For many entrepreneurs and expatriates, the question is simple: does this tax apply to me, and if so, how much? Here is the short answer.
What corporate tax is
A direct tax on the profit of companies and other business entities. Taxable income starts from accounting profit (revenue less cost of sales, administrative and selling costs, research, other operating costs and depreciation) and is adjusted under the corporate tax law.
Who is affected
- UAE companies and businesses with taxable income above the threshold.
- Non-residents with a permanent establishment or other connection to the UAE.
- Freelancers and sole proprietors only when business turnover exceeds AED 1 million a year.
Who is not affected
- Employees: salaries from public or private employers are not taxed.
- Individuals investing in property or shares in a personal capacity, with no commercial licence.
- Savings and bank interest earned personally.
How it started
The UAE announced the tax in 2022. It applies to financial years starting on or after 1 June 2023. A company with a calendar financial year became subject to tax from 1 January 2024. The rate is 0% on taxable income up to AED 375,000 and 9% above that, with a 15% top-up tax for very large multinational groups.
How it differs from VAT
Corporate tax is a direct tax on profit, paid by the business. VAT and excise are indirect taxes collected by businesses but borne by consumers.
The region
Several other Gulf countries already tax corporate profit, generally at higher headline rates than the UAE. Rates and rules differ by country and by who owns the business, so check each country's current position.
Treaties
The UAE has a wide network of double taxation agreements. For expatriates with income or businesses abroad, treaties can reduce or remove tax in the other country and limit withholding tax on certain payments. A tax residency certificate may be needed to claim the benefit. See how to get a tax residency certificate.
Practical steps
- Register on time and keep records.
- File accurate returns. If you find an error after filing, the FTA allows voluntary disclosure, but penalties may apply.
- Plan your accounts and tax before year end.
See our corporate tax services and corporate tax in the UAE: a complete introduction.
Key takeaways
- Corporate tax taxes business profit, not salaries or personal investments.
- Freelancers register only above AED 1 million in turnover.
- Treaties can reduce tax abroad; you may need a tax residency certificate.
Frequently asked questions
Are salaries taxed?
No.
Does a freelancer pay corporate tax?
Only when business turnover exceeds AED 1 million in a year.
Is corporate tax the same as VAT?
No. Corporate tax is on profit; VAT is on consumption.
Talk to a chartered accountant
Questions about your own situation? Reach us directly and we will reply with clear next steps.
This article is general information and not advice for your specific circumstances. Rules and thresholds change, so confirm the current position before you act.
