ADGM companies are licensed in a UAE free zone, so the corporate tax question comes down to one decision: whether you are a Qualifying Free Zone Person taxed at 0%, or a non-qualifying person taxed at 9%. Most ADGM licence holders that earn income from outside the UAE and hold adequate substance can hold the 0% rate — but commissions, excluded investment activity or missed registration deadlines move the whole entity (or part of it) to the 9% standard rate.
This page explains how the rules work for ADGM-registered companies in tax periods starting 1 January 2026, what disqualifies a Qualifying Free Zone Person, and the registration and audit deadlines that apply.
What rate does an ADGM company pay?
All juridical persons in the UAE fall under the corporate tax regime created by Federal Decree-Law No. 47 of 2022. The headline rates are (FTA corporate tax legislation, tax.gov.ae):
- 0% on qualifying income of a Qualifying Free Zone Person (QFZP).
- 9% on taxable income above AED 372,500 for everyone else, and on the non-qualifying income of a QFZP.
ADGM status alone gives you neither rate. The 0% rate is a set of conditions you must keep meeting every year.
The five conditions for the 0% rate
Under Cabinet Decision No. 55 of 2023 (as amended by Cabinet Decision No. 100 of 2023) and Ministerial Decision No. 265 of 2023, a QFZP must:
- Hold a valid licence from ADGM and maintain adequate substance in the free zone (sufficient qualified employees and expenditure relative to the activity).
- Derive qualifying income only — the categories are listed in the Cabinet Decision, e.g. income from transactions with other free zone persons, foreign-source income, and qualifying activities such as fund management, wealth and investment management services, reinsurance services and headquarters services.
- Keep non-qualifying revenue within the de minimis: no more than 5% of total revenue or AED 5 million, whichever is lower.
- Hold audited financial statements prepared under IFRS.
- Not have elected to be taxed as a mainland (non-QFZP) entity.
What breaks the 0% rate for ADGM firms
The excluded activities matter more to ADGM companies than the qualifying list. Under the same Cabinet Decision, income from certain activities is never qualifying, including transactions in financial assets for a person's own account (with narrow exceptions) and financing activities that do not meet the separate qualifying tests. For advisory and asset-holding structures, the practical traps are:
- Earning commission or brokerage income outside the qualifying categories.
- Holding immovable property in the UAE that is not commercial in nature — rent from such property is excluded from qualifying income.
- Related-party arrangements that shift mainland activity into the free zone without substance.
If non-qualifying revenue exceeds the de minimis, the entity loses QFZP status entirely for five consecutive years — not just the excess income. Only the income attributable to a deliberate activity breach is carved out; scale breaches cost the whole 0% rate.
Registration, filing and audit deadlines
ADGM companies had to register for corporate tax within 3 months of the issuance of their trade licence, per the timeline set in FTA Decision No. 3 of 2024 (tax.gov.ae). A late registration carries an administrative penalty of AED 10,000 under the FTA's administrative penalties framework.
Audit and filing obligations (Ministerial Decision No. 84 of 2025 and the corporate tax law):
- Audited IFRS accounts are mandatory for QFZPs, whatever their revenue.
- Companies with revenue above AED 50 million must also submit audited financial statements.
- A corporate tax return is due within 9 months of the end of each financial period.
New ADGM companies below the thresholds that do not claim the 0% rate can consider Small Business Relief, which now covers tax periods ending on or before 31 December 2029 for businesses with revenue not exceeding AED 3 million (Ministerial Decision No. 131 of 2026).
How ADGM income is taxed at a glance
| Income type | Typical treatment | Rate |
|---|---|---|
| Fund management, wealth & investment management fees to foreign funds | Qualifying activity (with substance) | 0% |
| Reinsurance and headquarters services | Qualifying activity | 0% |
| Advisory/commission income outside qualifying categories | Non-qualifying revenue (de minimis applies) | 9% if de minimis broken |
| UAE mainland-source trading income | Non-qualifying revenue | 9% |
| Rent from non-commercial UAE property | Excluded from qualifying income | 9% |
| Interest on deposits within the QFZP rules' exceptions | Qualifying income | 0% |
What ADGM companies should do before their next tax period
- Map every revenue stream against the qualifying and excluded lists and quantify non-qualifying revenue.
- Document substance: employee headcount, assets and operating expenditure in ADGM against each qualifying activity.
- Confirm the audit appointment — QFZPs cannot self-certify.
- Re-check the registration record with the FTA; a missed registration is a fixed AED 10,000 exposure.
Need a QFZP status review before your filing? Finanshels is an FTA Registered Tax Agency (no affiliation with the FTA). Talk to our corporate tax team.
FAQ
Do ADGM companies pay corporate tax?
Yes — ADGM companies are inside the UAE corporate tax regime from their first financial period starting on or after 1 June 2023. They either pay 0% as a Qualifying Free Zone Person or 9% on taxable income above AED 372,500.
Can an ADGM fund manager keep the 0% rate?
Fund management services are a qualifying activity under Cabinet Decision No. 55 of 2023, provided the manager holds ADGM's investment management licence, meets substance requirements and derives qualifying income. The fund itself can also be a QFZP where it is managed in ADGM.
What happens if I exceed the 5% de minimis?
The company loses Qualifying Free Zone Person status for the current and the following four years, and its taxable income is taxed at the 9% standard rate for that period.
Is an audit mandatory for an ADGM company?
Yes for QFZPs — audited IFRS financial statements are one of the QFZP conditions. Companies with revenue above AED 50 million must also submit audited statements under Ministerial Decision No. 84 of 2025.
Can a small ADGM startup pay nothing?
A QFZP pays 0% on qualifying income regardless of size. A non-QFZP with revenue up to AED 3 million can elect Small Business Relief for tax periods ending on or before 31 December 2029 (Ministerial Decision No. 131 of 2026).
Last reviewed 30 September 2026 by Gautam Sanoj.
