For years, the UAE’s zero-tax reputation was an attraction for entrepreneurs and multinationals alike, offering opportunity, growth, and tax-free profits. But let’s now call it the end of an era, since UAE is actively imposing new taxes over the period of last decade. This change hasn’t gone unnoticed. Over the past few years, the UAE has steadily rolled out new tax regulations from VAT to ESR, and now corporate tax is creating a more structured fiscal environment. As a result, businesses are leaning more heavily on the best accountants and corporate tax advisors in Dubai to interpret the rules, stay ahead of compliance requirements, and avoid costly missteps.
So, what exactly is corporate tax in the UAE and what should your business know to prepare for the next filing cycle? Let’s break it down.
Corporate Tax (CT)
Corporate tax is a direct tax imposed on the net earnings or profit of corporations and other companies from their trade. Corporate tax is administered by Federal Decree-Law No.60 of 2023 Amending Certain Provisions of the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. Businesses are subject to UAE Corporate Tax from the start of their first financial year that commenced on or after 1 June 2023.
What were the objectives behind the introduction of Corporate Tax?
By introducing the CT, the UAE aims to:
- Positioning the UAE as a competitive, globally renowned business hub.
By introducing a structured corporate tax regime, the UAE is aligning itself with international norms, reassuring investors and global partners that it’s a mature, well-regulated market. - Supporting long-term economic transformation.
Corporate tax creates a sustainable source of public revenue that can be reinvested into infrastructure, innovation, and national development goals that are key pillars of the UAE’s long-term strategic vision. - Meeting global tax transparency standards.
As part of its commitment to responsible global citizenship, the UAE is aligning with OECD guidelines to curb tax avoidance and promote fairer international tax practices.
Scope
Who Does Corporate Tax Apply To?
The UAE’s corporate tax regime casts a wide net targeting most business activities while still preserving incentives for specific sectors and zones. Here’s a breakdown of who falls under the scope:
- Mainland businesses and licensed individuals
Any business or individual carrying out commercial activities in the UAE under a valid trade license is subject to corporate tax. - Free zone entities
Businesses operating in free zones are included within the corporate tax framework. However, those that meet specific criteria such as maintaining adequate substance, complying with regulations, and not conducting business in the mainland can still benefit from existing 0% tax incentives. - Foreign companies and individuals
Non-UAE residents are subject to corporate tax only if they conduct trade or business in the UAE on a regular and ongoing basis. - Banking institutions
All banking operations, whether onshore or in free zones, fall within the corporate tax net. - Real estate and related sectors
Businesses involved in real estate development, management, brokerage, or construction are also covered under the corporate tax regime.
It is suggested to reach out to the corporate tax consultants to stay informed regarding changing tax regulations in the UAE.
Who is exempt under Corporate Tax UAE?
FTA has laid down specific exemptions for corporate tax. These include government entities or entities controlled by the government. The following are exempt persons for the purposes of Corporate Tax UAE:
- Extractive companies in the UAE
- Non-extractive natural resources companies in the UAE
- Qualifying public benefit entities
- Qualifying investment funds
- Pension or social security funds, both public and private
- Fully owned and controlled UAE subsidiaries of specified exempt entities
Small Businesses
Businesses that earn less than AED 3,000,000 of revenue for current and all prior tax periods have the relief available under small business. Small business relief will apply to tax periods ending on or before 31 December 2026. Eligibility criteria for small business relief are as follows:
- Resident person in the UAE
- Its turnover for the subject tax period and prior tax periods should not be more than AED 3,000,000
- It should not be a holding company or a financial institution
- A company that can satisfy the conditions for small business relief is exempt from corporate tax on its profits. It will also be subject to simplified transfer pricing rules.
Qualifying Free Zone Persons
If a taxable individual in UAE qualifies as a Qualifying Free Zone Person, a corporate tax of 0% is applied to their income. The qualification requirements are as follows:
- Maintain adequate substance in the UAE
- Derive qualifying income
- Meet the transfer pricing rules and documentation requirements
- Prepare audited financial statements based on the International Financial Reporting Standards (IFRS)
- Have non-qualifying income which is not over the de-minimis limit
Below excluded activities are liable to 9% corporate tax rate:
- Activities with natural persons that do not relate to specific qualifying activities
- Banking, insurance, and finance and leasing activities outside the listed exemptions
- Ownership or exploitation of non-commercial immovable property outside free zones,
- Ancillary activities pertaining to those mentioned earlier
What Are the Corporate Tax Rates in the UAE?
Understanding the UAE’s corporate tax (CT) rates is essential for financial planning, especially as businesses begin preparing for upcoming filing deadlines. While the regime remains highly competitive by global standards, there are clear thresholds and distinctions that every business leader should know.
Standard Corporate Tax Rates
According to the UAE Ministry of Finance:
- 0% tax on taxable income up to AED 375,000
This threshold is designed to support startups, SMEs, and entrepreneurs. - 9% tax on taxable income above AED 375,000
This rate applies to the majority of profitable businesses operating in the UAE.
A separate rate for large multinationals
A different tax rate (yet to be finalized) will apply to multinational groups that meet specific conditions under the OECD’s Pillar Two framework on Base Erosion and Profit Shifting (BEPS). This is part of the UAE’s effort to align with global tax standards.
Who’s Managing It All?
- The Federal Tax Authority (FTA) is the official body responsible for overseeing corporate tax in the UAE including registration, filing, compliance, and enforcement. The FTA’s website offers detailed guidance, forms, and updates to help businesses navigate the process.
For companies unsure about their applicable rate or how to structure earnings efficiently, working with experienced corporate tax consultants or the best accountants in Dubai can make all the difference.
Filing Corporate Tax UAE
The corporate tax returns are to be prepared by companies within 9 months of when the respective tax period comes to an end. The corporate tax liability has to be paid within this period. The majority of Corporate Tax Advisory in Dubai suggest opting for the financial year being the calendar year and the year ending 31st December. As per which corporate tax return UAE is to be submitted up to 30th September 2025 for the tax year ending 31 December 2024. Corporate Tax Consultants in Dubai, UAE make sure that the businesses remain compliant and keep all documentation and records minimum for 7 years to support the audits in the future.
How We Help?
SSCOGLOBAL Not only has the best accountants in Dubai but also the expert corporate tax consultants who offer professional services regarding corporate tax advisory in Dubai, UAE. Flourishing for the past few years, we have a history of working with several governmental, non-governmental, public and private organizations with unmatched skills and extensive knowledge. Reach out today and book a free consultation.
