Corporate Tax
Arbitration & Reconciliation Lawyers in UAE
Tax rules may be confusing, but if the steps are clear, it is still easy to stay compliant. The UAE Corporate Tax law directly applies to your net business profits. To protect your overall profit, your books must be correct. If you are running a startup on the mainland or an established company in a local trade zone, dealing with your tax requirements early helps you avoid unnecessary problems.
At RH and HALE, our tax consultants assist you through the entire business tax life cycle. We do everything from getting you set up on the official government systems to working out your tax liability and filing your annual returns.
Our bespoke corporate tax services in Dubai ensure that you are fully compliant with the most recent regulations of the Federal Tax Authority, so you can focus on developing your business.
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Overview of the UAE Corporate Tax Law and Rate Structure
The Federal Decree-Law No. 47 of 2022 on Taxation of Corporations and Businesses offers a competitive tax framework. It is based on a tiered system with clear financial thresholds to promote economic growth.
The 0% vs. 9% Corporate Tax Threshold Explained
The UAE implements a progressive tax rate based on your net taxable profit (not gross revenue):
Taxable Profit Bracket | Corporate Tax Rate |
Up to AED 375,000 | 0% (Tax-free bracket to support growth) |
Above AED 375,000 | 9% (Standard statutory rate) |
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Who is a Taxable Person? Mainland vs. Free Zone Jurisdictions
Under the UAE corporate tax law, a taxable person is generally divided into two categories:
- Legal (Business) Persons: Legal persons include companies, corporations and other legal entities.Â
- Resident Entities: Any business incorporated, established or recognized in the UAE (including Mainland and Free Zones) or foreign companies that are effectively managed and controlled in the UAE.Â
- Non-Resident Entities: Foreign entities that have a Permanent Establishment (a fixed place of business) in the UAE, derive state sourced income or have a nexus in the UAE (such as income from immovable property).
- Natural Persons: A Natural Person is subject to Corporate Tax only if:Â
- They conduct business or business activity in the UAE; andÂ
- Total turnover derived from business or business activities exceeds AED 1 million within the calendar year (Jan to Dec).
Exemptions and Non-Taxable Income Streams for Individuals
Employment income, personal real estate investments, stock dividends, and personal bank interest earned by individuals are entirely exempt from corporate tax.
Mandatory Corporate Tax Registration UAE: Process & Deadlines
Mandatory Corporate Tax Registration UAE: Process & Deadlines
All taxable business entities must register for corporate tax and acquire a Tax registration number (TRN). Registration is required whether your business is high earning, pre-revenue, or in a tax-free range.
Step-By-Step Corporate Tax Registration Process
A single clerical mistake or incorrect corporate structure classification can reject your registration, delay approvals or trigger the AED 10,000 late registration penalty immediately.
At RH and HALE, our corporate tax consultants take care of the entire registration process, from beginning to end. We take care of the whole cycle via the EmaraTax portal with a safe and systematic approach:
- Analysis of Entities & Verification of Deadlines:Â
Our tax experts will analyze your corporate structure (Mainland, Free Zone or Natural Person) and your trade licence dates. We match the FTA filing schedules to your actual registration deadline so that your application is fast-tracked well before you need it.
- Document Compilation & Verification:Â
We collect, review and maintain your trade licenses, MOAs, Emirates IDs and corporate ownership monitoring documents. By identifying and correcting document gaps in advance, we remove the risk of your application being returned by the FTA for clarification.
- Portal Profile Creation & Registration Management:Â
Our dedicated tax agents will handle the official registration on the EmaraTax portal. We handle all the regulatory input, correctly classify your streams of revenue, submit the application on your behalf and follow up on it until you have been successfully issued with your official Tax Registration Number (TRN).
- Post-registration alignment of the framework:Â
Getting your TRN is just the start. Once registered, our advisors will align your accounting systems with IFRS standards, establish your ledgers to record deductible expenses and make sure your business is ready for smooth annual filings.
Upcoming Corporate Tax Filing Deadlines
You are required to file your corporate tax return and make your payment to the FTA within 9 months of the end of your relevant tax period. For calendar year companies, this means a deadline of 30 September of the following year.
Penalties for Delayed Registration and Non-Compliance
Failure to register on time may result in an AED 10,000 late registration penalty under Cabinet Decision No. 75 of 2023. Late payment of tax attracts interest at 14% per annum.
Corporate Tax for Free Zone Entities: Qualifying for 0% Tax
The UAE continues to uphold its dedication towards investor hubs by providing a 0% corporate tax exemption for entities set up within Free Zones. But this benefit comes with strict compliance rules to follow.
Basic Criteria for Qualifying Free Zone Person (QFZP)
A Free Zone company is classified as a Qualifying Free Zone Person (QFZP), which qualifies for a 0% rate on eligible profits. This means meeting four cumulative pillars:
- Maintaining adequate ‘substance’ in the UAE (local physical office, local expenses and qualified full-time personnel).
- Earning only qualifying income as specified in Cabinet and Ministerial Decisions.
- Voluntarily not electing to be subject to the standard 9% corporate tax regime.
- Preparation and maintenance of audited financial statements signed by a certified UAE auditor.
Understanding the 5% De Minimis Revenue Threshold
If a Free Zone entity earns non-qualifying income (e.g., trading directly with mainland entities without using a mainland branch), there is a risk that it may lose its Qualifying Free Zone Person (QFZP) status.
Under the UAE de minimis rule, non-qualifying revenue must not exceed the lower of:Â
- 5% of the entity’s total revenue, orÂ
- AED 5 million in any tax period.
If the threshold is breached, the entity will lose its 0% tax benefit on qualifying income for the current tax period. Consequently, all of its business income will be taxed at the standard corporate tax rate of 9% (after the AED 375,000 tax-free bracket). Moreover, breaching the de minimis rule can lead to loss of QFZP status for up to the following four tax periods.
Small Business Relief UAE Corporate Tax: Eligibility & Revenue Limits
Mandatory Corporate Tax Registration UAE: Process & Deadlines
All taxable business entities must register for
Small Business Relief is intended to support start-ups and other small or micro businesses by reducing their Corporate Tax burden and compliance costs. Resident Persons (natural persons and juridical persons) are eligible to claim Small Business Relief under UAE corporate tax.
The AED 3 Million Revenue Threshold Criteria
The Ministerial Decision on Small Business Relief stipulates the following:Â
- Resident taxable persons are eligible to claim Small Business Relief if their revenue is less than AED 3 million for the current and previous tax periods. The relief will cease as soon as the revenue exceeds this threshold in any tax period.Â
- The AED 3 million threshold applies to tax periods beginning on or after 1 June 2023 and only to tax periods ending on or before 31 December 2026.Â
- Revenue is to be determined on the basis of UAE accounting standards that are generally accepted.Â
- Small Business Relief will not apply to Qualifying Free Zone Persons or MNE Groups with global consolidated revenue of more than AED 3.15 billion.
How to Elect for Small Business Relief (SBR) in Your Tax Return
Small Business Relief is not an automatic exemption. Businesses that qualify for SBR still need to register for corporate tax, keep proper accounting records, file a formal corporate tax return via EmaraTax, and check the Small Business Relief box during filing.
Corporate Tax Filing UAE: Calculating Taxable Income & Deductions
You need to adjust your net profit (according to the profit and loss statement) before filing your corporate return to obtain your legal taxable income base.
Deductible vs. Non-Deductible Corporate Expenses
You cannot deduct all your business expenses from your revenue to reduce your tax liability:Â
- Fully Deductible: Legally incurred business expenses solely for business operations (e.g., commercial rent, employee salaries, marketing, logistics).Â
- Partially Deductible (50% Limit): Article 32 of the Corporate Tax Law states that expenses for entertainment, amusement or recreation for clients, vendors (suppliers), shareholders or other business partners are deductible only to the extent of 50%.Â
- Non-deductible: Fines and penalties (including administrative fines paid to government bodies), bribes or other illicit payments, as well as the Corporate Tax itself, are non-deductible.
Transfer Pricing Rules and Connected Persons
Under the Transfer Pricing Rules in UAE Corporate Tax, all transactions conducted between related parties or connected persons (such as sister companies or a business paying a salary to its majority owner) must be carried out in accordance with the Arm’s Length Principle. That means that the financial terms of the transaction must be what two completely independent companies would agree to in the open market.
Companies should maintain accurate transfer pricing documentation, including local files and master files as appropriate, to support these internal transactions and to avoid transfer pricing adjustments in an audit.
Why Partner with Professional Corporate Tax Consultants in Dubai?
At RH and HALE, our team of specialized legal and financial experts offer complete corporate tax services to your business. These include but are not limited to:Â
- Complete UAE tax registration, return preparation and submission to the electronic portal.Â
- Structuring transactions to preserve your Qualifying Free Zone Person status or minimize taxation under the Small Business Relief.Â
- Developing clear transfer pricing policies to withstand formal FTA audits.Â
- Aligning your financial reporting to international statutory standards (IFRS).
Safeguard your operational margins and your commercial presence. Contact HH and Hale today to build a reliable and compliant corporate tax strategy for your business.