The UAE introduced a federal corporate tax for financial years starting on or after 1 June 2023. It follows VAT (2018) and was designed to keep the compliance burden low. This guide explains how it works.
Background
The Ministry of Finance announced the tax in January 2022, with a long lead time before it started. Earlier reforms included VAT in January 2018 and economic substance regulations in 2019. The system was built to diversify government income, which has historically relied on oil.
What corporate tax is
A direct tax on a company's net taxable income. The accounting profit is adjusted under the corporate tax law to arrive at taxable income, so accurate records are essential.
The tax period
It follows each business's own financial year. A company with a year from 1 January to 31 December became subject to tax from 1 January 2024, and one with a July to June year from 1 July 2023.
The rates
- 0% on taxable income up to AED 375,000
- 9% on income above that
- 15% under the domestic minimum top-up tax, for multinational groups with global consolidated revenue of at least €750 million, in line with the OECD Pillar Two rules
Who is liable
Most UAE businesses with taxable income, except companies extracting natural resources, which remain under emirate-level taxation. Individuals and foreign companies are taxed only if they conduct regular business in the UAE.
Individuals
Individuals are taxed only if they run a business under a commercial licence and turnover exceeds AED 1 million. Salaries, personal real estate investments and savings or bank interest are outside the scope.
Free zones
A Qualifying Free Zone Person can keep a 0% rate on qualifying income if it meets the requirements, including substance, transfer pricing and audited accounts. Other income is taxed at 9%.
Holding companies and offshore companies
Holding companies are generally in scope, though some income can be exempt, for example qualifying dividends and capital gains on participations. The treatment of an offshore company depends on its structure and where it is managed, so take advice.
Transfer pricing
Related-party transactions must follow the arm's length principle in line with OECD guidelines, with documentation when thresholds are met.
Withholding tax
There is no withholding tax on domestic or cross-border payments (a 0% rate).
Administration
Registration and returns are filed electronically through EmaraTax. Returns are due nine months after the financial year end. Supporting records include financial statements, the taxable income calculation, depreciation schedules, transfer pricing documentation and related-party details.
How it compares
The UAE's 9% headline rate is low compared with global averages, which is one reason it remains attractive for business.
Check the FTA website for the latest rules, because detailed guidance continues to evolve. See our corporate tax services.
Key takeaways
- 0% up to AED 375,000, 9% above, and 15% top-up tax for large multinational groups.
- No withholding tax, but transfer pricing rules apply.
- Free zone benefits depend on substance, qualifying income and audited accounts.
Frequently asked questions
What is the corporate tax rate in the UAE?
0% up to AED 375,000 and 9% above it, with a 15% top-up tax for very large multinationals.
When is the return due?
Nine months after the financial year ends.
Is there withholding tax?
No. The rate is 0%.
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.
