When did UAE Corporate Tax start and who does it apply to?

UAE Corporate Tax under Federal Decree-Law No. 47 of 2022 applies to financial years beginning on or after 1 June 2023. It applies to all UAE juridical persons (LLCs, PJSCs, branches) registered in the UAE mainland or free zones, as well as foreign companies with a permanent establishment in the UAE. Natural persons conducting licensed business activities generating AED 1,000,000 or more in annual turnover are also subject to Corporate Tax.

What is the Small Business Relief for UAE Corporate Tax?

Under Ministerial Decision No. 73 of 2023, UAE businesses with taxable revenue not exceeding AED 3,000,000 per tax period may elect for Small Business Relief (SBR), which treats their taxable income as zero for that tax period. However, SBR does not exempt a business from the Corporate Tax registration requirement. Businesses must still file a Corporate Tax return to claim SBR. SBR is not available to businesses that are members of a Multinational Enterprise Group or Qualifying Free Zone Persons.

Do Free Zone companies in the UAE pay Corporate Tax?

Free Zone companies that meet the strict criteria to be classified as a Qualifying Free Zone Person (QFZP) under Federal Decree-Law No. 47 of 2022 may apply a 0% Corporate Tax rate on qualifying income. To qualify, a Free Zone entity must: maintain adequate economic substance in the UAE; derive qualifying income from qualifying activities; not have elected to be subject to the standard 9% CT regime; and pass the de minimis threshold (non-qualifying revenue must not exceed 5% of total revenue or AED 5,000,000, whichever is lower). All other Free Zone companies pay the standard 9% rate.

What is the Corporate Tax return filing deadline in the UAE?

UAE Corporate Tax returns are due within 9 months from the end of the relevant financial tax period. For example, for a company with a financial year ending 31 December 2024, the Corporate Tax return must be submitted by 30 September 2025. Tax payment is also due on the same date. Failure to file by the deadline incurs an AED 10,000 registration penalty (if not yet registered) or late filing penalties.

What are disallowed expenses for UAE Corporate Tax purposes?

Under Federal Decree-Law No. 47 of 2022, certain business expenses are disallowed or restricted when calculating taxable income. Key disallowed expenses include: (1) 50% of entertainment, client meals, and hospitality expenses; (2) interest expense exceeding 30% of EBITDA (General Interest Deduction Limitation Rule); (3) payments made to related parties not at arm's length (transfer pricing); (4) dividends and profit distributions; (5) personal expenses of shareholders; (6) fines and penalties imposed by authorities. Accurate accounting segregation is essential to correctly identify and apply these limits.

Federal Decree-Law No. 47 of 2022

UAE Corporate Tax Advisory & Compliance

Guiding Abu Dhabi and UAE businesses through Corporate Tax registration, taxable income assessment, Free Zone qualifying income, and statutory annual return filings.

What is Corporate Tax in the UAE?

UAE Corporate Tax is a federal direct tax enacted under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. It applies to corporations, commercial entities, and individuals conducting licensed business activities within the United Arab Emirates. Taxable income up to AED 375,000 is taxed at 0% to support small enterprises and startups, while taxable income exceeding AED 375,000 is taxed at a standard competitive rate of 9%.

Crucially, every legal business entity—whether operating on the mainland or within a Free Zone—must register with the Federal Tax Authority (FTA) and file an annual Corporate Tax return within nine months of their financial year-end.

Who Needs Corporate Tax Advisory?

All UAE juridical persons (LLCs, PJSCs, PrJSCs, branches) and foreign companies with a permanent establishment in the UAE must register. Our advisory provides specific guidance for:

· Abu Dhabi Mainland Commercial Entities: Requiring taxable net income adjustments, interest deduction caps, and arm's length transfer pricing reviews.
· Free Zone Persons (FZPs): Evaluating whether they meet the strict legal conditions to be classified as a "Qualifying Free Zone Person" (QFZP) entitled to 0% tax on qualifying income.
· Small Businesses: Evaluating Small Business Relief (SBR) under Ministerial Decision No. 73 of 2023 for revenue below AED 3,000,000.
· Corporate Groups: Structuring tax groups to offset taxable losses against profitable subsidiaries.

Why Strategic Corporate Tax Advisory Matters

Failing to register within the FTA's specified timeline results in a mandatory AED 10,000 administrative fine per entity. Moreover, inaccurate calculation of disallowed expenses (such as excessive shareholder remuneration or non-business interest) can lead to substantial reassessments, penalties, and audit friction.

Our Comprehensive Scope of Support

· Corporate Tax Registration
Preparation and submission of EmaraTax registration dossiers to secure TRN.

· Taxable Income Reconciliation
Converting accounting profit to taxable income with statutory adjustments.

· Free Zone Qualifying Income Review
Detailed assessment of qualifying activities, de minimis thresholds, and substance.

· Annual Tax Return Filing
End-to-end filing with the FTA within the mandatory 9-month statutory window.

Frequently Asked Questions

The Corporate Tax return and any tax payment are due within 9 months from the end of the relevant financial tax period. For example, for a tax period ending December 31, 2024, the return must be submitted by September 30, 2025.

No. Free Zone companies are subject to Corporate Tax and must register and file returns. To benefit from 0% on qualifying income, they must satisfy statutory criteria: maintaining adequate economic substance, deriving qualifying income, not electing out, and complying with transfer pricing rules and audited financial statement requirements.

UAE Corporate Tax Advisory & Compliance

What is Corporate Tax in the UAE?

Who Needs Corporate Tax Advisory?

Why Strategic Corporate Tax Advisory Matters

Our Comprehensive Scope of Support

Frequently Asked Questions

Schedule a Corporate Tax Review

Internal Connections

UAE Corporate Tax Advisory & Compliance

What is Corporate Tax in the UAE?

Who Needs Corporate Tax Advisory?

Why Strategic Corporate Tax Advisory Matters

Our Comprehensive Scope of Support

Frequently Asked Questions

Schedule a Corporate Tax Review

Internal Connections

Book a Consultation