Introduction
The introduction of Corporate Tax (CT) in the UAE marks a significant milestone in the country’s economic evolution. Traditionally known for its tax-free environment, the UAE implemented corporate tax as part of its commitment to enhancing fiscal transparency, aligning with global tax standards, and supporting sustainable economic growth.
This guide breaks down everything businesses need to know about corporate tax in the UAE—from rates and exemptions to compliance requirements and how to prepare your business for the new tax landscape.
What is Corporate Tax in the UAE?
Corporate Tax is a direct tax imposed on the net profit of businesses operating in the UAE. It applies to companies across all Emirates and follows the rules set out in Federal Decree-Law No. 47 of 2022 on Taxation of Corporations and Businesses.
The corporate tax rate is designed to remain competitive, supporting the UAE’s reputation as a global business hub while ensuring compliance with international tax transparency standards.
Corporate Tax Rates in the UAE
Net Profit Threshold | Tax Rate |
Up to AED 375,000 | 0% |
Above AED 375,000 | 9% |
Qualifying Multinational Enterprises (MNEs) subject to Pillar Two rules | 15% |
Who is Subject to Corporate Tax?
Corporate Tax applies to: UAE-based companies and businesses
Free Zone companies (subject to qualifying income rules)
Foreign entities with a permanent establishment (PE) in the UAE
Individuals conducting business activities requiring a commercial license
Exempt Entities
Certain entities are exempt from corporate tax, including: Government entities
Wholly government-owned companies (performing sovereign functions)
Non-profit organizations (meeting FTA criteria)
Investment funds (that qualify for exemption)
Businesses involved in natural resource extraction (taxed under Emirate-level regulations)
Why Corporate Tax was Introduced
The UAE’s corporate tax regime supports several strategic objectives:
- Aligning with international tax standards, including OECD BEPS requirements
- Ensuring the UAE remains attractive to foreign investment
- Enhancing fiscal transparency and economic sustainability
- Creating a diversified revenue stream to reduce reliance on oil income
How Corporate Tax Affects Free Zone Companies
Free Zone companies can continue to benefit from tax incentives, provided they meet the conditions for Qualifying Free Zone regime under the new law. However, Free Zone businesses must still:
- Register for Corporate Tax
- Maintain proper financial records
- Submit annual corporate tax returns
Any non-qualifying income earned by a Free Zone entity will be taxed at the standard 9% rate.
Key Compliance Requirements
Mandatory Registration
All businesses within the scope of corporate tax must register with the FTA and obtain a Tax Registration Number (TRN).
Accurate Financial Records
Maintaining audited financial statements will be critical for businesses, especially larger companies and those in Free Zones.
Timely Filing & Payments
Corporate tax returns must be filed within 9 months after the end of the financial year. Payments are due alongside the return.
Transfer Pricing Compliance
Businesses engaged in related party transactions must ensure pricing meets arm’s length standards, with supporting documentation maintained.
Common Mistakes to Avoid
Assuming Free Zone businesses are completely exempt
Delaying registration until the deadline approaches
Failing to maintain compliant financial records
Misclassifying related party transactions
Ignoring transfer pricing rules
How to Prepare Your Business for Corporate Tax
Assess Your Taxable Income
Review your financials to understand your net profit and determine your tax exposure.
Ensure Proper Bookkeeping
Implement strong accounting systems to ensure accurate record-keeping and compliant reporting.
Review Your Business Structure
If your company has related party transactions or operates across multiple jurisdictions, conduct a transfer pricing review.
Seek Professional Guidance
Tax laws are complex and constantly evolving. Working with a specialist tax consultant ensures you stay compliant while identifying opportunities for tax optimization.
Final Thoughts
The introduction of Corporate Tax in the UAE is a transformative shift for businesses. While it brings new responsibilities, it also offers an opportunity for businesses to strengthen financial management, improve governance, and ensure sustainable growth.
Staying ahead of compliance requirements—and working with trusted tax experts—will be essential for businesses aiming to thrive in this new tax era.
Need Corporate Tax Guidance? We’re Here to Help
Our team of tax specialists helps businesses across the UAE navigate corporate tax regulations, ensuring full compliance while optimizing your tax position.
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Email: tax@axiaprime.ae