I have a foreign subsidiary — do Controlled Foreign Company rules apply to me in the UAE?

Controlled Foreign Company (CFC) rules are a tax tool used by many countries around the world to stop business owners from parking profits in subsidiaries based in low- or no-tax countries without ever actually distributing them. When CFC rules are triggered, the parent jurisdiction taxes the owner's share of the foreign subsidiary's profits, even if those profits were never actually paid out to them.

As for the UAE specifically, as of when this is written, there is no standalone CFC regime set out in the Corporate Tax Law. That means if you have a subsidiary abroad, its profits are taxed under that country's own rules, and aren't automatically 'imported' into your UAE file. What you genuinely need to watch instead are transfer pricing rules and the arm's length principle, making sure transactions with your foreign subsidiaries are priced fairly. At RASEEKH, we advise clients with entities in more than one country to focus on getting their transfer pricing documentation right, rather than worrying about a CFC regime that doesn't currently exist in the UAE.