Definition
Corporate Tax in the UAE is a federal tax imposed on the net profits of businesses. Introduced in June 2023, it applies to most companies operating in the UAE, marking a significant shift from the country’s previous tax‑free regime.
Key points
- Standard rate: 9% on taxable income above AED 375,000.
- 0% rate: For taxable income up to AED 375,000 (supporting small businesses and startups).
- Exemptions: Free zone companies may continue to benefit from preferential tax rates if they meet regulatory conditions. Certain sectors (like natural resource extraction) remain exempt as they are subject to emirate‑level taxation.
- Businesses must register for corporate tax with the Federal Tax Authority (FTA) and file an annual return.
- Deductible expenses include salaries, rent, utilities, and most operational costs.
- Non‑compliance leads to administrative penalties and potential legal consequences.
Practical example
A consulting firm in Dubai earns AED 1,000,000 in profit.
- First AED 375,000 = 0% corporate tax
- Remaining AED 625,000 = 9% corporate tax = AED 56,250 payable to the FTA
Why it matters
Corporate tax compliance is now an essential part of UAE bookkeeping. Businesses must maintain accurate financial records to optimize deductions, avoid penalties, and file returns on time.