Corporate Tax & VAT
Understanding UAE Corporate Tax: What Businesses Must Know
What Is UAE Corporate Tax?
The UAE introduced a federal Corporate Tax (CT) under Federal Decree-Law No. 47 of 2022. It applies a 9% tax rate to taxable income exceeding AED 375,000 annually. Taxable income up to AED 375,000 is taxed at 0% — designed to support small and micro businesses.
For the first time, the UAE now has a standardized tax framework applicable to businesses across all Emirates, replacing the previously informal approach where only specific sectors faced direct taxation.
Tax Rates at a Glance
| Taxable Income | Tax Rate | Applies To |
|---|---|---|
| Up to AED 375,000 | 0% | All taxable persons |
| Above AED 375,000 | 9% | Standard rate |
| Qualifying Free Zone income | 0% | Qualifying Free Zone Persons |
Registration Requirements
All taxable persons must register for Corporate Tax with the Federal Tax Authority (FTA), regardless of whether they expect to owe tax. Failure to register carries a penalty of AED 10,000.
Determine your taxable status
Identify whether your entity is a resident person, non-resident, or Free Zone entity. Your status determines your registration obligations and applicable rates.
Register with the FTA via EmaraTax
Registration is completed through the EmaraTax portal. Timelines vary by entity type.
Prepare compliant financial records
Corporate Tax requires maintaining proper books of accounts in line with IFRS or IFRS for SMEs. Records must be kept for at least 7 years.
Free Zone Entities: QFZP Regime
Free Zone businesses can benefit from a 0% Corporate Tax rate on their Qualifying Income if they meet the conditions to be a Qualifying Free Zone Person (QFZP). Key conditions include:
- Maintaining adequate substance in the UAE Free Zone
- Deriving only Qualifying Income as defined in the legislation
- Not electing to be subject to the standard CT regime
- Complying with transfer pricing requirements
Non-Qualifying Income of a QFZP is taxed at 9%. Businesses must be careful not to inadvertently generate non-qualifying income that triggers the standard rate on their entire income.
What To Do Before Filing
Book a free consultation with OMC to review your taxable status, registration deadline, and record-keeping setup before your first Corporate Tax filing is due.
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