UAE Corporate Tax 9%: Complete Guide
UAE corporate tax introduced in 2023: who pays, who is exempt, rates, free zone rules, and how to register with the FTA.
Updated:
The UAE introduced a federal corporate tax effective from financial years starting 1 June 2023. The standard rate is 9% — still one of the lowest corporate tax rates globally.
Tax Rates
| Taxable Income | Rate |
|---|---|
| Up to AED 375,000 | 0% |
| Above AED 375,000 | 9% |
| Multinationals (Pillar 2) | 15% (applicable to large MNCs) |
The AED 375,000 (≈ USD 102,000) threshold makes the UAE extremely attractive for small and medium businesses.
Who Must Register?
All UAE-registered entities must register with the Federal Tax Authority (FTA), including:
- Mainland companies (LLC, sole establishment, branch)
- Free Zone companies (even if qualifying for 0% rate)
- Foreign companies with a permanent establishment in the UAE
Free Zone Qualifying Income (0% Tax)
Free Zone companies can benefit from 0% corporate tax on “qualifying income” by maintaining Qualifying Free Zone Person (QFZP) status.
To qualify:
- Maintain adequate substance in the free zone (real office, employees, operations)
- Derive income from qualifying activities (trading, services with non-UAE parties, etc.)
- Audited financial statements required
Non-qualifying income (taxed at 9%):
- Sales to UAE mainland customers
- Passive income from non-qualifying sources
What Is Exempt?
- Personal income (salary, investments not via a business)
- UAE-resident companies’ dividends from subsidiaries (participation exemption)
- Capital gains from qualifying shareholdings
- Government entities and charities
Registration and Filing
- Register with FTA via EmaraTax portal (emaraTax.ae) — mandatory for all entities
- Choose fiscal year — aligns with financial year start
- File annual return — within 9 months after fiscal year end
- Pay tax — due with the annual return
Deadlines: Companies with fiscal year ending 31 December 2024 must file by 30 September 2025.
Key Deductions Allowed
- Staff salaries and benefits
- Rent and office expenses
- Depreciation of assets
- Interest expenses (subject to limitations)
- Entertainment expenses (up to 50%)
Transfer Pricing
The UAE adopted OECD transfer pricing rules. Related-party transactions must be at arm’s length and documented:
- Transfer Pricing Disclosure Form — filed with the tax return
- Local File required for large businesses (revenue > AED 200M or transactions > AED 40M)
Accounting Requirements
- All companies must maintain adequate financial records for at least 7 years
- Free Zone QFZPs must prepare audited financial statements
- Mainland companies may need audited accounts depending on size
We handle corporate tax registration, compliance, and optimisation. Contact our tax team.