UAE Corporate Tax: A Practical Guide for Businesses

What the tax is

UAE Corporate Tax was introduced by Federal Decree-Law No. 47 of 2022 and applies to tax periods starting on or after 1 June 2023. The Federal Tax Authority administers it. The Ministry of Finance has asked businesses to rely on official FTA and Ministry publications, because unofficial summaries frequently misstate the rules.

This article is general information for owners and finance managers. It is not advice on a named company. Small differences in legal form or in the accounts change the outcome.

The rate is applied to taxable income

For a standard taxable person, Cabinet Decision No. 116 of 2022 sets Corporate Tax at 0% on taxable income up to AED 375,000 and at 9% on taxable income above AED 375,000 in that tax period. Revenue of AED 375,000 is not the test. A company can bill more than that and still have taxable income inside the 0% band if its allowable costs bring the profit down. The reverse is also true.

Qualifying free zone persons are a separate case. A 0% rate can apply to qualifying income where the conditions are met. Income that is not qualifying income is taxed at 9%. Free zone status on a licence is not, by itself, that election.

Registration is not identical for every person

Companies and natural persons who carry on a business are not registered on the same test. The FTA’s Corporate Tax bulletin explains that a natural person registers by reference to turnover from the business, and that this test is separate from Small Business Relief. A company should not copy a natural person’s threshold, or the other way around.

Small Business Relief has an end date in the current decision

Ministerial Decision No. 73 of 2023 allows an eligible resident person to elect for Small Business Relief where revenue is AED 3 million or below in the relevant tax period and previous tax periods. The decision limits that threshold to tax periods ending on or before 31 December 2026. The FTA has told businesses to watch for any later update. The relief is lost for later periods if revenue has already exceeded the threshold, and it is not available to a qualifying free zone person.

When the return is due

The FTA’s Corporate Tax return guide states that the return is filed, and any tax paid, within nine months of the end of the tax period, unless the Authority directs another date. Filing is a self-assessment on EmaraTax. The accounts and the adjustment schedules need to be ready before that window, not during the last week of it.

If you want those figures prepared with the return, see our Corporate Tax support for UAE businesses.