What is Corporate Tax in UAE?
The United Arab Emirates (UAE) has long been known as a global business hub with investor-friendly policies and a tax-efficient environment. However, in recent years, the UAE has introduced a federal corporate tax system as part of its commitment to international tax standards and economic diversification.
In this article, we’ll explain what corporate tax is, who needs to pay it, and how it affects businesses operating in the UAE.
🏢 What is Corporate Tax?
Corporate Tax is a direct tax imposed on the net income or profit of businesses. In simple terms, it’s a percentage of a company’s profits paid to the government.
The UAE Corporate Tax Law came into effect on 1 June 2023, marking a significant shift in the country’s fiscal landscape. The tax is administered by the Federal Tax Authority (FTA).
💰 Corporate Tax Rate in the UAE
The UAE has introduced one of the most competitive corporate tax rates in the world:
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0% for taxable income up to AED 375,000 (to support small businesses and startups)
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9% for taxable income above AED 375,000
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Different rates may apply to large multinational enterprises that fall under the OECD Pillar Two framework (with global revenues exceeding EUR 750 million).
👥 Who is Subject to Corporate Tax?
Corporate Tax applies to the following entities:
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UAE companies and other legal persons incorporated in the country.
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Foreign companies that have a permanent establishment in the UAE.
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Free Zone businesses, although many can still enjoy 0% tax if they comply with specific conditions and only conduct activities permitted within the zone.
However, individuals are not subject to corporate tax unless they conduct a business activity under a commercial license.
🧾 Exemptions from Corporate Tax
Certain entities are exempt from UAE corporate tax, including:
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Government and public entities
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Charitable organizations (if approved by the FTA)
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Investment funds that meet specific criteria
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Natural resource extraction and exploitation businesses (subject to Emirate-level taxation)
📚 Taxable Income
Taxable income is generally based on the net profit (or loss) shown in the company’s financial statements prepared under International Financial Reporting Standards (IFRS), with some adjustments as per the UAE Corporate Tax Law.
📆 Corporate Tax Registration & Filing
Every taxable business must:
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Register for Corporate Tax with the Federal Tax Authority (FTA).
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File a Corporate Tax Return within 9 months from the end of the relevant financial year.
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Maintain proper accounting records and supporting documentation for at least 7 years.
