Corporate tax has become one of the most important topics for business owners in the UAE. If you are a founder, director, CFO, or professional running a licensed activity, you’ve probably asked yourself:
- What are corporate taxes, exactly?
- Does the new UAE corporate tax apply to my company or to me personally?
- Do I need to register now, and what happens if I miss a deadline?
This guide explains what corporate tax means in simple terms, then translates that into UAE-specific rules under Federal Decree-Law No. 47 of 2022, as amended by Federal Decree-Law No. 60 of 2023.
You will learn:
- How corporate tax works globally and in the UAE
- Who is in scope and who is exempt
- The 0% and 9% corporate tax rates and when 15% DMTT can apply
- What “taxable income” really means
- Corporate tax registration and deadlines in the UAE
- How Small Business Relief can protect eligible SMEs from corporate tax until certain thresholds are crossed
If, at any point, you realise your structure or situation is not straightforward, you should seek tailored advice. The Corporate Law and Business Law teams at Al Ramsy Advocates can review your entity, contracts, and risk profile in light of the new regime.
Important: This article is for general information only and does not constitute legal or tax advice. Always obtain advice specific to your facts before acting.
What Are Corporate Taxes?
At its simplest, corporate tax is a direct tax on the profits of a company or other business entity. The basic formula in most jurisdictions is:
Taxable profit × applicable tax rate = corporate tax payable
Where:
- Taxable profit = business income minus allowable business expenses and adjustments
- Applicable tax rate = the percentage set by law (e.g., 9% in the UAE above a certain threshold)
In many countries, corporate tax is sometimes called:
- Corporate income tax
- Corporation tax
- Business profits tax
Corporate Tax vs Other Types of Tax
Corporate tax is different from:
- VAT (Value Added Tax) – an indirect tax on the consumption of goods and services, collected at each stage of the supply chain, and ultimately borne by the end consumer.
- Personal income tax – tax on an individual’s personal income (salary, investment income, etc.). The UAE does not impose federal personal income tax on salaries at the time of writing.
- Zakat or similar levies – applicable in certain jurisdictions based on religious or specific local rules, not as a corporate tax.
Why Countries Impose Corporate Taxes
Governments levy corporate tax to:
- Collect revenue to fund public services
- Ensure that profitable companies contribute to the jurisdictions in which they operate
- Align with international standards, including OECD initiatives on tax transparency and preventing harmful tax practices
The UAE’s move to introduce a modern corporate tax regime is very much part of this global shift.
Is There Corporate Tax in the UAE Now? Key Laws and Dates
Yes. The UAE has introduced a federal corporate tax regime that applies to many businesses and commercial activities. The legal framework is built primarily on:
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses
- Federal Decree-Law No. 60 of 2023, which amends certain provisions (including rules related to the Domestic Minimum Top-up Tax)
When Does UAE Corporate Tax Apply?
Corporate tax applies to financial years starting on or after 1 June 2023.
For example:
- A company with a financial year 1 June 2023 – 31 May 2024
- Corporate tax applies from 1 June 2023
- Corporate tax applies from 1 June 2023
- A company using a calendar year 1 January – 31 December 2024
- Corporate tax applies from 1 January 2024
- Corporate tax applies from 1 January 2024
From that first “in-scope” financial year onwards, the company must comply with the UAE corporate tax law, including registration, accounting, filing, and payment obligations.
Who Pays Corporate Tax in the UAE (and Who Doesn’t)?
The law uses the term “Taxable Person” to define who is subject to UAE corporate tax. Broadly, corporate tax applies to:
1. UAE Resident Juridical Persons
These include:
- UAE-incorporated companies (LLCs, PJSCs, PSCs, etc.)
- Other juridical entities effectively managed and controlled in the UAE
- Free zone entities, even though they may benefit from special rules (see below)
If your company is established in Dubai mainland, a free zone (such as DMCC, JAFZA, DIFC, ADGM, etc.), or another Emirate as a separate legal entity, it is very likely considered a resident juridical person for corporate tax purposes.
2. Non-Resident Juridical Persons with a UAE Permanent Establishment
A foreign company can be subject to UAE corporate tax on income attributable to a permanent establishment (PE) in the UAE. A PE is generally a fixed place of business or dependent agent creating sufficient presence under the law and applicable guidance.
3. Natural Persons (Individuals) Conducting a Business
Certain individuals who carry on a “Business or Business Activity” in the UAE under a commercial licence or similar may be considered Taxable Persons where their activities and income meet legal criteria.
This can be particularly relevant to:
- Sole practitioners under professional licences
- Individuals operating e-commerce, consultancy or similar businesses
4. Free Zone Persons and Qualifying Free Zone Persons (QFZPs)
Free zone entities are within the scope of corporate tax, but some may be treated as Qualifying Free Zone Persons (QFZPs) and benefit from a 0% rate on qualifying income if they meet specific conditions on substance, activities, and dealings with mainland UAE.
Failing to meet these conditions can cause a free zone entity to lose QFZP status and be taxed at standard rates (0%/9%).
Who Is Exempt from UAE Corporate Tax?
Some persons and activities are exempt from corporate tax, subject to conditions. These include:
- UAE government entities
- Certain government-controlled entities
- Persons engaged in extractive and non-extractive natural resource businesses (at Emirate level instead)
- Qualifying public benefit entities
- Qualifying investment funds
- Certain public and private pension or social security funds
- Some fully-owned subsidiaries of exempt entities
This exemption regime is technical and document-heavy. If your organisation might fall within one of these categories, it is prudent to obtain a formal review from a UAE corporate tax lawyer.
Tip: If your group includes government-related entities, funds, or special purpose vehicles, consider a joint review with our Corporate Law and Business Law teams to confirm exempt status and documentation.
UAE Corporate Tax Rates and Thresholds (0%, 9% and 15% Explained)
The UAE has adopted a tiered corporate tax rate system that is relatively simple compared to many jurisdictions:
- 0% corporate tax on taxable income up to AED 375,000
- 9% corporate tax on taxable income above AED 375,000
- 0% or special treatment for qualifying free zone income of QFZPs
- 15% Domestic Minimum Top-up Tax (DMTT) for certain large multinational enterprise (MNE) groups from financial years starting on or after 1 January 2025
0% on Taxable Income up to AED 375,000
This lower band is designed to support smaller businesses and start-ups. However, reaching or staying under this threshold may not always be the best strategy, especially where growth and financing are priorities.
9% on Taxable Income Above AED 375,000
Once taxable income (not just revenue) exceeds AED 375,000, the amount above that threshold is generally taxed at 9%. This is still among the more competitive corporate tax rates globally, but it introduces real planning considerations for UAE businesses.
0% on Qualifying Free Zone Income
Certain Qualifying Free Zone Persons can enjoy a 0% rate on income that meets the definition of “qualifying income,” subject to strict conditions around activities, substance, and dealings with mainland entities. Missteps—such as improper mainland transactions—can jeopardise this status.
15% DMTT for Large MNEs
Under the UAE’s implementation of the OECD Pillar Two rules, a Domestic Minimum Top-up Tax will apply to large multinational groups with consolidated revenues of EUR 750 million or more, ensuring an effective tax rate of at least 15% on relevant UAE profits.
If your group has global revenues near this threshold, corporate tax planning cannot be done in isolation; it must integrate with international tax strategy.
Corporate Tax Meaning in Practice: How Is Taxable Income Calculated?
Understanding the rates is only half the picture. The real question is: what is being taxed?
The starting point is generally your accounting profit (or loss) before tax in your financial statements. From this, the law requires adjustments to derive Taxable Income.
Accounting Profit vs Taxable Income
Typical adjustments include:
- Adding back non-deductible expenses
- Excluding exempt income (e.g., certain dividends from qualifying shareholdings, qualifying intra-group transactions, some capital gains)
- Adjustments for provisions, impairments, and fair value movements, depending on the rules
- Group relief, loss utilisation, and other elections where applicable
Exempt Income (High-Level Overview)
Certain income can be exempt from corporate tax (subject to conditions), such as:
- Dividends from qualifying shareholdings
- Gains on disposal of qualifying shares
- Certain intra-group transfers and reorganisations
Non-Deductible or Partially Deductible Expenses
The law sets out categories of expenditure that are:
- Fully deductible
- Partially deductible (e.g., some entertainment expenses)
- Non-deductible (e.g., certain fines, penalties, distributions to owners)
Getting this wrong can lead to overstating or understating taxable income, which is a frequent source of disputes with tax authorities in many jurisdictions.
Practical step: Review your chart of accounts, intercompany agreements, management fees, and financing arrangements with an eye on these rules. Our Contract Law and Business Law teams can help align your documentation with the new tax framework.
Corporate Tax Registration in the UAE: Who Must Register and When?
Most Taxable Persons must register for UAE corporate tax and obtain a Corporate Tax Registration Number with the Federal Tax Authority (FTA), typically via the EmaraTax portal.
Who Must Register?
In general, registration is required for:
- UAE-resident companies and other juridical persons
- Non-resident entities with a UAE permanent establishment
- Natural persons conducting a business that meets the legal thresholds
- Free zone entities (including QFZPs), even if they expect to benefit from 0% on qualifying income
Certain exempt persons may also be requested to register, depending on FTA decisions.
Corporate Tax Registration Deadlines
The FTA has issued timelines and deadlines for registration based on categories of Taxable Persons and licence issuance dates. Failure to register within the prescribed window can trigger administrative penalties, even if the entity has no tax payable.
Because the deadlines can vary depending on:
- When your commercial licence was issued
- The type of entity
- Your financial year
…it is essential to check the latest FTA decisions or obtain advice to confirm your specific deadline.
Step-by-Step: High-Level Registration Process
- Gather entity information: trade licence, constitutional documents, financial year, authorised signatories.
- Create or access your account on EmaraTax.
- Complete the corporate tax registration application, including ownership and activity details.
- Upload supporting documents as required.
- Receive your Corporate Tax Registration Number once approved.
If you prefer to avoid errors or delays, Al Ramsy Advocates can support your registration and review your group structure for risks. You can reach us via the Contact page.
Small Business Relief: 0% Corporate Tax for Eligible UAE SMEs
The UAE introduced Small Business Relief (SBR) to ease the compliance burden on smaller entities. Under this regime, eligible Resident Persons can be treated as having no taxable income for the relevant period, effectively facing 0% corporate tax, subject to strict conditions.
Who Can Elect for Small Business Relief?
Broadly, SBR can be available to:
- UAE Resident Persons (natural or juridical)
- With revenue equal to or less than AED 3,000,000 in the current tax period and all previous tax periods, within the specified relief years
Who Cannot Elect?
Certain persons are excluded, such as:
- Qualifying Free Zone Persons
- Members of a multinational group with consolidated group revenue of more than EUR 750 million (Pillar Two scope)
What Does the Relief Actually Do?
If the election is valid:
- The entity is treated as not having derived any taxable income for that period, so no corporate tax is calculated.
- Other specific exemptions, reliefs, or deductions may not be available during SBR.
- Transfer pricing documentation is relaxed, but arm’s length pricing must still be respected.
Example: Revenue Threshold Breach
If a business had AED 4,300,000 in revenue in one prior period, and AED 1,900,000 in the current period, it would not qualify for SBR in the current period because the previous period revenue exceeded AED 3,000,000.
Warning: Whether to elect SBR is a strategic decision. It can affect the ability to use tax losses, claim other reliefs, or present consistent profit history to banks or investors. Consider a consultation with our Business Law and Corporate Law teams before making an election.
Compliance Checklist: Filings, Records, and Penalties
Once in scope and registered, a Taxable Person must comply with ongoing obligations.
Filing and Payment Deadlines
A corporate tax return generally must be filed within 9 months from the end of the relevant tax period, and the tax due must usually be paid by the same deadline.
For example:
- Financial year: 1 January – 31 December 2024
- Return and payment due by 30 September 2025 (subject to specific FTA rules)
Record-Keeping and Transfer Pricing
Taxable Persons are expected to:
- Maintain adequate financial records and supporting documents (invoices, contracts, loan agreements, etc.)
- Apply and, where required, document transfer pricing policies for transactions with related parties and connected persons – potentially including domestic transactions
A restructure or change in intra-group arrangements may also trigger specific rules or elections, which should be reviewed from both a tax and contractual perspective.
Common Compliance Mistakes
Typical issues in emerging tax regimes include:
- Misclassifying an entity as out of scope or exempt
- Late or missed registration, believing “we have no profits yet”
- Ignoring transfer pricing for intercompany charges
- Treating director loans, shareholder distributions, or related-party payments without considering their tax and legal treatment
Penalties and Disputes
The FTA has powers to impose administrative penalties for failures such as late registration, late filing, late payment, and errors or omissions in returns. Where disagreements arise, disputes can escalate into reconsideration requests, objections, and litigation or arbitration, depending on the circumstances.
The Litigation and Arbitration teams at Al Ramsy Advocates can assist in:
- Responding to FTA queries and audits
- Challenging assessments where appropriate
- Handling disputes with counterparties whose contracts did not anticipate corporate tax
How a UAE Corporate Tax Lawyer Can Help Your Business
Corporate tax is not just an accounting issue. It affects how you incorporate, contract, finance, and restructure your business.
A UAE corporate tax lawyer, working closely with tax and accounting professionals, can help you:
- Choose and document the right structure (mainland vs free zone, holding companies, group structures)
- Draft or update shareholder agreements, joint venture contracts, financing documents, and intercompany agreements to reflect corporate tax consequences
- Assess whether you qualify as a Qualifying Free Zone Person or Small Business Relief claimant, and whether it makes strategic sense
- Handle mergers, acquisitions, and group reorganisations in a tax-efficient and legally robust way
- Prepare for and respond to FTA audits, information requests, and disputes
At Al Ramsy Advocates, we combine UAE corporate, commercial, contract, and dispute-resolution expertise, linking naturally with our:
If you need assistance understanding how the UAE corporate tax regime affects your business, you can reach us through our Contact page.
FAQs – Corporate Tax in the UAE
What is corporate tax in the UAE in simple terms?
Corporate tax in the UAE is a federal tax on the profits of businesses, applied under Federal Decree-Law No. 47 of 2022 (as amended). Most resident companies, certain individuals carrying on a business, and some non-residents with a UAE permanent establishment are in scope, subject to exemptions.
What is the current corporate tax rate in the UAE?
The general rates are:
- 0% on taxable income up to AED 375,000
- 9% on taxable income above AED 375,000
- 0% / special rules for qualifying free zone income of QFZPs
- 15% Domestic Minimum Top-up Tax for certain large multinationals from financial years starting on or after 1 January 2025
Who is exempt from UAE corporate tax?
Exempt persons include (subject to conditions):
- UAE government and certain government-controlled entities
- Persons engaged in extractive and non-extractive natural resource businesses
- Qualifying public benefit entities
- Qualifying investment funds
- Certain public and private pension or social security funds
- Specific wholly-owned subsidiaries of exempt persons
Do freelancers and sole practitioners have to pay corporate tax in the UAE?
They may be in scope if they are carrying on a business or business activity under a licence or meet other criteria, and their income exceeds thresholds set by Cabinet decisions. The position depends on the nature and scale of their activities. A tailored review is strongly recommended for licensed professionals and consultants.
What is the UAE corporate tax registration deadline for my company?
Registration deadlines are set by the FTA based on factors such as the date your licence was issued and your entity type. Missing the prescribed window can lead to administrative penalties even if you have no profit yet. Because deadlines are issued through FTA decisions and may change, you should check the latest FTA guidance or obtain professional advice.
How does Small Business Relief work and when does it end?
Small Business Relief allows eligible UAE resident persons with revenue up to AED 3,000,000 in the current and all previous periods (within specified years) to be treated as having no taxable income for corporate tax purposes, subject to conditions and exclusions. It is available only for certain tax periods and does not apply to QFZPs or MNE group members above the Pillar Two threshold.
Does corporate tax apply to free zone companies in the UAE?
Yes. Free zone companies are within the scope of corporate tax. Some may qualify as Qualifying Free Zone Persons and enjoy 0% on qualifying income if they meet specific conditions. Failure to comply with those conditions can cause a loss of QFZP status, resulting in taxation at 9%.
How is corporate tax different from VAT in the UAE?
- Corporate tax applies to business profits of Taxable Persons.
- VAT applies to the supply of goods and services at each stage of the supply chain, currently at 5% in the UAE, with specific exemptions and zero-rating.
A business may be subject to both corporate tax and VAT, but on different tax bases.
What happens if I miss the corporate tax filing deadline?
Missing a corporate tax return filing or payment deadline can lead to financial penalties, and persistent non-compliance may expose you to more serious consequences, including enforcement actions by the FTA. If you believe you have missed a deadline, seek advice immediately to assess options for mitigation and remedial actions.
When does the 15% Domestic Minimum Top-up Tax apply?
The Domestic Minimum Top-up Tax (DMTT) applies to members of large multinational enterprise groups with consolidated global revenues of EUR 750 million or more in at least two of the four preceding financial years. It is effective in the UAE for financial years starting on or after 1 January 2025, ensuring an effective tax rate of at least 15% on relevant UAE profits.
Next Step: Understand Your Corporate Tax Position in the UAE
The question “What are corporate taxes?” quickly turns into more complex issues once you consider:
- Your legal structure (mainland vs free zone, holding company, group)
- Your contracts, financing, and related-party arrangements
- Eligibility for Small Business Relief, QFZP status, or other reliefs
- Exposure to FTA audits and disputes
If you would like a clear, practical view of how the UAE corporate tax regime affects your business, the team at Al Ramsy Advocates is ready to assist.
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Or contact us directly through our Contact page to arrange a consultation.