What is the Corporate Tax Rate in UAE?
Complete Guide to UAE Corporate Tax Rates, Registration, Compliance and Exemptions for 2025
Table of Contents
- Understanding UAE Corporate Tax Rate
- Tax Rate Structure & Thresholds
- Who is Subject to Corporate Tax?
- Exemptions and Special Cases
- Corporate Tax Compliance Requirements
- Registration Process
- Key Deadlines & Filing Obligations
- Why Corporate Tax Matters
- How One Desk Solution Can Help
- Frequently Asked Questions
Introduction to UAE Corporate Tax
The corporate tax rate in the UAE is a key factor for businesses operating in Dubai and across the Emirates. As of 2025, the UAE has implemented a federal corporate tax system that applies to most businesses, with rates designed to support small and medium enterprises while ensuring larger companies contribute proportionally to the national economy.
This comprehensive guide covers everything you need to know about UAE corporate tax rates, registration, compliance, and how to ensure your business meets all regulatory requirements.
Understanding the UAE Corporate Tax Rate
The UAE corporate tax system is structured with a tiered approach that benefits small businesses while ensuring larger enterprises contribute fairly to the economy.
Key Tax Rate Structure
- 0% tax rate on taxable income up to AED 375,000 per financial year
- 9% tax rate on taxable income exceeding AED 375,000 per financial year
This tiered system is designed to encourage entrepreneurship and support small businesses, while ensuring that larger enterprises pay a fair share. The tax applies to all business profits, including those from trading, investment, and other commercial activities, unless specifically exempted by law.
UAE Corporate Tax Rate Structure
The UAE corporate tax system uses a progressive rate structure with clear thresholds:
| Taxable Income (AED) | Corporate Tax Rate | Notes |
|---|---|---|
| Up to 375,000 | 0% | Applies to all taxable persons |
| Above 375,000 | 9% | Standard rate for higher income |
UAE Corporate Tax Rate Visualization
Tax Calculation Example
For a company with AED 1,000,000 in taxable income:
- First AED 375,000: 0% tax = AED 0
- Remaining AED 625,000: 9% tax = AED 56,250
- Total Tax Payable: AED 56,250
Who Is Subject to UAE Corporate Tax?
Corporate tax in the UAE applies to various entities operating within the country:
UAE Resident Companies
All companies incorporated in the UAE, including those in free zones (unless they qualify for specific exemptions).
Non-Resident Companies
Companies with a permanent establishment in the UAE or those deriving UAE-sourced income.
Foreign Companies
Certain foreign companies with UAE-sourced income or those effectively managed and controlled in the UAE.
Important Note
Individuals are generally not subject to corporate tax on income from employment, real estate, and other personal investments not conducted through a licensed business.
Exemptions and Special Cases
Some entities and activities are exempt from corporate tax under specific conditions:
Government Entities
Federal, emirate, and local government entities are generally exempt from corporate tax.
Public Benefit Entities
Qualifying public benefit entities that meet specific criteria outlined in the tax law.
Investment Funds
Qualifying investment funds that meet the conditions specified in the corporate tax law.
Natural Resource Businesses
Businesses engaged in natural resource extraction are typically subject to emirate-level taxation instead.
Free Zone Businesses
Free zone businesses that meet specific criteria and do not conduct business with the UAE mainland.
Wholly Owned Subsidiaries
Certain wholly-owned UAE subsidiaries of government entities may qualify for exemption.
Free Zone Company Considerations
Free zone companies can benefit from 0% corporate tax if they:
- Maintain adequate substance in the UAE
- Derive "Qualifying Income" as specified in the law
- Do not conduct business with the UAE mainland (with some exceptions)
- Comply with transfer pricing documentation requirements
Corporate Tax Compliance Requirements
Businesses subject to UAE corporate tax must adhere to several compliance obligations:
Registration
Register with the Federal Tax Authority (FTA) via the EmaraTax portal before the start of the first tax period.
Record Keeping
Maintain accurate financial records and prepare audited financial statements as required.
Tax Returns
File annual corporate tax returns within nine months after the end of the financial year.
Transfer Pricing
Comply with transfer pricing rules and maintain relevant documentation for related party transactions.
Disclosures
Disclose transactions with related parties and connected persons in the tax return.
Payment
Pay any tax due within the same nine-month window following the financial year end.
Penalties for Non-Compliance
Failure to comply can result in administrative penalties, including:
- Late registration penalties
- Late filing penalties
- Late payment penalties with interest
- Penalties for incorrect tax returns
It is essential to stay up to date with FTA requirements and deadlines to avoid penalties.
Corporate Tax Registration Process
The registration process for corporate tax in the UAE is straightforward and can be completed online through the EmaraTax portal:
- Access the EmaraTax Portal: Visit the FTA's EmaraTax platform and create an account if you don't have one.
- Enter Entity Details: Provide comprehensive information about your business, including activities and ownership structure.
- Provide Contact Information: Submit contact details and information about authorized signatories.
- Review and Submit: Carefully review all information before submitting the application.
- Receive Confirmation: Await confirmation and reference number from the FTA.
Registration Timeline
The processing time for corporate tax registration is typically around 20 business days. It's recommended to begin the process well before your first tax period begins to ensure timely compliance.
Key Deadlines and Filing Obligations
Understanding and meeting corporate tax deadlines is crucial for compliance:
| Requirement | Deadline | Important Notes |
|---|---|---|
| Registration | Before start of first tax period | Mandatory for all taxable persons |
| Tax Return Filing | Within 9 months of financial year end | Required even if tax liability is zero |
| Tax Payment | Within 9 months of financial year end | Same deadline as return filing |
| Record Keeping | Minimum 5-7 years | Varies based on specific circumstances |
| Transfer Pricing Documentation | By tax return filing deadline | Required for related party transactions |
Financial Year Considerations
Most companies in the UAE use the calendar year (January to December) as their financial year, but some may use different periods. The tax deadlines are based on your specific financial year end date.
Why Corporate Tax Matters for Dubai Businesses
Corporate tax compliance is crucial for businesses in Dubai and the UAE for several important reasons:
Legal Compliance
Ensures adherence to UAE laws and regulations, avoiding penalties and legal complications.
Financial Planning
Helps businesses accurately forecast tax liabilities and optimize cash flow management.
Business Growth
Supports sustainable growth by maintaining good standing with regulatory authorities.
Investor Confidence
Demonstrates transparency and reliability to investors, partners, and stakeholders.
International Standards
Aligns with global tax transparency standards and international best practices.
Risk Management
Reduces financial and reputational risks associated with non-compliance.
How One Desk Solution Can Help
As a leading provider of VAT, tax, bookkeeping, and audit services in Dubai, One Desk Solution offers comprehensive support for corporate tax compliance:
Corporate Tax Registration
Complete assistance with FTA registration through the EmaraTax portal.
Tax Advisory Services
Expert guidance on corporate tax planning, optimization, and compliance strategies.
Tax Return Preparation
Accurate preparation and timely filing of corporate tax returns.
Transfer Pricing Documentation
Comprehensive transfer pricing studies and documentation preparation.
Audit & Financial Statements
Professional audit services and financial statement preparation.
Compliance Monitoring
Ongoing compliance monitoring and updates on regulatory changes.
Why Choose One Desk Solution?
With a team of experienced professionals and a deep understanding of UAE regulations, One Desk Solution ensures businesses remain compliant, efficient, and focused on growth. Our services are tailored to meet the specific needs of each client, from startups to established enterprises.
Call Us
+971-52 797 1228
Available for immediate consultation
Frequently Asked Questions
Free zone companies may be exempt from corporate tax if they do not conduct business with the UAE mainland and meet specific criteria outlined in the corporate tax law. However, they must still register for corporate tax and file tax returns.
Missing the deadline can result in administrative penalties, including late filing fees and potential interest on any unpaid tax. The FTA imposes strict penalties for non-compliance, so timely filing is essential.
Yes, all businesses subject to corporate tax must file a return, even if their tax liability is zero. The filing requirement is separate from the payment obligation.
Yes, businesses can deduct legitimate business expenses incurred wholly and exclusively for business purposes. However, certain expenses may have restrictions or specific conditions for deductibility.
Corporate tax and VAT are separate tax systems in the UAE. VAT is a consumption tax applied to goods and services, while corporate tax is a direct tax on business profits. Businesses may need to comply with both systems simultaneously.
