Corporate Tax In UAE

Managing Corporate Tax in the UAE opens doors to smarter business — with Brightlink Consulting, it’s fast, simple, and worry-free.

Corporate Tax In UAE

The implementation of corporate tax in the UAE has begun on June 1, 2023. As per the legislation of the Federal Tax Authority (FTA), taxable businesses have been subjected to a 9% corporate tax starting from their first fiscal year that begins on or after June 1, 2023.

Taxable Income Rates

0% for taxable income up to AED 375,000
9% for taxable income exceeding AED 375,000

Freezone Tax Rates

0% on qualifying income
9% on income other than qualifying income

Net Gain for Qualifying Free Zone Entity:

The net profit earned by a Qualifying Free Zone business from international or Free Zone activities within the UAE is termed as “Qualifying Income”.

Why the UAE Remains a Top Choice for Tax-Friendly Business Setup

The United Arab Emirates continues to attract entrepreneurs and international companies thanks to its business-friendly tax landscape. While corporate taxation is selectively applied—mainly to industries like oil, gas, and foreign banking institutions—the broader business environment remains largely tax-efficient.

Since 2018, a modest 5% Value Added Tax (VAT) has been in place on most goods and services. Despite this, the UAE’s overall taxation remains light compared to global standards, offering businesses a compelling incentive to establish operations here.

Dubai, as a leading emirate, aligns with national corporate tax regulations but further enhances its appeal through numerous specialized free zones. These zones offer powerful benefits including:

Full foreign ownership
No customs duties on imports or exports
Unrestricted profit repatriation
Simplified licensing and regulatory processes

These advantages make Dubai—and the UAE as a whole—a prime destination for businesses seeking strategic, tax-efficient growth in the Middle East.

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Complete Guide on Corporate Tax in the UAE

By Brightlink Management Consultancy

Corporate Tax in the UAE was introduced to align with international tax standards, promote business transparency, and support the country’s economic vision. Here’s everything you need to know:

1. What is Corporate Tax?

Corporate Tax (CT) is a direct tax levied on the net profits of companies and other businesses. In the UAE, it was implemented to enhance regulatory compliance and establish a clear framework for business taxation.

2. When Did It Come Into Effect?

Corporate Tax is applicable for financial years starting on or after 1 June 2023. Businesses need to be prepared to file their returns based on their respective financial year-end dates.

3. Who is Subject to Corporate Tax?

The following are generally subject to UAE Corporate Tax:

UAE-incorporated companies (Mainland and Free Zone entities)
Foreign companies with a permanent establishment in the UAE
Individuals conducting business activities in the UAE under a commercial license
Partnerships (depending on their structure)

4. Tax Rates

Profit Range	Corporate Tax Rate
Up to AED 375,000	0%
Above AED 375,000	9%
Qualifying Free Zone Income	0% (conditions apply)
Multinational Companies (BEPS Pillar 2)	15% (for large groups)

5. Which Entities Are Excluded from Corporate Tax in the UAE?

In the UAE, specific organizations are not subject to corporate income tax. These include:

Government-owned entities fully owned by the state
Non-profit bodies, provided they meet certain criteria
Particular categories of investment funds

6. Corporate Tax for Free Zone Companies

Free Zone companies can continue to benefit from 0% tax on qualifying income, provided they:

Maintain adequate substance in the Free Zone
Earn qualifying income (e.g., income from other Free Zone entities or foreign sources)
Meet all compliance requirements as per FTA guidelines

7. Corporate Tax Compliance Requirements

All taxable persons must:

Register with the Federal Tax Authority (FTA)
Maintain proper financial records
File an annual Corporate Tax return
Pay tax within 9 months of the end of the relevant financial year

8. Penalties for Non-Compliance

Failure to register, file returns, or pay tax may result in administrative penalties imposed by the FTA. These can include:

Late registration fines
Late filing or payment penalties
Inaccurate reporting or record-keeping violations

9. Defining ‘Resident’ Entities Under UAE Corporate Tax Regulations

According to the UAE Corporate Tax framework, a resident entity is a company either incorporated within the UAE or managed and controlled from inside the country. Resident companies are liable to pay corporate tax on income earned globally. Conversely, non-resident companies are only taxed on income sourced within the UAE.

10. Types of Income Exempt from Corporate Tax in the UAE

Certain income streams are exempt from corporate tax in the UAE, including:

Income of entities wholly owned by the government
Earnings of qualifying non-profit organizations
Returns generated by specific investment funds

We offer specialized advice on which income categories qualify for exemption and assist businesses in structuring their affairs to optimize tax efficiency under UAE law.

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Why Is UAE Corporate Tax Essential for Your Business?

Implementing corporate tax practices in the UAE is vital for businesses to stay compliant with local regulations, unlock tax advantages, reduce financial risks, simplify tax-related operations, and benefit from professional advice on tax strategy. Collaborating with specialized tax advisors, audit professionals, and accounting firms based in Dubai can greatly enhance your ability to manage UAE Corporate Tax Impact Assessments and effectively handle tax filings and reporting requirements.

Regulatory Compliance
- UAE corporate tax frameworks help companies adhere to the government’s tax laws and regulations, thereby preventing fines and legal complications.

Specialized Knowledge
- Tax consultants in Dubai bring extensive expertise in the country’s corporate tax legislation, providing reliable guidance for tax planning, preparation, and optimization.

Maximizing Savings
- Partnering with corporate tax experts in the UAE enables businesses to uncover eligible deductions, credits, and incentives, leading to substantial cost efficiencies and better allocation of financial resources.

Support During Audits
- Dubai-based audit firms assist companies in navigating tax audits, ensuring they meet all requirements set by tax authorities and are fully prepared for the process.

Risk Management
- Internal audit teams in Dubai help identify potential tax-related risks early on and implement measures to mitigate them, safeguarding the company’s finances and reputation.

Operational Efficiency
- Audit and tax firms streamline tax-related procedures, easing administrative workloads and enabling businesses to manage their tax obligations more effectively.

Strategic Tax Planning
- Engaging corporate tax services in the UAE empowers businesses to develop tax strategies that align with the country’s complex regulations, helping them avoid penalties while optimizing their tax position.

Frequently Asked Questions: Corporate Tax UAE

Corporate Tax is a form of direct tax levied on the net income or profit of corporations and other businesses. Corporate Tax is sometimes also referred to as “Corporate Income Tax” or “Business Profits Tax” in other jurisdictions.

A competitive Corporate Tax regime based on international best practices is expected to cement the UAE’s position as a leading global hub for business and investment and accelerate the UAE’s development and transformation to achieve its strategic objectives.

Introducing a Corporate Tax regime also reaffirms the UAE’s commitment in meeting international standards for tax transparency and preventing harmful tax practices.

Most countries in the world have a comprehensive Corporate Tax regime, including most of the countries in the Middle East.

The UAE Corporate Tax regime is effective for Financial Years starting on or after 1 June 2023.

Examples:

A Business that has a Financial Year starting on 1 July 2023 and ending on 30 June 2024 is subject to UAE Corporate Tax from 1 July 2023 (which is the beginning of the first Financial Year that starts on or after 1 June 2023).
A Business that has a Financial Year starting on 1 January 2023 and ending on 31 December 2023 will become subject to UAE Corporate Tax from 1 January 2024 (which is the beginning of the first Financial Year that starts on or after 1 June 2023).

Yes. The application of UAE Corporate Tax does not differentiate between entities that are locally or internationally owned.

Juridical persons that are incorporated or resident in the UAE, or foreign entities that have a Permanent Establishment or taxable nexus in the UAE, will be subject to UAE Corporate Tax irrespective of the residence and nationality of the individual founders or (ultimate) owners of the entity.

Yes. The UAE Corporate Tax is a federal tax and will therefore apply across all the Emirates.

Businesses engaged in the extraction of the UAE’s Natural Resources and in certain non-extractive activities that are subject to Emirate level taxation will be outside the scope of UAE Corporate Tax, subject to meeting certain conditions.

Other businesses may be subject to both Corporate Tax and Emirate level taxation. Emirate level taxes paid will not be able to be credited against or otherwise reduce the amount of Corporate Tax Payable.

No, Corporate Tax and VAT are two different types of taxes. Both will apply in the UAE.

If you are a registered business for VAT, you will have to pay VAT and Corporate Tax separately. If your business is not registered for VAT you may still have to pay Corporate Tax.

Corporate Tax and Excise Tax are two different types of taxes. Both will apply in the UAE.

Corporate Tax In UAE