Have UAE holding companies gotten their acts together on VAT?

The UAE Federal Tax Authority has been working to resolve VAT-related matters since its implementation in January 2018.
One issue that has persisted is the correct VAT treatment of holding companies’ activities.
Even after five years since the introduction of VAT in the region, prominent organizations still struggle to apply the correct treatment.
Holding companies in the UAE typically hold shares in related entities and earn income through dividends, capital gains, and interest.
However, there is a lack of understanding regarding the correct VAT treatment when there is no taxable activity.
Pure holding companies earn income that falls under different categories of tax treatment, including exempt income, zero-rated income, and out-of-scope income.
The correct classification of each activity of the holding company is crucial in determining the correct VAT treatment.
Issues arise when holding companies engage in activities apart from purely holding shares, and when they pay salaries to employees who work for other subsidiaries.
Holding companies should identify such transactions and apply the correct VAT treatment.

Taxable person