The United Arab Emirates (UAE) implemented its Federal Corporate Tax (CT) system on 1 June 2023, marking a significant shift in the nation’s economic landscape. The corporate tax regime aligns with international tax standards, enhances transparency, and reinforces the UAE’s competitiveness as a global business hub. This blog provides a complete and SEO-optimised overview of corporate tax in the UAE for 2025, including rates, exemptions, applicability, filing deadlines, and registration requirements.
What is Corporate Tax in the UAE?
Corporate tax is a direct tax imposed on the net income or profit of businesses operating within the UAE. The standard CT rate is 9% on taxable income exceeding AED 375,000, making it one of the lowest globally.
Objectives of Implementing Corporate Tax
- Ensure tax transparency and prevent harmful tax practices
- Diversify national income sources
- Align with OECD Pillar Two standards for Base Erosion and Profit Shifting (BEPS)
- Strengthen the UAE’s status as a global business and investment hub
Who is Subject to UAE Corporate Tax?
| Category | Details |
|---|---|
| Mainland Companies | All UAE-incorporated businesses, unless exempt |
| Free Zone Companies | 0% on Qualifying Income; 9% on Non-Qualifying Income |
| Foreign Companies | Subject to CT if they have UAE-sourced income or Permanent Establishment (PE) |
| Individuals | Self-employed individuals & freelancers earning over AED 375,000 |
| Tax Groups | Groups under 75% common ownership can file consolidated tax returns |
Corporate Tax Rates in the UAE (2025)
| Taxable Income Range | Corporate Tax Rate |
|---|---|
| Up to AED 375,000 | 0% |
| Above AED 375,000 | 9% |
| Multinational Enterprises (MNEs)* | 15% |
*Applicable only to MNEs falling under OECD Pillar Two rules, effective from 1 January 2025.
Exempt Entities
Entities exempt from UAE corporate tax include:
- Government and government-controlled entities
- Public benefit entities and registered charities
- Pension and social security funds
- Qualifying investment funds
- Extractive and non-extractive natural resource businesses
Small Business Relief in the UAE
Available for businesses with revenue not exceeding AED 3 million for the relevant and previous tax periods. This relief is valid until December 31, 2026. Such businesses can:
- Apply simplified returns
- Use cash basis accounting
- Benefit from a 0% tax rate
Corporate Tax Applicability for Free Zones
A Free Zone company can qualify for 0% corporate tax if it meets all of the following conditions:
- Registered and operating in a UAE Free Zone
- Derives Qualifying Income (e.g., trading within Free Zones, international trading, certain service activities)
- Maintains adequate economic substance
- Has not elected for standard CT rate
- Complies with Transfer Pricing rules
- Prepares audited financial statements
- Ensures Non-Qualifying Income is below the De Minimis Threshold
Qualifying Activities for Free Zone Companies
- Manufacturing and processing of goods
- Reinsurance, fund management, investment services
- Holding company activities
- Treasury and financing for related parties
- Logistics and shipping
- Trading within or from Designated Zones
Excluded Activities under UAE Corporate Tax (Non-Qualifying)
- Income from natural persons
- Banking and insurance (except reinsurance)
- Real estate activities involving non-Free Zone persons
De Minimis Threshold Explained
Non-qualifying income must not exceed the lesser of:
- 5% of total revenue; or
- AED 5 million
Corporate Tax Registration Deadlines (As per FTA Decision No. 3 of 2024)
| Trade License Issue Date | Tax Registration Deadline |
|---|---|
| Jan 1 – Jan 31 | May 31, 2024 |
| Feb 1 – Feb 29 | May 31, 2024 |
| Mar 1 – Mar 31 | June 30, 2024 |
| Apr 1 – Apr 30 | June 30, 2024 |
| May 1 – May 31 | July 31, 2024 |
| Jun 1 – Jun 30 | Aug 31, 2024 |
| Jul 1 – Jul 31 | Sep 30, 2024 |
| Aug 1 – Aug 31 | Oct 31, 2024 |
| Sep 1 – Sep 30 | Oct 31, 2024 |
| Oct 1 – Oct 31 | Nov 30, 2024 |
| Nov 1 – Nov 30 | Nov 30, 2024 |
| Dec 1 – Dec 31 | Dec 31, 2024 |
| No license (as of Mar 2024) | 3 months from Mar 1, 2024 |
Penalty for Late Registration: AED 10,000
Steps to File Corporate Tax in UAE
- Register with the FTA via the EmaraTax Platform:
- Every taxable person must register with the Federal Tax Authority (FTA) through the EmaraTax portal.
- Upon successful registration, you will receive a Tax Registration Number (TRN), mandatory for all tax filings and communications.
- Maintain Proper Financial Records:
- Maintain books of account per IFRS, IFRS for SMEs, or on a cash basis (if eligible).
- Keep records for at least 7 years from the end of the tax period.
- Include: invoices, ledgers, payrolls, contracts, and bank statements.
- Calculate Taxable Income:
- Determine net profit from financial statements.
- Adjust for exempt income, disallowed deductions, and applicable reliefs (e.g., small business relief).
- Ensure Transfer Pricing compliance for related-party transactions.
- Prepare and File the Tax Return:
- File the return electronically via EmaraTax.
- Deadline: Within 9 months from the end of the financial year.
- Only one tax return is required per financial year (no advance/provisional returns).
- Pay the Tax Liability:
- Pay the tax due before the deadline to avoid penalties.
- Payment can be made through various methods on EmaraTax.
- Retain Records and Stay Compliant:
- Keep all documentation for 7 years post-tax period.
- Maintain consistency in accounting methods.
- Monitor regulatory changes and seek expert advice for compliance.
Filing Requirements Based on Revenue (2025)
| Revenue Level | Accounting Standard Required | Audit Requirement |
|---|---|---|
| Up to AED 3 million | Cash Basis | Not Required |
| AED 3M – AED 50 million | IFRS for SMEs | Optional |
| Above AED 50 million | Full IFRS | Mandatory |
| Qualifying Free Zone Person | Full IFRS | Mandatory |
Conclusion: Stay Compliant and Future-Proof in 2025
Navigating corporate tax in the UAE requires strategic planning, compliance, and timely registration. By understanding the qualifying conditions, deductions, filing requirements, and potential penalties, businesses can optimise their tax obligations and avoid costly mistakes.
For expert guidance and tax consultation tailored to your business model, it’s best to consult with UAE-based tax advisors or accounting professionals.
Frequently Asked Questions (FAQs)
Is salary income taxable under UAE Corporate Tax?
No, salary and other personal income earned by individuals are not subject to corporate tax. This includes income from employment, real estate investments, and other personal income sources not related to a business or commercial activity.
Do all Free Zone Companies qualify for the 0% corporate tax rate?
Not all Free Zone entities qualify. To benefit from the 0% corporate tax rate, a free zone business must meet strict criteria to be considered a qualifying free zone person. This includes maintaining adequate substance, earning qualifying income, and complying with transfer pricing and audit requirements.
Can I file my corporate tax return myself?
Yes, business owners can file their corporate tax returns through the EmaraTax platform. However, given the complexity of the law, seeking guidance from a certified tax advisor is recommended to ensure compliance and maximise allowable deductions.
What are the penalties for missing the corporate tax registration deadline?
If you fail to register with the Federal Tax Authority by your specified deadline, you will incur a penalty of AED 10,000. Additional fines may apply for late filings or inaccuracies in tax return submissions.
How often must I file a corporate tax return in the UAE?
Corporate tax returns must be filed annually, within 9 months after the end of the relevant financial year. For example, if your financial year ends on 31 December 2024, the tax return must be submitted by 30 September 2025.
Get Expert Help
Need help registering or filing your UAE corporate tax? Connect with our business consultants for end-to-end support tailored to your company’s structure.
Stay compliant. Stay ahead.