Corporate Tax in the UAE — Compliance and Advisory

What UAE Corporate Tax is

The UAE introduced a federal Corporate Tax (CT) under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. The law took effect for tax periods beginning on or after 1 June 2023. CT is administered by the Federal Tax Authority (FTA) and applies across the UAE — including in most Free Zones, with a separate qualifying regime for eligible Free Zone Persons (see below).

The headline standard rate is 9% on Taxable Income above the AED 375,000 threshold. Income up to that threshold is taxed at 0%. In addition, a 15% Domestic Minimum Top-up Tax (DMTT) applies to in-scope multinational groups (consolidated annual revenue of EUR 750 million or more) for financial years beginning on or after 1 January 2025, implementing the OECD Pillar Two rules in the UAE context.

Who is in scope

A Taxable Person under the CT law is one of:

• Resident Juridical Persons — UAE-incorporated companies (Mainland and Free Zone), partnerships with juridical personality, certain foundations and trusts that elect Taxable Person status.
• Resident Natural Persons conducting Business or Business Activities in the UAE with annual turnover above AED 1 million from those activities (the threshold is set in Cabinet Decision No. 49 of 2023). Wages, personal investment income, and qualifying real-estate income are excluded from CT for natural persons.
• Non-Resident Juridical Persons with a Permanent Establishment in the UAE, or that derive UAE-sourced income, or that have a nexus arising from real estate or other categories specified in Cabinet Decision No. 56 of 2023.

Certain entities are Exempt Persons (for example government entities, government- controlled entities, qualifying public-benefit entities, qualifying investment funds, pension funds, and social-security funds), but exemption is conditional and most exempt categories are still required to register with the FTA and notify their status.

Rates and thresholds

• 0% on Taxable Income up to AED 375,000.
• 9% on Taxable Income above AED 375,000 for ordinary Taxable Persons.
• 0% on Qualifying Income and 9% on Non-Qualifying Income (above the de minimis threshold) for a Qualifying Free Zone Person — see the QFZP section below.
• 15% DMTT for in-scope multinational groups (group consolidated revenue ≥ EUR 750 million in two of the four financial years preceding the tested year), for FYs beginning on or after 1 January 2025. This implements the GloBE / Pillar Two top-up tax in the UAE.

The headline rates do not capture withholding-tax positions, the participation exemption, foreign tax credits, or the interaction with branch-profits taxes in other jurisdictions. A multi-entity group's effective UAE tax position is rarely the same as the headline 9%.

Free Zone Persons — the QFZP regime

A Free Zone Person may apply the 0% rate to Qualifying Income if it qualifies as a Qualifying Free Zone Person (QFZP) under Cabinet Decision No. 100 of 2023 and the related Ministerial Decisions. The conditions include maintaining adequate substance in a Free Zone, deriving Qualifying Income, complying with the arm's-length principle and transfer-pricing documentation, preparing audited financial statements, and not electing to be subject to the 9% rate.

Failure to meet any of the conditions in a tax period disqualifies the person from QFZP status for that period and the four subsequent periods — a five-year exclusion. QFZP is narrower than the marketing in many setup-firm pages suggests; we cover the test in detail on the Qualifying Free Zone Person sub-page.

Small Business Relief

A Resident Person (other than a member of an MNE Group or a QFZP) may elect for Small Business Relief if Revenue does not exceed AED 3 million in the relevant and all previous tax periods, for tax periods ending on or before 31 December 2026 (per Ministerial Decision No. 73 of 2023). The election treats the Taxable Person as having no Taxable Income for the period — there is no tax payable, but registration and a return are still required. We cover the election in detail on the Small Business Relief sub-page.

Registration and deadlines

Registration with the FTA is mandatory for all Taxable Persons, including Free Zone Persons and most Exempt Persons. This is not optional and is not waived by the absence of UAE-source income. The legal basis is FTA Decision No. 3 of 2024, which sets a staggered registration timetable based on the month of trade-licence issuance for Resident Juridical Persons existing on or before 1 March 2024, and on the date of incorporation for entities formed afterwards.

Late registration is a specified administrative penalty under FTA Decision No. 10 of 2024 — currently AED 10,000 per Taxable Person. The FTA has from time to time operated a penalty-waiver initiative for late registrants who file their first CT return within seven months of the end of their first tax period; the availability and conditions of any active waiver should be confirmed at the point of filing rather than assumed.

Operationally, registration is completed via the FTA's EmaraTax portal. The most common avoidable mistakes we see are: (a) registering under the wrong legal entity type; (b) selecting an incorrect first tax period; (c) failing to register sister-companies and branches separately; and (d) submitting a draft of the return-filing entity name that diverges from the trade licence — which causes downstream EmaraTax mismatches at filing.

Return filing

The CT return for a tax period must be filed and any tax paid within nine months of the end of that tax period. For a Taxable Person with a calendar-year tax period, the first CT return covering FY2024 was therefore due by 30 September 2025. For a Taxable Person with a financial year ending 31 December 2024, the same deadline applies; for non-calendar tax periods (e.g., FY ending 31 March), the deadline shifts accordingly. Each Taxable Person files one CT return per tax period — there is no equivalent of estimated-payment instalments that exist in some other jurisdictions.

The return draws on the audited (or, where audit is not required, the prepared) financial statements of the Taxable Person under IFRS or IFRS for SMEs. Adjustments are applied to arrive at Taxable Income — including the participation exemption, the 30%-of-EBITDA limit on net interest expense, transfer-pricing adjustments for related-party transactions, and any QFZP segmentation. Late filing and late payment are separately penalised.

Transfer pricing

The CT law adopts the OECD-aligned arm's-length principle for transactions between Connected Persons and Related Parties. Documentation thresholds apply: a Taxable Person must maintain a Master File and Local File where total consolidated revenue reaches AED 200 million or where it is part of an MNE Group with global revenue ≥ AED 3.15 billion, per Ministerial Decision No. 97 of 2023. Country-by-Country Reporting obligations under Cabinet Resolution No. 44 of 2020 continue to apply to ultimate parent entities resident in the UAE within the EUR 750 million scope. Transfer-pricing positions are an audit area: see the Transfer Pricing sub-page for the documentation we prepare.

Records and IFRS accounting

Books and records must be kept in a form that supports each line of the CT return and allows the FTA to verify positions for at least seven years from the end of the relevant tax period (longer for real-estate-related records). Default reporting is under IFRS; small businesses (revenue not exceeding AED 50 million) may apply IFRS for SMEs. A Taxable Person with revenue above AED 50 million, and any QFZP, requires audited financial statements per Ministerial Decision No. 82 of 2023.

In practice this means a real general ledger, real reconciliations, and a real chart of accounts that distinguishes deductible from non-deductible expenses, related-party flows, and (for QFZPs) Qualifying versus Non-Qualifying Income. Spreadsheet-based "books" reconstructed at year-end fail this test. We do bookkeeping at IFRS quality from day one precisely so that CT, VAT and audit positions remain defensible without retroactive reconstruction.

Practical compliance for a UAE SME

The standard annual workflow we run for an SME client looks like this:

1. Continuous bookkeeping in IFRS (or IFRS for SMEs) with monthly close, bank reconciliation, related-party transaction tagging, and FX position tracking.
2. Quarterly VAT returns filed in EmaraTax, with input-VAT recovery and any voluntary disclosures handled in the same workflow.
3. Year-end financial statements prepared from the general ledger; audit liaison if the entity meets the audit threshold.
4. CT return preparation from the audited (or prepared) financial statements, with all adjustments calculated and supporting workpapers retained.
5. CT return filing within the 9-month deadline, payment of any liability, and storage of supporting records for the seven-year retention period.
6. Transfer-pricing documentation updated where the Master File / Local File thresholds are met; Country-by-Country Reporting where applicable.

Deadlines are concrete and the FTA does enforce them. The avoidable problems we see most often start as late or incomplete bookkeeping in mid-year — the CT return at month twenty-one is then a problem, not the cause of one.

When to engage Consorata

We take on Corporate Tax engagements at the level of monthly bookkeeping plus year-end CT filing for SMEs and at the level of group consolidation, transfer-pricing documentation, QFZP analysis, and Pillar Two readiness for international groups with a UAE entity. We are an FCCA-led practice — chartered-accountant standard work, not a setup-firm sideline.

The book-a-consultation link below leads to a 30-minute call. We use it to understand your group structure, your current CT registration position, and any near-term filing deadlines. If your situation is straightforward, we tell you so — and what to do. If we would handle anything differently from how it is set up today, we tell you that too.