Corporate Tax in the UAE

For decades, the United Arab Emirates has attracted global businesses with its tax-free incentives and economic dynamism. However, as part of aligning with global taxation standards, corporate tax in UAE was officially implemented from June 2023. This marks a significant shift in the UAE’s tax landscape.

This comprehensive guide will help you understand UAE corporate tax, its rates, registration process, and how to stay compliant with the UAE corporate tax law.

What is Corporate Tax in UAE?

Corporate tax, also known as company tax or federal tax, is a direct tax levied on the net income or profits of corporations and other businesses. The UAE corporate tax applies to all emirates and is enforced by the Federal Tax Authority (FTA).

Introduced under Federal Decree-Law No. 47 of 2022, corporate tax in UAE applies to both UAE-based and foreign entities operating in the country.

UAE Corporate Tax Rates

The Dubai corporate tax rate and UAE-wide tax rate are structured to support small businesses while ensuring tax contributions from larger enterprises:

Additional provisions apply to Multinational Enterprises (MNEs) under the OECD BEPS 2.0 framework, specifically those with global revenues exceeding AED 3.15 billion.

Who is a Taxable Person?

According to the UAE corporate tax law, a taxable person includes:

• Resident Persons: UAE-incorporated entities, foreign companies managed and controlled in the UAE, and natural persons earning more than AED 1 million annually.
• Non-Resident Persons: Foreign companies with a UAE permanent establishment (PE) or earning UAE-sourced income.

Corporate Tax Registration UAE

All taxable entities must complete corporate tax registration in UAE with the FTA and obtain a Corporate Tax Registration Number. This includes:

• Mainland companies
• Free zone entities
• Branches of foreign companies
• Sole establishments earning qualifying revenue

Deadline: Businesses must register before filing their first corporate tax return.

Calculation of Corporate Tax UAE

The calculation of corporate tax in UAE follows a clear structure:

1. Determine Gross Revenue
2. Deduct Allowable Expenses such as:
   1. Employee salaries
   2. Office rent
   3. Utilities
   4. Marketing costs
   5. Loan interest
   6. Depreciation & amortization
3. Arrive at Taxable Income
4. Apply Corporate Tax Rate (0% or 9%)

Companies must maintain accurate financial records by UAE GAAP or IFRS.

Corporate Tax in UAE Free Zones

Entities operating within designated Free Zones may qualify for a 0% tax rate if they meet the following:

• Hold a Qualifying Free Zone Person (QFZP) status
• Earn Qualifying Income from permitted activities within the zone
• Avoid income from Excluded Activities or a PE outside the Free Zone

Note: Free zone businesses must still register and file returns even if tax-exempt.

Exemptions Under UAE Corporate Tax Law

Certain entities and income are exempt from UAE corporate tax, including:

• UAE government and related entities
• Extractive industries (e.g., oil, gas, mining)
• Qualifying public benefit entities
• Qualifying investment funds
• Social security and pension funds (as listed by the FTA)

Small Business Relief (SBR)

To support SMEs, the UAE offers Small Business Relief under corporate tax:

• 0% tax for businesses with annual revenue up to AED 3 million (until Dec 31, 2026)
• Applies to resident persons (mainland or free zone)
• Excludes holding companies and financial institutions
• Requires filing an SBR notification within the tax return

This helps startups and micro-businesses lower compliance costs while operating efficiently.

Key Features of the UAE Corporate Tax Regime

• 9% flat rate on profits above AED 375,000
• 0% for small businesses and qualifying Free Zone entities
• Standard financial year basis – firms with a fiscal year starting after June 1, 2023, are subject to corporate tax in that year
• Deductions for legitimate business expenses
• Transparent compliance with international reporting standards (IFRS)
• Penalties for non-compliance with filing or payment deadlines

How Can Shuraa Help?

Navigating the new corporate tax regime in the UAE requires clarity, compliance, and confidence. At Shuraa Tax, we provide expert guidance on:

• Corporate tax registration UAE
• Tax return filing
• VAT registration services
• Audit services
• Tax advisory services

Let our corporate tax experts in UAE help your business stay compliant and confident in 2025.

FAQs – Corporate Tax in the UAE