Overview
The UAE introduced a federal Corporate Tax (CT) on business profits, effective for financial years starting on or after 1 June 2023. Administered by the Federal Tax Authority (FTA), CT represents the most significant change to the UAE's tax landscape since VAT in 2018.
For most SMEs, the mechanics are straightforward. This guide covers the essentials without the legal complexity.
Who Is Subject to Corporate Tax?
CT applies to:
- All UAE juridical persons — mainland companies, freezone companies, and branches of foreign companies registered in the UAE
- Natural persons (individuals) who conduct business or business activity in the UAE and whose annual business income exceeds AED 1 million
This means: if you own a UAE company — mainland or freezone — you are subject to CT and must register with the FTA.
Tax Rates
| Taxable Income | Rate |
|---|---|
| AED 0 – 375,000 | 0% |
| Above AED 375,000 | 9% |
| Large multinationals (Pillar Two) | 15% (if applicable) |
The AED 375,000 threshold applies to the taxable income of the entity, not its revenue. Small and micro businesses with revenue below this level after allowable deductions will pay no CT.
What Is Taxable Income?
Taxable income is broadly the accounting net profit of the entity (as per IFRS or applicable accounting standards), adjusted for specific CT add-backs and deductions defined in the CT law.
Key deductions allowed:
- Business expenses incurred wholly and exclusively for business purposes
- Depreciation and amortisation
- Interest expenses (subject to a 30% EBITDA cap for most businesses)
- Losses carried forward from prior periods (subject to conditions)
Key items not deductible:
- Penalties and fines
- Personal expenses
- Distributions or dividends paid to shareholders
- Expenses that are not at arm's length (transfer pricing rules apply)
Freezone Entities — The Qualifying Freezone Person (QFZP) Regime
Freezone entities may qualify for a 0% corporate tax rate on their Qualifying Income, provided they meet all of the following conditions:
- Adequate substance — the entity must have real economic substance in the UAE (employees, premises, management decision-making)
- Qualifying Income only — income must come from qualifying activities (broadly, transactions with other freezone entities or international customers outside the UAE). Income from UAE mainland customers is excluded qualifying income and taxed at 9%
- Not elected into the standard regime — the entity has not chosen to be taxed at the standard CT rates
- Compliance with transfer pricing rules — where applicable
- Audited financial statements — most QFZPs must prepare and maintain audited accounts
The 0% rate is not automatic. It must be claimed and the conditions must be met and documented. Freezone entities that trade with UAE mainland customers on a significant basis will lose QFZP status.
Registration Requirements
All UAE entities subject to CT must register with the FTA on EmaraTax and receive a Tax Registration Number (TRN) for CT purposes.
Deadlines are based on licence issuance date (for entities incorporated before June 2023) or financial year end (for new entities). The FTA has published a phased registration schedule. Penalties for late registration start at AED 10,000.
Amara tracks CT registration deadlines for all active clients as part of the compliance calendar.
Filing and Payment
- CT returns are filed annually, within 9 months of the end of the financial year
- CT is paid at the same time as the return is filed
- Most UAE entities use a calendar year (January–December) financial year, making the first return due by 30 September 2025 for the year ending 31 December 2024
- Entities with a non-calendar financial year have adjusted deadlines
Transfer Pricing
Transactions between related parties (e.g. transactions between a UAE company and its foreign parent, or between two UAE entities under common ownership) must be conducted on arm's length terms — i.e. at market rates that unrelated parties would agree to.
Transfer pricing documentation requirements apply to entities above certain revenue and transaction thresholds. Amara advises on transfer pricing obligations as part of the Compliance+ and Amara360 tiers.
Small Business Relief
SMEs with revenue not exceeding AED 3 million for the relevant tax period may elect for Small Business Relief, which treats taxable income as zero. This relief is available for tax periods ending on or before 31 December 2026 and must be actively elected on the CT return.
How Amara Can Help
Amara manages CT registration, advises on QFZP eligibility, prepares CT return workpapers, and coordinates with licensed UAE tax agents for submission. CT compliance is included under our Compliance+ and Amara360 retainer tiers.