Corporate Tax
CT
Definition
Federal tax on net business profits. Standard rate is 9% on profits above AED 375,000, with many free zones offering 0% corporate tax for qualifying activities; full profit repatriation is allowed.
Also known as
- UAE CIT
- Federal Corporate Income Tax
- Business Profits Tax
Attributes
| Standard rate | 9% |
|---|---|
| Threshold | AED 375,000AED |
| Regulator | Federal Tax Authority |
| Jurisdiction | United Arab Emirates |
| Applicable law | Federal Decree-Law No. 47 of 2022 |
| Effective from | 2023-06-01 |
| Currency | AED |
| ISO country code | AE |
What it is
UAE Corporate Tax is a federal direct tax on the net profits of businesses, introduced under Federal Decree-Law No. 47 of 2022 and effective for financial years starting on or after 1 June 2023. It is administered by the Federal Tax Authority (FTA) through the EmaraTax portal.
The standard rate is 9% on taxable profits above AED 375,000; profits below that threshold are taxed at 0%. Multinationals in scope of the OECD Pillar Two regime pay a top-up to 15% via a separate Domestic Minimum Top-up Tax. Qualifying Free Zone Persons (QFZPs) continue to pay 0% on 'qualifying income' from free-zone and international business — but pay the standard 9% on any mainland-source income.
Every taxable person — including free-zone entities and licensed branches — must register with the FTA, obtain a Tax Registration Number, and file an annual Corporate Tax return within nine months of the financial-year end. Audited financial statements are mandatory for entities exceeding AED 50 million in revenue and for all QFZPs. Personal income, employment salary, dividends from UAE entities, and capital gains on qualifying participations remain outside scope.
Key characteristics
- Standard rate
- 9% on profits above AED 375,000
- Threshold
- 0% on the first AED 375,000 of profit
- Free-zone rate
- 0% on QFZP qualifying income
- Effective from
- Financial years starting on or after 1 June 2023
- Filing deadline
- 9 months after financial year-end
- Regulator
- Federal Tax Authority (FTA), EmaraTax portal
How it works
- Determine taxable person status (mainland, free zone, branch, partnership).
- Register with the FTA via EmaraTax to obtain a TRN — within prescribed deadlines after license issuance.
- Maintain books of account under IFRS for the financial year.
- Compute taxable income (accounting profit + adjustments per the Decree-Law).
- Apply the 0% threshold and any QFZP relief if eligible.
- File the Corporate Tax return through EmaraTax within 9 months of year-end and pay any tax due.
Types of Corporate Tax
| Type | Description | When it applies |
|---|---|---|
| Federal Tax | A tax levied by the federal government. | Applies to all companies operating within the UAE. |
| Free Zone Tax | A tax rate applicable to companies operating within a designated free zone. | Applies to companies registered in free zones that qualify for the 0% tax rate. |
Examples
Why it matters
Corporate Tax ends the UAE's old 'no business tax' positioning and brings real registration, compliance, and audit obligations to every licensed entity. Missing the registration deadline triggers an AED 10,000 administrative fine, and late filings accrue further penalties.
Common misconceptions
Misconception
Free zone companies are fully exempt from UAE Corporate Tax.
Reality
Only Qualifying Free Zone Persons (QFZPs) on qualifying income pay 0%. Non-qualifying income from a free-zone entity is taxed at 9%.
Misconception
Small businesses don't need to register if profits are below AED 375,000.
Reality
Registration is mandatory for every taxable person regardless of profit. The 0% rate is on tax due — not a registration exemption.
Misconception
Sole proprietorships are outside scope.
Reality
Natural persons conducting business with annual turnover above AED 1 million are taxable persons too, with the same 9% rate above the AED 375,000 threshold.
FAQs
- When do I need to register for UAE Corporate Tax?
- Within the deadlines published by the FTA, generally tied to the month of license issuance. New entities incorporated after March 2024 typically must register within 3 months of incorporation. Late registration is an AED 10,000 fine.
- What records do I have to keep?
- Books of account under IFRS for at least 7 years, including invoices, bank statements, contracts, and the trial balance. QFZPs and entities above AED 50 million revenue need audited financial statements alongside the return.
- Does UAE Corporate Tax apply to my offshore (RAK ICC, JAFZA Offshore) company?
- Yes if it is considered a UAE taxable person. Most offshore companies with no UAE-source income and no permanent establishment in the UAE will fall under specific exemptions, but registration assessment is still required.
See also
- FTA(Federal Tax Authority)
- TRN(Tax Registration Number)
- VAT(Value Added Tax)
- Withholding Tax
- Profit Repatriation
- Free Zone(None)
- Tax Registration & Returns(Best Solution service)
For better understanding, see also
- How to Start a Jewellery Business in Dubai: Clear Cut Guide(post)
- Why LLC Company Formation in Dubai Is the Best Choice for Investors(post)
- How to Set Up a Subsidiary Company in UAE(post)
- Dubai Business Setup Cost: Ultimate Guide for Entrepreneurs(post)
- Business Ideas in Dubai 2025: Top Opportunities & Trends(post)
- Real Estate Company in Dubai: License & Requirements(post)
- Business Setup Dubai: Expert Consultants | Trade License(post)
- Dubai Visa Guide 2025: Options for Expats & Entrepreneurs(post)
- Mainland vs Free Zone in Dubai: Which is Best? (2024)(post)
- Start a Business in Dubai Free Zone | Expert Guide(post)
- Dubai Mainland Business Setup: Guide, Trade License & Cost(post)
- Legal Type of Business in UAE: Company Formation in Dubai(post)
- Start a Business in Dubai: Top Reasons & Benefits in 2024(post)
- How to Start a Business in Dubai: Everything You Need to Know(post)
- New VAT Rules in UAE: Updates for Businesses in 2026(news)
- Critical Tax Structuring Decisions When Incorporating New Business(insight)
- 5 Hidden Costs and Compliance Challenges That Stall Your Company's Growth(insight)
- How to Open a Business Bank Account in Dubai: Your Comprehensive Guide for 2025(post)
- Sole Proprietorship Vs. LLC in Dubai: Which is Best For Your Business?(post)
- How to Check TRN Validity in UAE: Stay Legal, Stay Compliant(post)
- How to Check TRN Validity in UAE: Stay Legal, Stay Compliant(post)
- The Complete Guide to Tax Registration in Dubai – Easy Steps(post)
- The Complete Guide to Tax Registration in Dubai – Easy Steps(post)
- The Complete Guide to Tax Registration in Dubai – Easy Steps(post)
- The Complete Guide to Tax Registration in Dubai – Easy Steps(post)
- The Complete Guide to Tax Registration in Dubai – Easy Steps(post)
- The Complete Guide to Tax Registration in Dubai – Easy Steps(post)
- Your Blueprint for Success: Choosing the Right Type of Trade License in Dubai(post)
- Do You Actually Need an External Audit in the UAE?(post)
Sources
External references
- Wikipedia (EN)
- tax.gov.ae
- bestsolution.ae
- bestsolution-one.vercel.app
- bestsolution-one.vercel.app
- bestsolution-one.vercel.app
- bestsolution-one.vercel.app
- bestsolution-one.vercel.app
- bestsolution-one.vercel.app
- bestsolution-one.vercel.app
- bestsolution-one.vercel.app
- bestsolution-one.vercel.app
- bestsolution-one.vercel.app
- bestsolution-one.vercel.app
- /blog/audit-accounting/do-you-actually-need-external-audit-uae
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