UAE Corporate Tax: Complete Guide for Businesses
UAE Corporate Tax applies to all businesses operating in the UAE at a rate of 9 per cent on taxable income exceeding AED 375,000, with a 0 per cent rate on income up to that threshold, making it one of the most competitive corporate tax regimes globally. Effective for financial years starting on or after 1 June 2023, the UAE Corporate Tax law (Federal Decree-Law No. 47 of 2022) represents a significant shift in the country’s tax landscape, though it maintains the UAE’s position as a business-friendly jurisdiction through generous exemptions and reliefs.
Who Is Subject to UAE Corporate Tax?
UAE Corporate Tax applies to a broad range of entities, including mainland companies, free zone entities, individuals conducting business activities, and foreign entities with a permanent establishment in the UAE.
- UAE-incorporated companies (mainland and free zone)
- Foreign entities with a permanent establishment in the UAE
- Natural persons engaged in business activities (freelancers, sole traders)
- Non-resident entities with UAE-sourced income exceeding AED 1 million annually
- Government entities and government-controlled entities (subject to specific provisions)
UAE Corporate Tax Rates
The UAE Corporate Tax regime features a progressive rate structure designed to support small businesses while raising revenue from larger enterprises.
| Taxable Income Bracket | Tax Rate | Applicable To |
|---|---|---|
| Up to AED 375,000 | 0% | All taxable persons |
| Above AED 375,000 | 9% | All taxable persons |
| Qualifying free zone income | 0% | Qualifying Free Zone Persons (subject to conditions) |
| Large multinationals (Pillar Two) | 15% | MNE groups with consolidated revenue exceeding EUR 750 million |
Free Zone Treatment: Qualifying Free Zone Person (QFZP)
Free zone entities can benefit from a 0 per cent Corporate Tax rate on qualifying income, provided they meet the conditions to be a Qualifying Free Zone Person (QFZP). This regime is designed to preserve the UAE’s free zone advantages while ensuring alignment with international tax standards.
Conditions for QFZP Status
- Maintain adequate substance in the UAE (assets, employees, premises)
- Derive qualifying income as defined by the Cabinet Decision
- Comply with transfer pricing rules and maintain proper documentation
- Elect to be treated as a QFZP in the tax return
- Non-qualifying income must not exceed AED 5 million or 5% of total revenue (whichever is lower)
Corporate Tax Registration Process
All taxable persons in the UAE must register for Corporate Tax with the Federal Tax Authority (FTA). The registration process is conducted through the EmaraTax portal.
- Access the FTA’s EmaraTax portal (tax.gov.ae) and log in or create an account.
- Navigate to the Corporate Tax registration section.
- Enter business details including trade licence number, legal form, and establishment date.
- Provide financial year end date and accounting standards used.
- Submit the application and receive your Corporate Tax Registration Number (TRN).
- Await confirmation from the FTA (usually within 5–10 business days).
Filing Deadlines and Tax Return Requirements
Corporate Tax returns must be filed within nine months of the end of the financial year. The standard format includes financial statements, tax adjustments, and detailed computations.
| Obligation | Deadline | Details |
|---|---|---|
| Tax registration | Within the period specified by FTA | Ongoing registration process |
| Tax return filing | 9 months after financial year end | Example: 31 Dec year-end, file by 30 Sep |
| Tax payment | Same as filing deadline | Payment via FTA portal (bank transfer/card) |
| Transfer pricing documentation | Same as filing deadline | Must be maintained and submitted on request |
| Record keeping | 7 years after tax year end | Retain all books, records, and supporting documents |
Transfer Pricing Requirements
UAE Corporate Tax law includes comprehensive transfer pricing rules aligned with OECD guidelines. Businesses must ensure that transactions with related parties and connected persons are conducted at arm’s length.
- Arm’s length principle applies to all related party transactions
- Transfer Pricing Master File required for groups with revenue exceeding AED 200 million
- Local File required for groups with related party transactions exceeding specific thresholds
- Country-by-Country Reporting for MNE groups exceeding EUR 750 million revenue
- Disclosure form in tax return for all related party transactions
- Penalties for non-compliance: AED 15,000 minimum plus additional penalties for underpaid tax
Penalties Under UAE Corporate Tax
| Violation | Penalty Amount (AED) |
|---|---|
| Failure to register for Corporate Tax | 10,000 |
| Late filing of tax return | 500 per month (first 12 months), 1,000 per month thereafter |
| Late payment of tax | 2% per quarter on unpaid amount |
| Failure to maintain records | 10,000 |
| Failure to submit transfer pricing documentation | 15,000 |
| Tax evasion | Up to 300% of evaded tax |
Exemptions and Reliefs
The UAE Corporate Tax law provides several important exemptions and reliefs designed to support specific sectors and activities.
- Small business relief: businesses with revenue below AED 3 million can elect simplified compliance (for tax periods up to 31 December 2026)
- Participation exemption: dividends and capital gains from qualifying shareholdings are exempt
- Foreign permanent establishment exemption: election to exempt foreign branch profits
- Business restructuring relief: certain mergers and reorganisations can be tax-neutral
- Exempt persons: government entities, extractive businesses, pension funds, qualifying public benefit entities
Frequently Asked Questions
Does the 0% rate on AED 375,000 apply per company or per group?
The AED 375,000 threshold applies per taxable person. For a group of companies, each entity qualifies for the 0 per cent rate on its first AED 375,000 of taxable income separately, provided they are not part of a tax grouping election.
Are free zone companies automatically exempt from Corporate Tax?
No, free zone companies must meet the conditions for Qualifying Free Zone Person (QFZP) status to benefit from the 0 per cent rate on qualifying income. Non-qualifying income is subject to the standard 9 per cent rate.
Do individuals need to register for Corporate Tax?
Individuals engaged in business or professional activities in the UAE must register for Corporate Tax. Salaried employees with only employment income are not subject to Corporate Tax.
What is small business relief and who qualifies?
Small business relief allows businesses with revenue below AED 3 million to file simplified tax returns without detailed income and expense computations. This relief is available for tax periods ending on or before 31 December 2026.
Can losses be carried forward under UAE Corporate Tax?
Yes, tax losses can be carried forward indefinitely, subject to certain conditions. The loss utilisation is capped at 75 per cent of taxable income in any given year, and ownership continuity and business continuity tests must be satisfied.
What are the record-keeping requirements for Corporate Tax?
Businesses must maintain all books, records, and supporting documents for a minimum of seven years after the end of the relevant tax year. Records must be kept within the UAE and made available to the FTA upon request.
Prepare Your Business for UAE Corporate Tax with Bitrixme
UAE Corporate Tax compliance requires careful planning, accurate registration, and ongoing attention to filing deadlines, transfer pricing obligations, and record-keeping. Whether you operate a mainland company, free zone entity, or as a sole proprietor, Bitrixme’s Corporate Tax specialists can guide you through every stage of the process.
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