The introduction of Corporate Tax (CT) in the UAE has significantly reshaped the financial and regulatory environment for businesses across the nation. Whether you are operating in Dubai, Abu Dhabi, or other Emirates, understanding this new tax regime is essential to ensure compliance and optimize your tax strategy.
At Arab Asset Consulting, we are committed to guiding businesses through these changes with expert advice, tailored tax solutions, and ongoing support. Our team of consultants helps you navigate the complexities of UAE Corporate Tax while maximizing efficiency and protecting profitability.
What is Corporate Tax in UAE?
Corporate Tax is a direct tax on business profits introduced by the UAE Ministry of Finance. It became effective for financial years starting on or after June 1, 2023.
This tax aligns the UAE with international standards, enhances fiscal transparency, and ensures long-term economic sustainability, while still offering one of the most competitive tax regimes globally.
Key highlights of UAE Corporate Tax:
- 0% on taxable income up to AED 375,000 (supporting small and startup businesses).
- 9% on taxable income above AED 375,000.
- 15% (expected) for multinational groups with global revenues above EUR 750 million (in line with OECD’s BEPS Pillar Two).
Applicability of Corporate Tax in UAE
The Federal Decree-Law No. (47) of 2022 makes corporate tax applicable to all business and commercial activities across the UAE, including free zones and mainland entities.
Entities Subject to Corporate Tax
- Mainland companies
- Free Zone companies (with special rules for Qualifying Free Zone Persons)
- Foreign companies with a Permanent Establishment (PE) in the UAE
- Individuals conducting business under a commercial license
Exemptions from Corporate Tax
Certain entities and income streams are exempt to maintain a business-friendly ecosystem:
- Automatically Exempt: UAE government entities and government-controlled entities.
- Conditional Exemptions: Extractive industries under Emirate-level taxation, qualifying public benefit entities, pension funds, and certain investment funds.
- Special Income Exemptions:
- Dividends and capital gains from qualifying shareholdings.
- Income from qualifying intra-group transactions.
- Income from personal investments in real estate, shares, and securities.
Corporate Tax in UAE Free Zones
Free Zone entities generally fall under the Corporate Tax regime, but those meeting specific conditions as Qualifying Free Zone Persons (QFZPs) may enjoy a 0% tax rate on Qualifying Income.
To qualify, an entity must:
- Maintain adequate economic substance in the UAE.
- Derive Qualifying Income as per Cabinet Decision.
- Not opt into the standard CT regime.
- Comply with transfer pricing documentation requirements.
⚠️ Non-qualifying income will be taxed at 9%. Businesses must carefully review their operations to ensure compliance and retention of free zone tax benefits.
Compliance & Filing Requirements
To remain compliant with UAE Corporate Tax regulations:
- Businesses must register for Corporate Tax with the Federal Tax Authority (FTA).
- Tax returns must be filed electronically within nine months after the end of the financial year.
- No advance tax payments are required.
- Tax Groups can consolidate their filings, reducing administrative burden and optimizing tax outcomes.
Deductible Expenses & Loss Utilization
- Deductible Expenses: Business expenses that are wholly and exclusively incurred for generating income are deductible. This includes salaries, rent, utilities, and depreciation of fixed assets.
- Interest Deduction: Interest on internal and external loans may be deductible, subject to transfer pricing and thin capitalization rules.
- Tax Losses: Losses can be carried forward and offset against future taxable income (with some restrictions).
Transfer Pricing & Related Party Transactions
The UAE has introduced transfer pricing rules to ensure transactions between related parties are conducted at arm’s length (similar to transactions with unrelated parties).
Businesses must:
- Maintain transfer pricing documentation.
- Ensure fair valuation of intra-group transactions.
- Avoid artificial profit shifting between entities with different tax profiles.
Strategic Tax Planning with Arab Asset Consulting
At Arab Asset Consulting, we provide end-to-end solutions for navigating the UAE’s Corporate Tax regime.
Our Services Include:
- Corporate Tax Registration with the FTA
- Corporate Tax Impact Assessments
- Implementation of Tax Policies and restructuring support
- Transfer Pricing Documentation & Compliance
- Annual Corporate Tax Computation & Filing
- Reconsideration Requests & Clarifications from the FTA
- Continuous Advisory on regulatory changes
Why Choose Arab Asset Consulting?
- Over [X years of experience – Insert number] in tax and financial consulting across the UAE.
- A dedicated team of corporate tax experts in Dubai and Abu Dhabi.
- Proven track record in helping businesses optimize tax strategies and stay compliant.
- Personalized, industry-specific tax solutions.
Contact Us Today to schedule a free consultation and ensure your business stays ahead in the evolving UAE tax landscape.
- Phone: +971 56 2722 055
- WhatsApp: +971 56 2722 055
- Email: info@arabasset.com
- Office Locations: 1905 Latifa Towers Dubai Sh Zayed Rd Opposite Museum of future.
Frequently Asked Questions (FAQs) on UAE Corporate Tax
1. What is the current UAE corporate tax rate?
- 0% for income up to AED 375,000.
- 9% for income exceeding AED 375,000.
- 15% for certain multinational groups.
2. Do free zone companies pay corporate tax?
Yes, but qualifying free zone entities can enjoy a 0% tax rate on qualifying income if conditions are met.
3. How can businesses use tax losses?
Tax losses can be carried forward and offset against future taxable income, subject to certain conditions.
4. Is interest deductible under UAE corporate tax?
Yes, both internal and external interest payments can be deductible, provided transfer pricing rules are met.
5. When is the first tax return due?
Businesses with a financial year starting on June 1, 2023, must file their first tax return in 2024.
Final Thoughts
The UAE Corporate Tax regime is designed to support long-term economic growth while aligning with global tax frameworks. Businesses that adapt early and adopt robust compliance systems will gain a competitive advantage.
At Arab Asset Consulting, we ensure your business not only complies with the UAE Corporate Tax law but also identifies opportunities to reduce liabilities and maximize efficiency.
Get in touch with our tax experts today and safeguard your business future under UAE Corporate Tax.
