Corporate Tax Obligations
Written in plain language for general understanding. This is educational content, not legal advice. Based on UAE federal decrees, laws, and ministerial decisions.
UAE Federal Law
What is this right?
The UAE introduced a federal corporate income tax starting June 1, 2023:
- Tax rate: The standard rate is 9% on taxable income exceeding AED 375,000. Income below this threshold is taxed at 0%.
- Who pays: All businesses operating in the UAE, including mainland and free zone companies, must register and potentially pay corporate tax.
- Free zone incentive: Qualifying free zone companies can benefit from a 0% rate on qualifying income if they meet substance requirements and do not earn income from mainland UAE.
- Small business relief: Businesses with revenue under AED 3 million can elect for simplified treatment and pay 0% tax (available until 2026).
- Registration: All taxable persons must register with the Federal Tax Authority (FTA) and obtain a Tax Registration Number (TRN).
When does it apply?
- You operate a business in the UAE — company, partnership, sole proprietorship, or freelance activity with UAE-sourced income.
- Your business has a financial year starting on or after June 1, 2023.
- This does not apply to personal salary income — there is no personal income tax in the UAE.
What should you do?
- Register with the FTA through the EmaraTax platform to get your TRN.
- Keep proper financial records — the FTA requires you to maintain books and records for at least 7 years.
- File your tax return within 9 months of the end of your financial year.
- Consult a tax advisor to determine if free zone benefits or small business relief apply to you.
What should you NOT do?
- Do not assume the UAE is still tax-free for businesses — corporate tax is now law.
- Do not miss registration deadlines — late registration can result in penalties of AED 10,000 or more.
- Do not confuse corporate tax with personal income tax — there is no tax on your salary or personal income.
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