Introduction to UAE Corporate Tax
In December 2022, the Ministry of Finance of the United Arab Emirates (“UAE”) released Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (“CT Law”), introducing a federal corporate tax regime for the first time in the country. The regime is designed to enhance the UAE’s position as a leading global business hub while aligning with international tax standards, including the OECD’s Base Erosion and Profit Shifting (“BEPS”) framework.
The Corporate Tax Law sets a standard corporate tax rate of 9% on taxable income exceeding AED 375,000, with income below this threshold taxed at 0% to support small businesses and start-ups. Specific exemptions apply to certain entities such as government bodies, extractive industries, and qualifying investment funds. Free Zone entities may also benefit from a 0% rate on qualifying income, provided they meet the conditions laid out in the law and accompanying decisions.
The introduction of the Corporate Tax Law was further clarified by a series of Cabinet and Ministerial Decisions throughout 2023 and 2024, covering key areas such as qualifying Free Zone income, business restructuring reliefs, participation exemptions, and Small Business Relief (SBR). Guidance has also been issued to help businesses navigate transitional rules, reporting requirements, and compliance obligations.
The UAE Corporate Tax Law applies to financial years beginning on or after June 1, 2023. As a result, many businesses are now in their first corporate tax reporting period and are undertaking corporate tax impact assessments, compliance planning, and return preparation. With the reporting cycle now active, it is imperative for businesses to implement the appropriate systems and controls to ensure compliance with the UAE’s corporate tax framework.
How can we assist you?
When to reach out
At the planning stage
- When you need clarity on how UAE Corporate Tax Impacts your Compay’s income, expenses, or to avail the Free Zone benefits.
- If you want to identify tax risks, opportunities, and structuring options before year-end.
Before financial year close
- To assess potential disallowed expenses, deferred tax positions, and transitional rule implications.
- For provisional tax computations to support management reporting and decision-making.
Ahead of registration deadlines or ungergoing liquidation process
- When your entity becomes liable for UAE CT and needs to complete registration with the FTA
- When the entity is closing down or undergoing liquidation and needs to deregister from UAE Corporate Tax.
- To ensure accuracy and compliance in the EmaraTax registration and de-registration process.
At corporate tax return preparation time
- When compiling CT return data, reconciliations, and supporting schedules for submission.
- If you require assistance in reviewing computations, addressing complex areas, or filing through the EmaraTax portal.
During business or structural changes
- If your group is restructuring, entering new transactions, or expanding cross-border operations.
- To assess CT implications on related party transactions, transfer pricing, and group relief opportunities.
