Corporate Tax in UAE

Corporate Tax in the UAE was introduced on June 1, 2023, with a 0% rate applied to taxable income up to AED 375,000 and a 9% rate applied to income exceeding that threshold. It aims to align the UAE with global tax standards while supporting business growth. All businesses must register with the Federal Tax Authority (FTA) and file annual corporate tax returns.

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Corporate Tax in UAE: Everything You Need to Know

The UAE introduced a federal corporate tax regime starting June 1, 2023, marking a pivotal shift in the country’s business landscape. Under the new rules, businesses with net profits exceeding AED 375,000 are now subject to a 9% corporate tax, while qualifying free zone companies may still enjoy a 0% preferential rate on eligible income.

As one of the leading corporate tax service providers in the UAE, VAZone offers specialized and fully compliant taxation services tailored to each client’s needs, delivered by approved and experienced tax agents.

What Is Corporate Tax in the UAE?

Corporate Tax in UAE

Corporate Tax (CT) is a direct tax levied on the net income or profit of corporations and other entities from their business activities. The UAE introduced CT to align with international standards, encourage transparency, and support economic diversification.

This tax aims to:

  • Strengthen the country’s financial and regulatory framework.
  • Reinforce the UAE’s commitment to international tax compliance.
  • Combat harmful tax practices like base erosion and profit shifting (BEPS)

📉 Corporate Tax Rates in the UAE

The UAE corporate tax regime offers tiered tax rates based on income brackets and business classifications:

Taxable Applicable Rate

Up to AED 375,000 0%

Over AED 375,000 9%

Multinationals with global revenue > AED 3.15 billion (15%) (as per OECD BEPS Pillar Two)

These rates apply to both domestic and foreign-owned businesses that operate under a valid commercial license in the UAE.

📅When Did Corporate Tax Start in the UAE?

The implementation of corporate tax is aligned with businesses’ financial years:

  • June Year Start: Companies whose fiscal year begins on June 1, 2023, and ends on May 31, 2024, became subject to CT from June 1, 2023, with returns due by early 2024.
  • Calendar Year Start: For businesses operating from January 1, 2023, to December 31, 2023, the tax becomes applicable from January 1, 2024, and returns are due by mid-2025.

🏢 Corporate Tax for Free Zone Companies

Free Zone entities that meet specific criteria can still benefit from a 0% corporate tax rate on “qualifying income.” However, this status depends on

  • Maintaining adequate substance within the free zone
  • Earning qualifying income as per FTA definitions
  • Not conducting business with the UAE mainland.

If these conditions are not met, free zone businesses may be subject to the standard 9% tax rate.

🧮How Is Corporate Tax in the UAE Calculated?

The tax calculation follows a tiered structure:

Example:

If a business earns AED 400,000 in profit:

  • The first AED 375,000 is taxed at 0%
  • The remaining AED 25,000 is taxed at 9%, resulting in
  • AED 25,000 × 9% = AED 2,250

Thus, the total corporate tax payable = AED 2,250

How Does UAE Corporate Tax Affect Foreign Investors?

Foreign individuals are not subject to corporate tax on passive income sources, including:

  • Dividends
  • Capital gains
  • Bank interest
  • Royalties
  • Investment returns

However, foreign companies conducting regular and ongoing business activities in the UAE will be subject to corporate tax and must register with the Federal Tax Authority (FTA).

Who Must Comply with Corporate Tax in the UAE?

Corporate tax obligations extend to:

  • Businesses licensed under the UAE Commercial Companies Law
  • Free Zone companies that earn taxable or mainland-linked income
  • Foreign companies with ongoing UAE operations
  • Financial institutions, including banks
  • Taxable Persons, such as corporations and certain partnerships
  • Exempt Persons (such as government bodies) that must still register with the FTA

Corporate Tax Return Filing in the UAE

Each Taxable Person is required to:

  • File a corporate tax return for every tax period
  • Submit the return within 9 months from the end of that tax year
  • Pay the calculated tax liability within the same timeframe

Non-compliance may result in penalties and fines, as outlined by the Federal Tax Authority (FTA) and Ministry of Finance.

Entities & Income Exempt from Corporate Tax in UAE

Some categories and income types remain exempt, including:

  • Oil & gas companies involved in natural resource extraction (subject to Emirate-level taxes)
  • Dividends and capital gains from UAE companies with qualifying shareholdings
  • Intra-group restructurings and transactions under specified conditions
  • Employment income (salaries, wages, allowances)
  • Interest earned on UAE bank deposits or savings schemes
  • Foreign investor income from dividends, royalties, and capital gains not tied to UAE business activities

Our Corporate Tax Services in UAE

At VAZone, we provide a comprehensive suite of corporate tax compliance and advisory services to help businesses stay ahead in a rapidly evolving regulatory environment. Our team includes FTA-approved tax agents who deliver tailored solutions, including

  • ✅ Corporate Tax Assessment & Planning
  • ✅ Tax Registration & TRN Issuance
  • ✅ Tax Return Preparation & Filing
  • ✅ Corporate Tax Accounting & Reporting
  • ✅ CT Compliance & Documentation
  • ✅ Ongoing Advisory & Tax Consultancy

🏁 Key Features of the UAE Corporate Tax Law

  • World-class tax framework aligned with OECD standards
  • Encourages business transparency and accountability
  • Focused on economic diversification and foreign investment
  • Enables zero-tax incentives for compliant free zone entities
  • Simplified filing process via the FTA online portal

📞 Ready to Get Compliant with UAE Corporate Tax?

Navigating the new corporate tax regime can be complex, but you don’t have to do it alone—partner with VAZone, one of the most trusted names in corporate tax services in the UAE.

👉 Contact us today or visit our Dubai office to schedule your personalized consultation.

FAQs: Corporate Tax in UAE

What is Corporate Tax?

Corporate tax is a direct tax imposed on the net earnings or profits of businesses and corporate entities. It's also known internationally as corporate income tax or business profits tax, depending on the jurisdiction.

Why has the UAE introduced Corporate Tax?

The UAE has implemented corporate tax to align with global tax practices, enhance economic competitiveness, and promote long-term growth and investment. This move reflects the country's commitment to transparency and to curbing harmful tax avoidance strategies.

Is the UAE the first country to apply Corporate Tax?

No, the UAE is not the first. Corporate taxation is widely adopted around the world, including among most Gulf Cooperation Council (GCC) countries.

When did the UAE's Corporate Tax system come into effect?

The UAE's corporate tax regime took effect for financial years beginning on or after June 1, 2023.
Examples:

A company with a fiscal year from July 1, 2023, to June 30, 2024, is subject to corporate tax from July 1, 2023.

A company with a calendar year accounting period from January 1 to December 31, 2023, will be subject to corporate tax starting January 1, 2024.

Will Corporate Tax apply in all Emirates?

Yes. Corporate tax is a federal-level tax, meaning it will be uniformly applied across all emirates in the UAE.

What is the role of the Federal Tax Authority (FTA)?

The FTA is responsible for the implementation, collection, monitoring, and enforcement of the corporate tax system throughout the country.

What is the role of the Ministry of Finance?

The Ministry of Finance acts as the competent authority for managing the UAE's international tax agreements, including the exchange of tax information under bilateral or multilateral treaties.

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