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UAE Corporate Tax
In January 2022, the UAE Ministry of Finance announced the introduction of Federal Corporate Tax (CT) on business profits. Effective from 1st June 2023, Corporate Tax applies to most businesses operating in the UAE, depending on their financial year. Corporate Tax, also referred to as Corporate Income Tax or Business Profits Tax, is a direct tax levied on net income.
Currently, the UAE offers a competitive 9% corporate tax rate, the lowest among GCC countries, ensuring minimal impact on entrepreneurs while aligning with global standards for tax transparency. Notably, individuals earning income outside of commercial activities are not subject to corporate tax.
Corporate Tax Rates in UAE
- 0% on net profits up to AED 375,000
- 9% on net profits exceeding AED 375,000
- Special tax rate for large multinational corporations in line with OECD Pillar 2 rules
Significance of Corporate Tax in UAE
Corporate Tax aims to:
- Strengthen the UAE’s position as a global business and investment hub
- Promote corporate governance and sustainable economic growth
- Align with international standards for tax transparency
- Prevent harmful tax practices while supporting strategic national development
Despite the introduction of Corporate Tax, the UAE remains highly competitive internationally, offering one of the lowest corporate tax rates globally:
- France: 26.5%
- USA: 21%
- India: 25–30%
Scope of UAE Corporate Tax
- Businesses and individuals operating under a commercial license in the UAE
- Free zone businesses adhering to legal requirements without mainland offices
- Foreign entities conducting ongoing business activities in the UAE
- Banking operations
- Companies engaged in real estate management, construction, development, agency, and brokerage
The following are exempt from UAE Corporate Tax:
- Businesses involved in the extraction of natural resources (subject to Emirate-level taxation)
- Dividends and capital gains from qualifying shareholdings
- Qualifying intra-group transactions and reorganizations (meeting specific conditions)
- Individuals’ salaries and employment income
- Interest and income from personal bank deposits or savings
- Foreign investor income from dividends, capital gains, interest, royalties, and other investments
Income is considered UAE-sourced if it arises from:
- Activities, contracts, or assets located in the UAE
- Services provided or utilized in the UAE
- Interest secured against UAE property
- Insurance premiums related to UAE-based assets or residents
The Qualifying Free Zone Person (QFZP) framework allows certain free zone entities to benefit from a 0% tax rate on qualifying income, provided they:
- Maintain adequate substance in the UAE
- Derive eligible income as defined by ministerial decisions
- Comply with transfer pricing rules
Entities may also elect to pay the ordinary CT rate instead of the 0% regime
TAXORYX Corporate Tax Services in UAE
TAXORYX offers comprehensive Corporate Tax consultancy to help businesses comply, optimize tax liabilities, and minimize risks. Our services include:
- Tax advisory aligned with UAE and international regulations
- Preparation and validation of corporate tax reports
- Guidance on exemptions, free zone regimes, and qualifying income
- Handling tax documentation and compliance for audits
- Strategic tax planning for business growth
- Support for transfer pricing and intra-group transactions
Our team ensures penalty-free corporate tax compliance while providing actionable insights to improve financial efficiency.
Accuracy & Timeliness
Minimize human error and ensure that every tax obligation is met accurately and on time
Scalable Solutions
Providing tailored compliance and strategic support at every stage.
Compliance
Updated with both local and international financial regulations to ensure your business remains fully compliant
FAQs?
Who administers Corporate Tax in UAE
The Federal Tax Authority (FTA) is responsible for administration, collection, and enforcement.
What defines “large multinationals”?
Companies with global revenues exceeding EUR 750 million (approx. AED 3.15 billion) under OECD Pillar 2 guidelines.
Who is subject to Corporate Tax?
All UAE businesses and commercial activities except those involved in natural resource extraction.
What is the Ministry of Finance’s role?
No, individuals investing in real estate in a personal capacity are exempt unless a commercial license is required
Are personal real estate investments taxable?
Yes, TAXORYX prepares comprehensive financial statements for audit, relieving clients from last-minute audit pressures.
