Corporate Tax Guide for A Practical Overview for Businesses in the UAE
Our guide aims to provide important information about corporate tax in the UAE to help you deal with it confidence.
What Is Corporate Tax in the UAE?
Corporate tax is a tax that companies pay on their net profit made in the country. The Federal Tax Authority which comes under the Ministry of Finance levy corporate tax on mainland companies, certain free zone entities, and foreign businesses that have a taxable presence in the UAE. The tax is generally calculated based on your company’s accounting profits, adjusted for allowable deductions, exemptions, and disallowed expenses as defined under UAE corporate tax law. The tax aligns the UAE with international tax standards while maintaining a competitive and business-friendly environment.
Who Has to Pay Corporate Tax in the UAE?
Corporate tax is levied to
- UAE-incorporated mainland companies
- Free zone companies that do not meet qualifying income conditions
- Branches of foreign companies operating in the UAE
- Individuals conducting business activities under a commercial license
Corporate Tax Rates
In the UAE, businesses have to pay corporate tax at a standard tax rate on taxable profits exceeding a specified threshold. If your profits are under the threshold, you have to pay tax at a lower rate. This tax structure supports start-ups and small businesses while ensuring larger corporates contribute fairly to the tax system.
Key Compliance Requirements
Businesses subject to corporate tax must fulfil several compliance obligations, including:
- Corporate tax registration with the Federal Tax Authority
- Maintenance of proper accounting records
- Preparation of financial statements
- Timely filing of corporate tax returns
- Payment of tax liabilities within prescribed deadlines
Failure to comply can result in administrative penalties and financial fines, making proactive compliance essential.
