The UAE introduced Corporate Tax (CT) under Federal Decree-Law No. 47 of 2022. It applies to financial years starting on or after 1 June 2023. With a headline rate of 9%, the UAE remains one of the most tax-competitive jurisdictions globally — but understanding who is liable, what qualifies for relief, and when to file is essential for every UAE business.
Who Is Subject to UAE Corporate Tax?
Corporate Tax applies to all UAE juridical persons (companies) and foreign entities operating in the UAE through a permanent establishment, as well as individuals conducting business activities in the UAE. Free zone companies are subject to CT but may qualify for a 0% rate if they meet QFZP conditions.
- UAE mainland companies (LLC, sole establishments, branches)
- UAE free zone entities — subject to CT; 0% available if QFZP conditions met
- Foreign companies with a UAE permanent establishment
- Individuals earning AED 1M+ from UAE business activities
- Exempt: Government entities, UAE sovereign wealth funds, qualifying pension funds, UAE-source dividends from qualifying shareholdings
Corporate Tax Rates
- 0% on taxable income up to AED 375,000
- 9% on taxable income above AED 375,000
- 0% for Qualifying Free Zone Persons (on qualifying income only)
- 15% Domestic Minimum Top-up Tax for large multinationals (Pillar Two — effective from 2025)
Small Business Relief: Businesses with revenue of AED 3 million or less can elect to be treated as having zero taxable income for financial years 2023, 2024, and 2025. This significantly reduces compliance costs for micro and small enterprises.
Free Zone Companies: Qualifying Free Zone Person (QFZP)
Free zone entities can benefit from a 0% CT rate on their Qualifying Income if they meet all QFZP conditions. This is one of the most important CT planning considerations for UAE free zone businesses.
- Must maintain adequate substance in the UAE free zone
- Must derive Qualifying Income (transactions with foreign persons or other free zone entities)
- Non-qualifying income must not exceed 5% of total revenue or AED 5 million (de minimis rule)
- Must comply with transfer pricing requirements
- Must not have elected to be subject to the standard CT regime
Corporate Tax Registration
All businesses subject to CT must register via EmaraTax and obtain a Corporate Tax Registration Number (CTRN). Registration deadlines are staggered based on your licence issuance month — typically 3 to 9 months from your first financial year start date. Late registration penalties are AED 10,000.
Filing and Payment Deadlines
Corporate Tax returns must be filed within 9 months of the end of the taxable financial year. For a company with a calendar year (January–December 2024), the return and payment are due by 30 September 2025.
- CT return due: 9 months after financial year end
- CT payment due: same deadline as return filing
- Advance payments: not required for most SMEs
- Late filing penalty: AED 500/month for the first 12 months, AED 1,000/month thereafter
- Late payment penalty: 14% per annum on outstanding CT
What Expenses Are Deductible?
Generally, expenses incurred wholly and exclusively for business purposes are deductible. Key categories include:
- Salaries, wages, and employee benefits (subject to arm's length conditions for related parties)
- Rent and utilities for business premises
- Professional fees (accounting, legal, consulting)
- Depreciation on business assets
- Interest on business loans (subject to 30% EBITDA cap for large businesses)
- Charitable donations to approved UAE public benefit entities
- Non-deductible: fines and penalties, entertainment above 50% of cost, dividends paid, personal expenses
Transfer Pricing Requirements
Transactions between related parties and connected persons must be conducted at arm's length. Businesses with related-party transactions must maintain a Master File and Local File if annual revenue exceeds AED 200 million, and must disclose related-party transactions in their CT return regardless of size.
Action item: If your business transacts with related parties — including payments to owners, directors, or group companies — ensure these are documented at market rates. This is one of the highest-scrutiny areas for FTA audits.
Need Help with Corporate Tax?
Our team handles Corporate Tax registration, return preparation, and FTA correspondence. We work with UAE SMEs across all sectors and free zones. Contact us for a free 15-minute consultation via WhatsApp.