAE Corporate Tax Law – No. 47 of 2022 as well as Cabinet Decision No. 55 of 2023 regarding the Qualifying Income of Qualifying Free Zone Entitie,

As a reminder, the UAE Corporate Tax has come into effect as of June 1, 2023 and the rate is 9%.