The UAE introduced a federal Corporate Tax regime for financial years starting on or after 1 June 2023. For most small and medium businesses, the rules are straightforward once you know the key numbers — but registration and record-keeping obligations apply even to companies that end up owing no tax at all.
Who Needs to Register
Every UAE business — mainland or free zone — is generally required to register for Corporate Tax with the Federal Tax Authority (FTA) and obtain a Tax Registration Number, regardless of whether it is currently profitable. Registration deadlines are tied to your trade license issue date, and late registration carries a fixed administrative penalty, so this is usually the first thing we help clients confirm.
The Headline Rate
- 0% on taxable income up to AED 375,000
- 9% on taxable income above AED 375,000
- A different rate applies to large multinational groups within scope of the OECD Pillar Two rules — most SMEs are unaffected by this.
Free Zone Companies: The Qualifying Income Regime
A Free Zone Person that meets the conditions to be a "Qualifying Free Zone Person" can continue to benefit from a 0% rate on its Qualifying Income, while any non-qualifying income is taxed at the standard 9% rate. Meeting the conditions depends on factors such as maintaining adequate substance in the free zone, the nature of your income, and complying with transfer pricing requirements — it is worth having this reviewed rather than assumed.
Key Compliance Duties
- Register for Corporate Tax within the deadline linked to your license
- Maintain accounting records and supporting documents for at least 7 years
- Determine taxable income from your financial statements, applying the specific adjustments set out in the law
- File an annual Corporate Tax return, generally within 9 months of your financial year-end
Getting It Right From the Start
Because taxable income is derived from your accounting profit with specific add-backs and adjustments, the quality of your bookkeeping directly affects your tax position. A short tax health check before your first filing is usually the most cost-effective way to catch issues early — before they become FTA queries.
Rates, thresholds and rules reflect UAE Corporate Tax Law as of the publication date and are provided for general guidance only. Always confirm current requirements with the FTA or your tax advisor before making decisions specific to your business.