General FAQs on Corporate Tax in the UAE

The UAE introduced Corporate Tax through Federal Decree-Law No. 47 of 2022, and it became effective on June 1, 2023. 

The Corporate Tax rates are as follows: 

• 0% for taxable income up to AED 375,000. 

• 9% for taxable income exceeding AED 375,000. 

• A Qualifying Free Zone Entity will be subject to special taxation regime, where Qualifying Income will have 0% taxation 

• A different rate applies to multinational enterprises that meet certain criteria under the OECD’s Base Erosion and Profit Shifting (BEPS) framework. 

Corporate Tax applies to: 

• UAE-incorporated businesses. 

• Foreign entities with a permanent establishment in the UAE. 

• Free zone entities conducting business in the mainland (subject to conditions). 

• Individual Entrepreneurs and Freelancers 

• Government-Owned and Public Benefit Entities 

• Small and Medium Enterprises (SMEs) 

• Investment Funds and Real Estate Investors 

• Trusts & Foundations (unless opted as fiscally Transparent) 

Yes, exemptions include: 

• Entities engaged in the extraction of natural resources (already subject to Emirate-level taxation). 

• Qualifying public benefit entities and government entities. 

• Qualifying investment funds. 

Businesses must: 

• File a Corporate Tax return annually. 

• Maintain proper financial records. 

• Prepare financial statements in accordance with International Financial Reporting Standards (IFRS). 

Free Zone businesses can benefit from a 0% Corporate Tax rate if they meet specific conditions and comply with regulatory requirements. 

Under the UAE Corporate Tax regime, multinational enterprises that fall within the scope of the OECD's BEPS 2.0 framework (specifically those with consolidated global revenues exceeding €750 million) will be subject to a 15% domestic top-up tax. This measure ensures alignment with international tax standards established by the OECD 

Deductible expenses generally include costs that are incurred wholly and exclusively for business purposes, such as: 

• Employee salaries. 

• Operational costs. 

• Depreciation on assets  

• Interest costs (deductibility is subject to specific conditions and limitations). 

Yes, penalties are imposed for: 

• Late registration for Corporate Tax 

• Late filing of Corporate Tax returns. 

• Failure to pay tax due. 

• Incorrect submissions or non-disclosure of required information. 

Entities with annual Turnover less than AED 3 million during the current and all previous tax periods will be subject to 0% tax. Additionally, startups can benefit from simplified compliance requirements. 

Freelancers earning annual revenue from business activities above AED 1 million will be subject to Corporate Tax.  

Businesses should: 

• Register with the Federal Tax Authority (FTA). 

• Assess their tax liability. 

• Maintain accurate financial records. 

• Seek professional advice to ensure compliance with tax regulations. 

The UAE does not impose withholding tax on domestic or cross-border payments under its Corporate Tax regime. 

With a standard rate of 9%, the UAE’s Corporate Tax is among the lowest globally, reflecting its commitment to fostering a competitive business environment. 

Free zone entities are treated differently under the UAE Corporate Tax Law. They benefit from a two-tiered system: 

• Qualifying Income: This income is generally subject to a 0% Corporate Tax rate. 

• Non-Qualifying Income: This income is taxed at a standard rate of 9%. 

Yes, certain sectors like oil and gas extraction remain subject to Emirate-level taxation, and special rules apply to investment funds and government entities. 

Individuals earning income from professional or business activities may be subject to Corporate Tax if their earnings exceed defined thresholds or meet certain criteria. 

Businesses need to maintain accurate financial records, prepare financial statements according to applicable standards, and file annual tax returns with the Federal Tax Authority.