Abu Dhabi Global Market (ADGM) is commonly described as tax friendly, although ADGM is not automatically tax free for every company. ADGM offers a tax environment that can be 0% on qualifying income, but that status depends on meeting specific UAE federal rules. This distinction matters for founders, CFOs, and anyone buying accounting services in Dubai.
ADGM has built its pitch on transparent, internationally aligned rules. The jurisdiction advertises a tax friendly environment, zero direct tax on qualifying income, free repatriation of profits, and access to the UAE’s double tax treaty network. Those features make ADGM attractive to financial firms, funds, and regional headquarters that need clarity and substance. Still, promise and practice are governed by federal law, not marketing alone.
How UAE corporate tax changed the simple “tax-free” story
The UAE introduced a federal corporate tax regime under Federal Decree-Law No. 47 of 2022. The headline rate for ordinary taxable profits is 9%. That new regime took effect for financial years starting on or after 1 June 2023. The law also creates a pathway for free zone companies to benefit from a 0% rate on qualifying income. In short, the UAE is no longer uniformly tax free, and ADGM’s advantages flow from rules that make an eligible ADGM company a “Qualifying Free Zone Person.”
The Ministry of Finance published a detailed “Corporate Tax Guide on Free Zone Persons.” That guide lays out what counts as qualifying income, the de-minimis tests, substance requirements, permitted activities, and documentation expectations. The guide makes clear that the 0% treatment is a conditional regime. Companies that fail the tests become subject to the standard corporate tax rules and rates on the income that no longer qualifies. This is the critical legal detail every CFO and provider of accounting services in Dubai needs to understand.
What makes an ADGM company eligible for 0% on qualifying income
An ADGM entity can enjoy 0% corporate tax on qualifying income only if it meets the federal QFZP conditions. The conditions include clear operational substance, audited financial statements, limits on non-qualifying revenue, compliance with transfer pricing rules, and the requirement that qualifying activities be carried out from within the free zone area. The rules balance a favourable tax rate with substance and transparency safeguards. For a practical firm-level checklist, companies should work with experienced accounting services in Dubai to document and demonstrate compliance.
ADGM itself highlights the tax friendly positioning for corporate treasury and financial services. ADGM’s promotional material states that the jurisdiction supports 0% direct tax for qualifying activity, and that it imposes no restrictions on repatriation of profits. That promotional framing is accurate as long as an entity fits the federal QFZP definition and meets the tests laid down by the Ministry of Finance. In practice, ADGM is a “tax friendly environment” rather than a blanket tax haven.
Why substance and documentation matter in practice
Two things determine whether an ADGM company benefits from the 0% treatment. First, its commercial reality must match the paperwork. The Ministry of Finance expects real substance: staff, premises, decision-making, and business operations aligned with the company’s stated activity. Second, the company must produce audited financial statements and maintain records that show the split between qualifying and non-qualifying income. These are not optional niceties; they are qualifying requirements that many accounting services in Dubai now help clients satisfy.
If a company falls short on substance or exceeds the allowed de-minimis for non-qualifying revenue, the federal rules will treat more of its income as taxable at 9%. A company that elects to be subject to the standard regime will also be taxed under standard rules. The practical implication is simple: corporate structure and tax planning must be supported by operational commitments, not just a registered address in ADGM. This is why firms offering accounting services in Dubai play a central role in the decision to locate in ADGM.
What ADGM’s growth tells us about investor demand
ADGM is growing quickly. In 2024 and into 2025 ADGM reported strong year-on-year increases in operational entities and assets under management. ADGM reported a 32% annual growth in operational entities in 2024 and highlighted a dramatic increase in AUM and fund numbers into 2025. Those figures show that international financial firms still value ADGM’s combination of a clear regulatory framework, robust financial services ecosystem, and conditional tax treatment. The numbers also mean more clients will need specialist accounting services in Dubai to meet compliance expectations.
The larger tax landscape: 9%, and a 15% minimum for big multinationals
The UAE’s headline corporate tax rate for ordinary taxable income sits at 9%. On top of that, the UAE has adopted global measures for large multinationals: from January 2025 the UAE implemented a 15% domestic minimum top-up tax for groups that meet the global revenue threshold set under the OECD rules. In practice, ADGM-based companies that are part of very large multinational groups can face additional rules that reduce the benefit of a low or zero headline rate. This reality matters for multinational structures and for any firm that considers ADGM tax status as the only factor. Good accounting services in Dubai will factor these rules into global tax modelling.
Practical advice for choosing ADGM and selecting accounting services in Dubai
If you are evaluating ADGM for your structure, treat tax outcomes as the result of two linked decisions. First, choose the right entity type and ensure ADGM jurisdictional rules fit your business model. Second, document and deliver substance: hires, premises, contracts, and audited financials. The Ministry of Finance rules make this binary. ADGM’s environment provides the framework, but federal law decides the tax outcome. For companies that need predictable compliance and reporting, experienced accounting services in Dubai are essential to design, implement, and test the required controls and reporting.
Accounting services in Dubai should not be an afterthought. Firms that lack experience with ADGM and QFZP rules risk misclassifying income and incorrectly allocating costs. Firms that specialise in free zone taxonomy, transfer pricing, and audit readiness will help avoid surprises. When a board asks “Is ADGM tax free?”, the operational answer will often include the name of the external accounting team that has prepared the compliance files and the workpapers showing qualifying income. That is the practical test.
A simple decision framework for boards and founders
Decide based on three questions: does the business activity qualify under the QFZP rules, can the business sustain genuine substance in ADGM, and do you have the right accounting services in Dubai to deliver audited statements and documentation? If the answers are yes, ADGM tax treatment can be 0% on qualifying income. If any answer is no, expect the standard 9% corporate tax or other domestic top-up rules to apply.
Conclusion
ADGM offers an attractive, transparent environment that can produce a 0% corporate tax rate on qualifying income. That advantage is conditional. The UAE’s federal corporate tax law and the Ministry of Finance guidance define those conditions. ADGM remains a powerful proposition for financial services, asset managers, and regional hubs because it combines regulatory clarity with fiscal certainty where the QFZP tests are met. Boards, founders, and in-house finance teams should treat the question “Is ADGM tax free?” as a technical compliance question, not a marketing slogan. Working with qualified accounting services in Dubai will turn the theoretical advantage into a documented, defensible outcome.
