SS&Co presents a clear review of the largest tax changes affecting businesses in 2025. The Federal Tax Authority introduced a range of updates that influence corporate structures, value added tax, excise tax, and compliance processes. This blog summarizes those updates and explains practical implications for business leaders.
Corporate Tax Developments
The most immediate set of changes concerns corporate tax in UAE. Natural persons who ran business activities with annual turnover above AED 1 million in 2024 had a firm deadline to register for corporate tax by 31 March 2025. This change means many sole proprietors, freelancers, and unincorporated businesses must now treat corporate tax in UAE as a compliance priority. The rule applies only to income from business activities. It does not include salaries, dividends, or rental income. For firms and individuals monitoring corporate tax in UAE, the message is straightforward i.e. review 2024 revenue, confirm registration status, and correct any gaps.
Valuable taxpayers who register during the relief period specified in the FTA will also have their costs overhead waived as a sanction for delayed corporate tax registration. In granting relief, the intention is to motivate voluntary compliance and lower immediate administrative burden relating to corporate tax in the UAE. The waiver does not remove the requirement to register, but it does soften consequences for qualifying late filings.
A major international-aligned change is the introduction of a Domestic Minimum Top-Up Tax effective 1 January 2025. Large multinational enterprise groups with global revenues of €750 million or more will face a 15% minimum effective tax rate in the UAE. This change affects how global groups handle corporate tax in UAE and how they split profits and taxes across countries.
Tax grouping rules were refined under Ministerial Decision No. 301 of 2024. The decision clarifies ownership and residency criteria for forming tax groups. Those who use group structures should revisit tax grouping eligibility and calculation methodologies when planning corporate tax in UAE compliance.
The FTA also clarified corporate tax treatment for investors in Real Estate Investment Trusts that qualify as investment funds. The guidance sets out conditions where REIT investors, resident or non-resident, may benefit from exemptions. This clarification changes how property-focused investors model corporate tax in UAE outcomes.
Finally, while R&D tax incentives take effect from 1 January 2026, businesses are advised to plan in 2025. The upcoming incentive will permit tax credits of 30% to 50% on qualifying R&D expenditures. Early planning will help companies position projects, so they qualify when the corporate tax in UAE regime permits credits.
VAT changes and the impact on operations
The VAT landscape has shifted in ways that will affect routine transactions and systems. The blog outlines an expansion of the reverse charge mechanism to supplies of precious metals and stones. This measure, effective 15 February 2025, shifts VAT accounting responsibility to the recipient and changes cash flow and compliance obligations for traders in precious metals and stones.
Real estate transactions received further clarification. As on 14th March 2025, it is made public that transfer of ownership of real estate is a supply of goods for VAT purposes, and the value must be shown as a single aggregate. All this has a bearing on both contract drafting and VAT invoicing practices in property transactions.
The FTA clarified VAT rules for cryptocurrency mining. Mining for personal use is not taxed. Services given to UAE clients are subject to 5% VAT, while international clients may benefit from 0% VAT, depending on certain conditions. The mining companies need to review their clients and services under the appropriate VAT rate.
A new way for correcting VAT return errors was introduced on 1 January 2025. Under Decision No. 8 of 2024, taxpayers can correct VAT return errors without affecting the due tax, provided the correction does not change the tax liability. This mechanism reduces the administrative burden of minor reporting mistakes while maintaining the integrity of tax assessments.
E-invoicing is now mandatory for all VAT-registered businesses. The move to electronic invoices and credit notes is a step toward a fully digital VAT compliance system. Businesses must upgrade invoicing systems and prepare for enforcement and possible administrative penalties for non-compliance. For firms seeking tax and accounting services, this is a practical area where external expertise can speed implementation and reduce risk.
The blog includes a public clarification on amendments to the VAT Executive Regulations that came into effect on 15 November 2024. This clarification reiterates the real estate treatment and composite supply valuation rules described above.
Excise tax, partnerships, and whistleblowing
From July 2025, excise tax will also cover electronic smoking devices and some non-sweetened drinks. This broadening of excise scope therefore increases cost and also the compliance considerations for affected manufacturers and distributors.
Ministerial Decision 261 of 2024 brought updates to the FTA tax guide on partnerships. It explains how unincorporated partnerships should be registered and be taxed, and it adds a new category called “unincorporated partnership” in the FTA portal. Partnerships should check their registration and confirm the right tax treatment for both the partners and the partnership.
The FTA updated the Raqeeb User Guide for its whistleblower program. The new guide makes it easier to submit reports, explains what evidence is needed, and sets clear rules for rewards. This update improves transparency and strengthens the FTA’s ability to enforce excise tax, VAT, and corporate tax.
FTA Decision No. 2 of 2025, effective 1 March 2025, created a clearer framework for issuing tax clarifications and directives. The decision formalizes private and public clarification processes, introduces procedures for administrative exceptions, and permits taxpayers to request alternative input tax apportionment methods for up to four years. The decision also schedules the start of unilateral Advance Pricing Agreements in the fourth quarter of 2025.
International agreements and trade context
International agreements influence tax planning. The UAE-Australia CEPA, signed in November 2024, eliminates tariffs on most Australian exports and may change cross-border planning considerations. In April 2025, the EU and UAE agreed to start free trade talks. These developments affect trade flows and therefore the tax positions of importers and exporters. While the blog focuses on domestic tax policy changes, readers should watch international agreements for indirect tax and transfer pricing implications.
Key compliance deadlines to note
Compliance deadlines shape action plans. Natural persons who have satisfied the threshold for registration had a deadline for registering by 31 March 2025. The same date marked the end of the grace period to update tax records without penalties. Corporate tax returns for applicable entities are due by 30 September 2025. These dates were presented in the blog to help taxpayers plan filings and avoid fines.
Practical next steps for business leaders
Business leaders should treat the changes as a program of work rather than isolated tasks. First, they must audit 2024 revenue and entity structures to determine whether corporate tax in UAE registration is required. Second, they must check VAT systems for e-invoicing readiness and for changes in the treatment of real estate, precious metals, and crypto-mining services. Third, product owners should map goods against the expanded excise categories to confirm applicability.
Businesses that plan to claim future R&D credits should set up documentation, project controls, and expense mapping in 2025 to secure credit eligibility from 1 January 2026. Companies that operate across borders should revisit transfer pricing arrangements in light of the domestic minimum top-up tax and the availability of Advance Pricing Agreements later in 2025. Finally, engaging professional tax and accounting services will make these actions faster and more reliable.
Conclusion
The FTA’s 2025 changes have widened the scope of tax obligations and sharpened compliance expectations. From the registration requirements that affect natural persons to the international alignment represented by the Domestic Minimum Top-Up Tax, the landscape is more complex and more integrated. VAT clarifications, e-invoicing mandates, excise tax expansion, and updated procedures for clarifications and APAs complete a set of reforms that demand structured responses.
SSCOGLOBAL offers focused help across corporate tax registration, VAT, excise, international tax planning, and R&D planning. Firms that engage experienced tax and accounting services will find the path through these reforms clearer and less risky.
