Corporate Tax in UAE

by | Jan 19, 2025

Corporate Tax in UAE

The UAE has made a historic move by introducing corporate tax for the first time, with rates set at 0% and 9%. While this marks a shift away from the country’s traditional tax-free status, the new rates are still relatively low compared to global standards. This strategic change shows the UAE’s commitment to aligning with international tax norms while continuing to be an attractive destination for global businesses.

For businesses operating in the UAE, understanding and complying with the new corporate tax regulations is crucial. This guide explains everything you need to know about the corporate tax system and how to ensure your business remains compliant.

What is Corporate Tax?

Corporate tax is a direct tax on the profits earned by businesses. Essentially, it means that companies will pay a portion of their earnings to the government. While many countries have had corporate tax systems for years, the UAE’s introduction of corporate tax represents a significant shift for a country that has long been seen as a tax haven for businesses.

Corporate Tax Rates in the UAE

Standard Tax Rate: 9%

The UAE’s Corporate Tax Law, introduced on December 9, 2022, came into effect on June 1, 2023. Under this new law, businesses will be subject to a 9% tax rate on taxable income above AED 375,000. However, income up to this threshold will be exempt from tax.

Here’s a breakdown of the tax system:

  • Income up to AED 375,000: Exempt from tax.
  • Income above AED 375,000: Taxed at 9%.


Minimum Tax for Large Multinational Enterprises (MNEs)

From January 1, 2025, the UAE has introduced a Domestic Minimum Top-Up Tax (DMTT) for large multinational enterprises. This is in line with the global agreement under the OECD’s Two-Pillar Solution, which ensures that MNEs pay a minimum of 15% tax on their global profits. This tax will apply to companies with revenues over €750 million in at least two of the last four years.

Who Needs to Register for Corporate Tax?

If your business meets the criteria for taxable income, you’ll need to register for corporate tax. The registration process depends on whether you’re a resident or a non-resident business.

Resident Persons

A business is considered resident in the UAE if:

  • It is incorporated in the UAE (mainland, free zone, or offshore).
  • It is a foreign entity managed and controlled in the UAE.

Resident businesses are taxed on their worldwide income.

Registration Deadlines for Resident Businesses

The deadline for registering your business for corporate tax depends on the month your trade license is issued. Here’s a summary of the registration deadlines for each month:

Month of License IssuanceRegistration Deadline
January 1 – January 31May 31, 2024
February 1 – February 29May 31, 2024
March 1 – March 31June 30, 2024
April 1 – April 30June 30, 2024
May 1 – May 31July 31, 2024
June 1 – June 30August 31, 2024
July 1 – July 31September 30, 2024
August 1 – August 31October 31, 2024
September 1 – September 30October 31, 2024
October 1 – October 31November 30, 2024
November 1 – November 30November 30, 2024
December 1 – December 31December 31, 2024

If your company has multiple licenses, the deadline will be based on the earliest license issuance date.

Non-Resident Persons

For non-resident businesses (i.e., foreign entities with a permanent establishment in the UAE or earning income from UAE sources), the registration deadlines are slightly different:

  • Permanent establishment (before March 1, 2024): Register within 9 months of establishing a permanent establishment in the UAE.
  • Nexus (after March 1, 2024): Register within 3 months of creating a nexus.

Failure to register on time will incur a fine of AED 10,000.

Who Is Exempt from Corporate Tax?

Some businesses are completely exempt from corporate tax. These include:

  • Government entities and those controlled by the government.
  • Extractive industries (e.g., oil, gas, and mining businesses).
  • Public benefit entities, such as charities.
  • Pension and social security funds.
  • Certain small businesses with annual revenues below AED 3 million.

Small Business Relief

If your business has revenues under AED 3 million, you may qualify for small business relief. This exemption allows you to avoid corporate tax until December 31, 2026, provided you meet the following criteria:

  • The business must be a resident in the UAE.
  • Revenue for the relevant tax period and all prior periods must not exceed AED 3 million.
  • The business must not be a financial institution or holding company.

In addition to the tax exemption, eligible businesses will face fewer compliance requirements, including simplified rules for transfer pricing.

Free Zone Businesses

Businesses operating in UAE free zones may qualify for a 0% corporate tax rate on qualifying income, provided they meet specific conditions, such as:

  • Maintaining a real physical presence (substance) in the free zone.
  • Engaging in qualifying business activities (e.g., manufacturing, logistics, financial services).
  • Complying with transfer pricing rules and financial reporting requirements.

However, income from certain activities, like banking or real estate outside free zones, will still be subject to the standard 9% tax rate.

Filing Your Corporate Tax Return

Once your business is registered for corporate tax, you will need to file your first tax return within 9 months after the end of your financial year. If your fiscal year ends on December 31, your first tax return will be due by September 30, 2025.

It’s also important to retain all records for at least 7 years, as these may be required for audits or future tax assessments.

How to Stay Compliant with UAE Corporate Tax Law?

Navigating the new corporate tax system in the UAE can be complex, especially if you’re unfamiliar with tax regulations. Here are some ways to ensure compliance:

  • Register on time: Ensure that you submit your tax registration application by the appropriate deadline.
  • Keep proper records: Maintain accurate financial records for at least 7 years to support your tax filings.
  • File tax returns on time: Be sure to submit your tax return within the required timeframe to avoid penalties.

If you’re unsure about any aspect of the process, professional services like those offered by Fair Tax International can help. We assist with:

  • Obtaining your tax registration number.
  • Preparing and filing your corporate tax return.
  • Offering advice on tax planning and compliance.

Free Consultation

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