Corporate Tax in the United Arab Emirates

What Is Corporate Tax?

Corporate Tax is a direct tax imposed on the taxable income of juridical persons and certain natural persons conducting business or business activities in the UAE, subject to the conditions and rules provided under the law.

Who Is Subject to Corporate Tax?

• Companies incorporated in the UAE.
• Resident juridical persons in the UAE.
• Natural persons conducting business or business activities subject to the applicable rules.
• Juridical persons established in UAE free zones.
• Certain non-resident persons with a permanent establishment or taxable income in the UAE.

Corporate Tax Rate

Corporate Tax applies at the rates prescribed by law. Taxable income not exceeding AED 375,000 is subject to 0%, while taxable income exceeding this amount is generally subject to 9%.

• 0% on taxable income not exceeding AED 375,000.
• 9% on taxable income exceeding AED 375,000.

Corporate Tax Services

We provide Corporate Tax services to help companies and businesses comply with UAE tax requirements.

• Corporate Tax registration.
• Preparation and filing of annual Corporate Tax returns.
• Review of accounts for tax purposes.
• Review of taxable income.
• Review of deductible and non-deductible expenses.
• Review of related party transactions.
• Transfer pricing review.
• Organization of required records and documents.
• Support during tax audits.
• Solutions for Corporate Tax-related issues.
• Assistance in responding to Federal Tax Authority enquiries.

Persons Exempt from Corporate Tax

The Corporate Tax Law identifies certain categories that may be exempt from Corporate Tax or may benefit from exemption when the required conditions are met.

• Government entities.
• Government-controlled entities specified under relevant decisions.
• Extractive businesses when the required conditions are met.
• Non-extractive natural resource businesses when the required conditions are met.
• Qualifying public benefit entities.
• Public or private pension and social security funds when approved.
• Qualifying investment funds when approved.
• Certain wholly owned subsidiaries of exempt persons, subject to the required conditions.

Small Business Relief

Small Business Relief is available under Ministerial Decision No. 73 of 2023 for certain taxable persons where the revenue does not exceed the prescribed threshold, subject to the applicable conditions and tax periods.

The company’s revenue and relevant tax periods should be reviewed before relying on this relief.

Corporate Tax and Free Zones

Free zone companies are subject to special rules under the UAE Corporate Tax regime. The tax position may differ depending on the nature of the activity, qualifying income, and whether the conditions of a Qualifying Free Zone Person are satisfied.

Due to the importance of this topic, we have a separate page dedicated to Corporate Tax and Free Zones, including Qualifying Free Zone Person, qualifying income, non-qualifying income, related parties, and transfer pricing.

Required Records and Documents

Corporate Tax depends on accounting records, financial statements, and supporting documents. Businesses should maintain records supporting transactions, income, expenses, assets, and liabilities.

• Financial statements.
• Revenue and sales records.
• Expense and purchase records.
• Bank statements.
• Contracts and agreements.
• Fixed asset records.
• Related party records.
• Supporting documents for transactions.

Tax Audit and Corporate Tax

The Federal Tax Authority may review accounting records, supporting documents, and financial information to verify tax compliance. Properly organized accounting records help reduce risks during tax audits.

Penalties and Violations

Late registration, late filing, or failure to maintain required records and supporting documents may result in tax penalties and violations. It is important to monitor tax obligations and deadlines properly.

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What is Corporate Tax?

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