UAE corporate tax

Corporate Tax in the UAE

Starting June 1, 2023, a new corporate tax regime was introduced in the United Arab Emirates, marking a significant shift from its traditionally tax-free environment. This move reflects the UAE’s commitment to enhancing tax transparency, aligning with international financial standards, and combating illegal activities and tax evasion. As the nation continues to establish itself as a global financial and trade hub, it is also embracing advanced tax and accounting practices. A key milestone in this journey was achieved in 2024 when the UAE was officially removed from the FATF “gray” list—signaling substantial progress and a strong commitment to further strengthening its tax system.

All individuals and legal entities conducting business in the UAE are now required to register for corporate tax with the Federal Tax Authority, obtain a Tax Registration Number (TRN), and file an annual tax return. These steps must be completed in 2024, and failure to register within the stipulated timeframe will result in a penalty of AED 10,000.

The corporate tax process—including registration, return preparation and filing, and tax payment—involves several critical stages. It is essential to understand the compliance requirements, meet key deadlines, and be aware of the consequences of any lapses. Working with a qualified tax consultant can ensure smooth navigation through this complex system and help businesses remain fully compliant with UAE tax laws.

Key facts:

Everything You Need to Know About Corporate Tax and VAT in the UAE

Do I need to register? When should I file? How can I avoid penalties?

Essential Definitions Under the UAE Federal Corporate Tax Law

Tax Rates
The UAE imposes a highly competitive corporate tax rate of 9%, making it one of the lowest globally. However, qualifying free zone businesses and small enterprises with annual revenues below set thresholds may benefit from a reduced 0% rate. These incentives are designed to promote targeted economic sectors and support the growth of small businesses.

Tax Base
Corporate tax is levied on a business’s taxable income, which refers to net profits or losses adjusted according to specific provisions under UAE tax law. As a federal tax, it applies uniformly across all Emirates, ensuring consistency and clarity in its implementation.

Taxable Income
Taxable income includes all revenue generated from business activities, minus allowable expenses as outlined in the corporate tax regulations. Companies can also make adjustments for qualifying deductions, such as carried-forward losses and other eligible incentives.

Taxable Persons
The corporate tax applies to both juridical persons (e.g., companies) and natural persons (e.g., individual entrepreneurs operating under a business license). In certain cases, foreign entities with a permanent establishment in the UAE or earning income from UAE sources may also be subject to taxation, depending on the nature and origin of the income.

Exemptions
Certain entities are exempt from corporate tax, including government bodies, regulated investment and pension funds, and businesses involved in natural resource extraction. Additionally, specific income types—such as dividends, capital gains on real estate, and intra-group transactions—may also qualify for exemption, depending on the circumstances.

Who Is Liable for Corporate Tax in the UAE?

For corporate tax purposes in the UAE, taxable persons may be either residents or non-residents. This classification is based on business activity and presence, and is independent of an individual’s UAE residency status, visa type, or physical presence in the country. It focuses solely on how and where the business operates, rather than the personal status of the business owner.
Category
Type
Description
Resident persons
Legal entities
Companies incorporated and registered in the UAE—whether on the mainland or in free zones—are considered resident persons for corporate tax purposes.
Individuals
Individuals conducting business in the UAE under a freelance or sole proprietorship license and earning over AED 1,000,000 in annual revenue are required to comply with corporate tax obligations.
Non-Resident Persons
Legal Entities
Foreign companies that have a permanent establishment in the UAE—such as a branch office, factory, or other fixed place of business—or that earn UAE-sourced income or maintain a nexus with the UAE, are subject to corporate tax under the applicable rules.
Individuals
Non-resident individuals who receive UAE-sourced income may be subject to withholding tax, depending on the nature of the income.

Corporate Tax Rates in the UAE

Mainland Companies
  • 0% tax rate on taxable profits up to AED 375,000

  • 9% tax rate on profits exceeding AED 375,000


Free Zone Companies
  • 0% corporate tax for companies engaged in qualifying activities and meeting the criteria for Qualifying Free Zone Person (QFZP). To qualify, companies must:

    • Conduct activities specified by the government as “qualifying”

    • Operate within the geographical boundaries of the free zone

    • Maintain sufficient assets in the UAE

    • Employ an adequate number of qualified staff

    • Incur a reasonable level of operating expenses in the UAE

  • If non-qualifying income exceeds 5% of total revenue or AED 5 million (whichever is lower), the company loses QFZP status and is taxed at the standard 9% rate on full profits.


Small Business Relief (SBR)
  • Businesses with annual revenue up to AED 3 million can opt for Small Business Relief, allowing them to pay 0% corporate tax.

  • Once the revenue exceeds the AED 3 million threshold, the SBR benefit is lost.

  • This relief is available until December 31, 2026.


Natural Persons Conducting Business Activities

This includes freelancers, self-employed individuals, sole proprietors, and other individuals operating under a commercial license.

  • 0% tax rate on annual business turnover up to AED 1 million

  • If turnover exceeds AED 1 million, corporate tax applies at:

    • 9% on profits exceeding AED 375,000

  • Eligible individuals with revenue up to AED 3 million can also benefit from the Small Business Relief, reducing their corporate tax to 0%.

Once an individual’s annual turnover exceeds AED 1 million, they are required to register for corporate tax and file a tax return annually.

Who Is Exempt from Corporate Tax in the UAE?

Under the new corporate tax framework, certain entities are fully exempt from corporate tax. These include:

  • Federal and Emirate governments, along with their departments, authorities, and other government bodies

  • State-owned enterprises, subject to specific conditions

  • Companies involved in the exploration and extraction of natural resources within the UAE

  • Public benefit organizations approved by the government

  • Investment funds that meet regulatory requirements

  • Pension and social security funds, both government and privately managed, provided they are registered and recognized as exempt

Which Types of Income Are Not Subject to Corporate Tax in the UAE?

The following sources of income are not subject to corporate tax under UAE regulations:

  • Salaries and wages earned by individuals

  • Investment income, including returns from bank deposits and savings schemes

  • Income from real estate owned by individuals, provided it is not part of a licensed business activity

  • Rental income received by individuals outside of a business license framework

  • Dividends received from UAE or foreign companies

  • Inheritance and personal gifts

  • Capital gains from the sale of personal assets not related to business activities

Tax Groups in the UAE

Businesses in the UAE have the option to form a tax group under certain conditions. To qualify:

  • The parent company must directly or indirectly hold at least 95% of the share capital, voting rights, and entitlement to profits of each subsidiary

  • All group members must have the same financial year and follow identical accounting standards

  • Neither the parent nor any subsidiary can be classified as an exempt entity or a Qualifying Free Zone Person (QFZP)

Navigating Corporate Tax in Dubai with visakingsdubai

o operate legally and transparently in the UAE—and to avoid potential tax or banking complications—businesses and individuals must fully comply with their tax obligations. This includes timely registration, accurate tax return filing, and the submission of financial statements to the appropriate authorities.

At Visakingsdubai, our team of experienced tax advisors, accountants, and business consultants is here to guide you through every step of the UAE’s corporate tax landscape. Whether you’re a startup, freelancer, or established enterprise, we’ll help you stay compliant and confident.

Frequently Asked Questions

Do offshore companies need to pay corporate tax?
No. If a foreign company has no permanent establishment and no UAE-sourced income, it is not subject to UAE corporate tax under the new regulations.


Is it mandatory to maintain accounting records and submit financial statements in the UAE?
Yes. All UAE companies must maintain proper accounting records and submit financial statements prepared according to IFRS (International Financial Reporting Standards).
Accurate bookkeeping helps justify income sources and simplifies tax return filing. All transactions must be supported by invoices, contracts, bills of lading, and other relevant documentation.
The starting point for calculating corporate tax is the accounting profit or loss.


Do companies have to file tax returns?
Yes. As of June 1, 2023, all UAE-registered companies must:

  • Register with the Federal Tax Authority (FTA)

  • File annual tax returns through the EmaraTax portal, regardless of whether they owe corporate tax

  • Pay taxes within 9 months after the end of the relevant tax period


If a company pays VAT, does it also need to pay corporate tax?
Yes. VAT and corporate tax are separate. A company registered for VAT must also register separately for corporate tax, as each tax regime has its own rules and filing requirements.


Can companies offset past losses against future profits?
Yes. Companies can offset up to 75% of their taxable income using carried-forward losses.

  • If 50% or more of the shareholding remains the same, losses can be carried forward indefinitely.

  • If ownership changes, 50% of the losses may still be carried forward—if the business activity remains unchanged or similar.


Do companies within the same group file tax returns separately?
No. If the group meets the conditions for forming a tax group, it can be treated as a single taxable entity, filing one consolidated tax return.


If a natural person conducts multiple business activities, are separate tax filings required?
No. If an individual is engaged in more than one taxable business activity, they are treated as a single taxable person.
Only one corporate tax return is required, reflecting the total income and expenses across all activities.


What is transfer pricing in the UAE?
Transfer pricing refers to the pricing of goods, services, and transactions between related parties or within multinational corporate groups.
To prevent tax manipulation, the UAE mandates that transfer prices match market rates—similar to what unrelated parties would pay under the same conditions.

Companies engaged in related-party transactions must:

  • Complete a disclosure form

  • Maintain local and global transfer pricing documentation

  • Submit a Country-by-Country Report (CbCR) if applicable


Still have questions about UAE corporate tax, accounting, or compliance?
The team at visakingsdubai is here to help. We’ll guide you through every step—from registration to filing—ensuring your business stays compliant and ready for the future.

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