Corporate Tax

Introduction to Corporate Tax in the UAE

What is Corporate Tax?

Corporate tax is a direct tax levied on a company’s net profits. The UAE introduced a federal corporate tax on 1 June 2023. The law imposes 0% on taxable income up to AED 375,000 and 9% on income above that. A Domestic Minimum Top-up Tax (DMTT) of 15% applies to multinational enterprises with global revenue over AED 3.15 billion, and small business relief allows a 0% rate for revenue up to AED 3 million until 2026. Unlike personal income taxes, the corporate tax applies to juridical persons, non-resident entities with a UAE nexus and natural persons conducting business with annual turnover exceeding AED 1 million.

Why Do You Need UAE Corporate Tax?

The new tax regime brings the UAE closer to international standards while keeping its reputation as a low-tax jurisdiction. Requiring businesses to register and file returns promotes financial transparency and fair competition. The corporate tax also attracts responsible foreign investors and discourages profit-shifting. By complying early and structuring operations properly, companies can enjoy the UAE’s modern infrastructure, incentives and business-friendly environment while avoiding penalties. Professional guidance ensures you utilise qualifying deductions, manage cross-border profits and maintain eligibility for 0% free-zone or small-business relief.

Our Full Range of Corporate Tax Services in the UAE

Our consultants provide end-to-end support throughout your corporate tax journey:

Corporate Tax Framework in the UAE

Who is Eligible for Corporate Tax?

Resident juridical persons (companies incorporated or effectively managed in the UAE) are taxed on worldwide income. Non-resident persons are taxed on UAE-sourced income through a permanent establishment or nexus. Natural persons (sole proprietors and freelancers) are subject to corporate tax if annual business turnover exceeds AED 1 million.

UAE Corporate Tax: Exempt Persons, Income & Activities

Certain entities are exempt from corporate tax. These include:

Wholly-owned government entities and public benefit organisations;

Extractive businesses and non-extractive natural resource enterprises;

Qualifying investment funds and pension funds;

Non-resident persons earning only shipping/air transport income;

Income from dividends and capital gains from qualifying shareholdings;

Intra-group transactions under certain conditions.

Tax Benefits & Incentives

The UAE corporate tax law includes generous reliefs:

Group relief & loss transfer

tax groups can file consolidated returns and transfer losses between members; intragroup transfers are exempt if shareholding thresholds and qualifying periods are met.

Exemption for foreign branch profits

profits from foreign permanent establishments may be exempt (or a foreign tax credit may apply) to avoid double taxation.

Relief for restructuring

mergers and transfers of assets may be tax-neutral.

Carry forward losses

companies may offset future profits with losses incurred after 1 June 2023.

Applicable Rate of UAE Corporate Tax

0%

taxable profits up to AED 375,000; and qualifying small business relief up to AED 3 million of revenue until 31 December 2026.

9%

taxable profits above AED 375,000.

0%

qualifying income of free-zone persons who meet substance requirements, maintain audited accounts and earn only qualifying revenue.

15% DMTT

multinational groups with global revenue exceeding AED 3.15 billion (Pillar Two).

Corporate Tax Scenarios

Corporate Tax for Free Zone Persons

Free-zone entities can maintain a 0% corporate tax on qualifying income if they have adequate substance, earn income from approved activities (e.g., manufacturing, processing, holding shares, treasury services, aircraft financing, logistics and distribution) and keep audited financials and transfer pricing documentation. Non-qualifying revenue must not exceed AED 5 million or 5% of total revenue, otherwise the entire income becomes taxable at 9%. Our experts help free-zone companies structure contracts, segregate qualifying and non-qualifying activities and maintain substance to preserve the 0% rate.

Corporate Tax for Freelancers

Freelancers and sole proprietors are subject to corporate tax when their annual business turnover exceeds AED 1 million. Professional advice is vital to separate personal and business income, register on time and claim allowable deductions (such as office rent, travel and professional costs). We help freelancers use cash-basis accounting, maintain simplified records and avoid penalties.

Corporate Tax for Groups

Two or more UAE companies can form a tax group if the parent owns at least 95% of the subsidiaries’ share capital and voting rights. The group files a single return, calculates a consolidated taxable income and can transfer losses between members. This structure reduces compliance costs, offsets profits with losses and simplifies intragroup transactions. Our advisors assist in assessing eligibility, preparing group consolidation and drafting shareholder resolutions.

Tax Deduction for Companies with Foreign Branches

Companies with foreign branches may elect to exempt foreign branch profits or claim a foreign tax credit. The choice depends on the applicable overseas tax rate and potential withholding taxes. We evaluate treaty benefits, manage foreign tax credit documentation and align branch profits with UAE transfer pricing rules. This ensures profits are not taxed twice while maintaining compliance with global minimum tax standards.

Corporate Tax Rates and Global Comparison

The UAE’s headline corporate tax rate is among the lowest in major economies. The table below compares the UAE’s rate with statutory rates in selected countries.

Country	Statutory Corporate Tax Rate
United Arab Emirates	9% (0% up to AED 375k; 9% thereafter)
Australia	30%
Germany	29.93%
Japan	29.74%
Canada	26.14%
United States	25.63%
France	25.83%
Netherlands	25.8%
United Kingdom	25%
Singapore	17%
Hong Kong	16.5%
Ireland	12.5%
Qatar	10%

As the table shows, the UAE’s 9% rate is significantly lower than most advanced economies and even lower than regional competitors like Singapore and Hong Kong. Combined with the 0% threshold and free-zone incentives, Dubai remains an attractive hub for multinational corporations, startups and freelancers.

Corporate Tax Compliance & Filing

Corporate Tax Registration

Every taxable person—whether resident company, non-resident with a UAE nexus or natural person with turnover over AED 1 million—must register for corporate tax. Registration should be completed within three months of commencing business. Our team handles the application through the EmaraTax portal, ensuring accuracy, preventing delays and attracting benefits of early submission.

Tax Income Deductions

Taxable income equals gross income minus allowable deductions and exemptions. Deductible expenses include operating costs, salaries, rent, depreciation, interest (subject to rules), research & development and marketing. Non-deductible items include penalties, donations to non-approved entities and expenses not incurred wholly and exclusively for business. We assist in documenting deductions, allocating expenses between qualifying and non-qualifying activities and maximising reliefs.

How to File a Corporate Tax and Financial Report

Businesses must maintain financial records in accordance with IFRS or, for small businesses, simplified accounting standards. Free-zone persons must have audited financial statements. A corporate tax return must be filed within nine months of the end of the tax period. The return includes income statement, adjustments, deductible expenses, foreign tax credits, group relief and details of qualifying income. We prepare reports, coordinate with auditors and file electronically on time.

Corporate Tax Return Filing & Payment

Corporate tax is payable at the same time the return is filed. Payments are made through the FTA’s online portal. Late filings attract penalties and interest. Early filings attracts incentives and benefits. Our automated reminders and compliance tools ensure you never miss a deadline and help you plan cash flow.

Probable Implications of Corporate Tax in the UAE

The introduction of corporate tax will affect pricing, profit distribution and cash-flow management. Businesses may need to review contracts, reorganise group structures and adjust transfer pricing policies. International enterprises must consider the 15% global minimum tax (Pillar Two) and DMTT. Non-compliance may lead to fines, reputational damage and loss of free-zone benefits. Early preparation and strategic planning mitigate these risks and position your company for sustainable growth in the new tax landscape.

How DSA Helps

Dubai Setup Advisors (DSA) simplifies every step of your UAE business formation journey — from initial planning to long-term operational support. We’re not just consultants; we’re your on-ground execution partners with deep expertise in UAE legal, regulatory, and commercial frameworks.

Business Planning & Jurisdiction Comparison

Trade Name Reservation & Licensing Approvals

Legal Documentation, Drafting & Translation

Workspace & Ejari Tenancy Solutions

Bank Account Opening & Financial Setup

Visa & Immigration Processing

PRO & Legal Documentation Services

Post-Incorporation Support & Growth Enablement

Why Choose Us?

At Dubai Setup Advisors (DSA), we go beyond basic company registration. We provide strategic guidance, legal clarity, and operational support tailored for global entrepreneurs and investors entering the UAE market. Here’s why clients from over 30 countries trust us to build their presence in the Emirates:

Extensive Experience

End-to-End Service

Transparent Pricing

Global Perspective

Personalized Approach

Comprehensive Network

FAQs

Any UAE-incorporated company, foreign company with a permanent establishment or nexus in the UAE, or natural person with business turnover above AED 1 million must register. Registration is mandatory even if your tax rate is 0%.

Yes. Exempt persons include government entities, public benefit organisations, extractive businesses, investment funds, pension funds and qualifying free-zone persons. Dividends and capital gains from qualifying shareholdings and certain intra-group transactions are also exempt.

Free-zone companies enjoy a 0% rate on qualifying income if they have adequate substance, earn qualifying revenues (e.g., manufacturing, holding shares, treasury services), and maintain audited accounts. Non-qualifying income is taxed at 9% if it exceeds AED 5 million or 5% of total revenue.

Yes. Freelancers and natural persons conducting business must register and pay corporate tax when their annual turnover surpasses AED 1 million. If income remains below this threshold, no tax is due.

Returns must be filed within nine months from the end of your financial year. Payment is due at the same time. For example, a company with a tax period ending 31 December 2024 must file and pay by 30 September 2025.

To support startups, the law provides a 0% corporate tax rate for businesses with revenue up to AED 3 million until the end of 2026. Qualifying businesses can elect to be treated as not having derived any taxable income, simplifying compliance.

Companies under 95% common ownership can form a tax group. The group files a single return, calculates consolidated taxable income and may transfer losses between members. Intra-group asset transfers may also be tax-neutral if conditions are met.

Businesses can elect to exempt profits from foreign permanent establishments or claim a foreign tax credit. The choice depends on foreign tax rates and treaty benefits. Our advisors compare both options to prevent double taxation.

Failure to register, file returns or pay tax on time results in penalties and interest. In severe cases, the FTA may suspend licences or impose higher fines. Maintaining proper records and seeking professional support reduces these risks.

Corporate tax is levied on business profits, while VAT is an indirect tax on goods and services at each stage of production and distribution. Both require separate registration and filings. Our firm handles VAT registration, return filing and accounting, ensuring full compliance with all tax obligations.

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