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UAE Corporate Tax – Simplified Guide for Businesses and Tax Filing

When setting up a business in the UAE, it is important to understand the basic UAE Corporate Tax simplified guide, including tax rules, rates, registration, and filing requirements.

The UAE introduced corporate tax on business profits. Corporate tax is generally calculated on taxable income, not directly on total revenue or sales. It applies across the UAE, subject to the rules and exemptions provided under UAE corporate tax law.

UAE Corporate Tax is a direct tax on the taxable income of companies and other businesses. It is also known as corporate income tax or business profits tax. Corporate tax is different from VAT, excise tax, and customs duty.

Corporate Tax Important Dates to Keep in Mind

Effective Date / Implantation from:

UAE CT is effective for financial years starting on ‘or’ after 1 June 2023. (Article 69) Tax Period (article 57): The financial year of a taxable person shall be Gregorian Calendar year ‘or’ 12 month period

Example: (1) A business that has a financial year starting on 1 July 2023 and ending on 30 June 2024 will become subject to UAE Corporate Tax from 1 July 2023 (which is the beginning of the first financial year that starts on or after 1 June 2023).

(2) A business that has a financial year starting on 1 January 2023 and ending on 31 December 2023 will become subject to UAE CT from 1 January 2024 (which is the beginning of the first financial year that starts on or after 1 June 2023).

You check in company Memorandum of Association or Previous Audit report to find out the Financials year of your business.

A Few Examples of UAE Corporate Tax Applicability, Return Filing and Payment

The UAE Corporate Tax – Simplified Guide helps businesses understand when Corporate Tax starts, when the tax return should be filed, and when the tax payment is due.

The UAE Corporate Tax regime applies to financial years starting on or after 1 June 2023. The Corporate Tax return filing deadline is generally within nine months from the end of the relevant Tax Period.

i. Financial Year: 1 January 2023 to 31 December 2023

As the financial year started before 1 June 2023, the first Corporate Tax period generally starts from the next financial year.

Corporate Tax Period: 1 January 2024 to 31 December 2024
Corporate Tax Return Filing Deadline: 30 September 2025
Corporate Tax Payment Deadline: 30 September 2025

ii. Financial Year: 1 July 2023 to 30 June 2024

As the financial year started after 1 June 2023, this becomes the first Corporate Tax period.

Corporate Tax Period: 1 July 2023 to 30 June 2024
Corporate Tax Return Filing Deadline: 31 March 2025
Corporate Tax Payment Deadline: 31 March 2025

iii. Financial Year: 1 April 2024 to 31 March 2025

The financial year starts after 1 June 2023, so it can be the relevant Corporate Tax period.

Corporate Tax Period: 1 April 2024 to 31 March 2025
Corporate Tax Return Filing Deadline: 31 December 2025
Corporate Tax Payment Deadline: 31 December 2025

iv. Financial Year: 1 October 2023 to 30 September 2024

The financial year starts after 1 June 2023 and can therefore be the relevant Corporate Tax period.

Corporate Tax Period: 1 October 2023 to 30 September 2024
Corporate Tax Return Filing Deadline: 30 June 2025
Corporate Tax Payment Deadline: 30 June 2025

v. Financial Year: 1 August 2023 to 31 July 2024

The financial year starts after 1 June 2023 and can therefore be the relevant Corporate Tax period.

Corporate Tax Period: 1 August 2023 to 31 July 2024
Corporate Tax Return Filing Deadline: 30 April 2025
Corporate Tax Payment Deadline: 30 April 2025

These examples form an important part of the UAE Corporate Tax – Simplified Guide and can help businesses understand their Corporate Tax filing requirements in the UAE. Businesses should confirm their specific Tax Period and deadline based on their FTA registration and financial year.

All Important Corporate Tax Sections

UAE Corporate Tax Rate

The UAE Corporate Tax – Simplified Guide helps businesses understand the applicable UAE Corporate Tax rates, taxable income, deductions, exemptions, and filing requirements.

Under the UAE Corporate Tax rules:

0% applies to taxable income up to AED 375,000.
9% applies to taxable income above AED 375,000.
A Qualifying Free Zone Person may benefit from a 0% rate on Qualifying Income and 9% on income that does not qualify.

Corporate Tax Registration and Exempt Persons

Certain persons may be exempt from Corporate Tax when they meet the conditions under UAE law. These can include:

Government Entities.
Certain Government Controlled Entities.
Qualifying Extractive Businesses.
Qualifying Non-Extractive Natural Resource Businesses.
Qualifying Public Benefit Entities.
Qualifying Investment Funds.
Certain pension and social security funds.

Exemption conditions should be checked under the applicable UAE Corporate Tax legislation and implementing decisions.

UAE Corporate Tax Taxable Income

The UAE Corporate Tax taxable income is generally determined by adjusting accounting income according to the Corporate Tax Law.

Business income can include income from:

Sale of goods.
Providing services.
Contract activities.
UAE movable or immovable property.
Intellectual property and intangible assets.
Interest and other financial income, where applicable.
Other income arising from business activities.

UAE Corporate Tax Exempt Income

Certain types of income may be exempt when the required conditions are satisfied. These can include:

Certain dividends and profit distributions.
Qualifying income from participating interests.
Income from a qualifying foreign Permanent Establishment where the exemption conditions are met.
Certain income from international transportation activities.

The specific exemption requirements should be checked under the relevant Corporate Tax rules.

UAE Corporate Tax Deductible Expenses

Generally, business expenses incurred wholly and exclusively for generating taxable income may be deductible, subject to the UAE Corporate Tax rules.

Capital expenditure is generally dealt with through the applicable depreciation or other tax adjustment rules.

Where an expense has both business and personal purposes, only the appropriate business portion may be deductible when the required conditions are met.

UAE Corporate Tax Non-Deductible Expenses

Certain expenses are not deductible when calculating taxable income. These can include:

Expenses not related to the business.
Expenditure related to exempt income.
Certain fines and penalties.
Dividends and profit distributions.
Corporate Tax itself.
Certain other expenses restricted under the Corporate Tax Law.

The treatment depends on the type of expense and the applicable legislation.

UAE Corporate Tax Entertainment Expenses

Certain entertainment, amusement, or recreation expenses provided to customers, shareholders, suppliers, or business partners are generally subject to a 50% deduction restriction under the Corporate Tax rules.

Examples can include meals, accommodation, transportation, and admission fees, subject to the applicable conditions. FTA guidance also illustrates the 50% adjustment for qualifying entertainment expenditure.

UAE Corporate Tax Interest Deduction

The UAE Corporate Tax interest deduction rules can limit the amount of net interest expenditure that a business can deduct.

For businesses subject to the general interest limitation rule, the deduction can be limited to 30% of adjusted EBITDA, with specific rules and exceptions. A de minimis threshold of AED 12 million also applies under the relevant Ministerial Decision.

Related Party Transactions and Transfer Pricing

Transactions between related parties must generally follow the Arm’s Length Principle.

Businesses may need to apply appropriate UAE transfer pricing methods, such as:

Comparable Uncontrolled Price Method.
Resale Price Method.
Cost Plus Method.
Transactional Net Margin Method.
Transactional Profit Split Method.

The applicable method depends on the nature of the transaction and the relevant UAE Corporate Tax requirements.

UAE Corporate Tax on Payments to Owners and Directors

Payments or benefits provided to owners, directors, or officers may be deductible when they are incurred for business purposes and meet the applicable market value and Corporate Tax requirements.

Businesses should maintain proper supporting documents for these transactions.

UAE Corporate Tax Groups

A UAE resident parent company and qualifying UAE resident subsidiaries may apply to form a UAE Corporate Tax Group.

Generally, the parent company must meet the required ownership conditions, including at least 95% ownership of the relevant capital and voting rights, along with other requirements. A Tax Group is generally treated as a single taxable person for Corporate Tax purposes.

Taxable Income of a UAE Corporate Tax Group

The parent company generally prepares consolidated financial results for the Tax Group. Transactions between group members are generally eliminated or disregarded according to the applicable rules.

Tax losses, asset transfers, and changes in group membership may require specific tax adjustments.

UAE Corporate Tax on Branches

A UAE branch of a UAE resident company is generally an extension of its head office and is not treated as a separate legal entity for Corporate Tax purposes. Therefore, it generally does not require separate Corporate Tax registration or a separate return from its UAE head office.

Foreign branches or Permanent Establishments may have specific tax treatment, including rules relating to foreign tax credits or foreign branch exemptions.

UAE Corporate Tax Currency Rules

Businesses generally calculate their Corporate Tax information in UAE Dirhams. Where transactions are recorded in another currency, the applicable exchange-rate rules should be followed.

UAE Corporate Tax Return Filing and Payment

Businesses generally need to file their UAE Corporate Tax return and pay any Corporate Tax due within 9 months from the end of the relevant Tax Period, unless another deadline applies under the legislation or an FTA decision.

UAE Withholding Tax

The UAE Corporate Tax system includes withholding tax provisions for certain UAE-sourced income paid to non-residents. The applicable rate can be 0% for relevant categories under current rules.

Businesses should check whether withholding tax provisions apply to a particular cross-border payment.

UAE Corporate Tax Refund

A Corporate Tax refund may be available in certain situations, such as where a taxable person has paid more tax than required or has an eligible excess tax credit.

The taxpayer must follow the applicable FTA refund procedure.

Foreign Tax Credit

A UAE Corporate Tax foreign tax credit may be available for qualifying foreign tax paid on income that is also subject to UAE Corporate Tax.

Generally, the credit is limited to the lower of the foreign tax paid and the UAE Corporate Tax attributable to the relevant income.

Process to Register UAE Corporate Tax and Registration Guide with Required Documents

1. UAE Corporate Tax (CT) Registration Process:

Login Emarat Tax Portal (if already has an Account with Emarat tax. If not have Account, then Create New Account with Emarat Tax

Taxable Person List (On successful login, the taxable person list will be displayed. If no taxable person is linked, create a new taxable person. Select the taxable person from the list for whom CT registration application is to be filled)

Click on ‘Register’ to initiate the CT registration application (The CT tile will appear in the Taxable Person Dashboard. Click on ‘Register’ on the CT tile to initiate the CT registration application)

CT Registration Application (Five Sections):
(I) Entity Details: Below Details 1.Entity Type 2.Sub Type 3.Date of incorporation 4.Country of Registration /incorporation, 5. CT Period.

(II) Identification Details: Below Details 1. Main License Details 2. Business Activity Details 3. Owner List 4. Local Branch Details

(III) Contact Details: Below Details 1. Registered Address 2.Tax Agent Address in UAE (if a foreign business applying for CT Registration)

(IV) Authorized Signatory: Below Details 1. Details of Authorized Signatory 2. Evident of authorization (MOA / POA)

(V) Review and Declaration Review all of the information before submitting the CT Registration Application, then submit CT Application

After the application is submitted successfully, a Reference Number. is generated for submitted application. Once the application is submitted, the FTA shall approve, reject or resubmit for additional information and notify the applicant accordingly. Once the registration application for CT is approved, a CT TRN (Tax Registration Number) and registration certificate shall be issued. Taxpayer can download the registration certificate from your Emera Tax account.

Others: To enter all the Owners that have a 25% or More ownership in the entity being registered. If you have one or more branches, and add the local branch details, for each branch, enter the trade license details and associated business activates and owners list. Ø Registration will be in the name of head office. Registration will not be performed in the name of Branch. If you have multiple addresses, provide details of the place where most of the day-to-day activities of the business are carried out. Required Documents for CT Registration:
1. Emirate ID / Pass Port copy of Taxable person 2. Emirate ID / Pass Port copy of Authorized person 3. Proof of Authorized person i.e. MoA, PoA etc.

2. UAE Corporate Tax – Registration Guide (CTGRJP 1- Aug,23)

CT Registration is Mandatory for:

UAE Companies (UAE mainland and free zones Companies)
other Juridical persons that are incorporated or effectively managed and controlled in the UAE
Natural person (Decision No. 49 of 2023)
Foreign legal entities that have a PE in the UAE
Foreign Legal entities that a nexus in the UAE arising from earning income from any immovable property in UAE

Non-Resident person that doesn’t have a PE in UAE and earn State sourced income

CT Registration Non-Mandatory for:

Government entity
Government controlled entity.
Extractive Business
Non-Extractive Natural Resource Business
Qualifying Public Benefit Entity
Pension and Social Security Fund **
Juridical persons wholly owned and controlled by certain other exempted persons **

(** These entities must Register for CT then make application for exemption from CT)

Registration Process:

Submit Application in Emirate Tax Portal
FTA will review Application & Get additional details
FTA once Approved will issue TRN (TRN different from other TRN)

Required Documents:

(i).Trade license / Business license
(ii).Passport of the authorized signatory
(iii).POA and or MoA
(iv).If the authorized signatory is a UAE resident, Emirates ID of authorized signatory
(v).If the owner is an individual, passport & Emirate ID of the immediate owner who directly owns at least 25% of the shares of the juridical person

CT Deregistration:

If business or business activity ceases or dissolution or liquidation.

Make an application to FTA within 3 months

Taxable person should meet all tax obligations

Other Key Points:

Person who already registered for VAT and / Excise tax still required to Register for CT. CT registration Separate TRN will issue.

Person who are not registered for VAT and / Excise tax also within the scope of CT Registration.

Registration details are up to date and informing the FTA of any changes within 20 business days.

If a UAE Judicial person only derives exempt income will be also required to register for corporate tax

Head office must register for Corporate Tax registration on behalf of all the UAE branches; also applicable for Free Zone branches of Mainland company and Mainland branches of Free Zone company.

Small business relief must register for CT, No corporate tax liability. Has to file corporate tax return. Has to maintain appropriate records to support small business relief.

Natural person shall be subject to CT only where the total revenue derived from such business or business activities exceeds AED. 1 million within a Gregorian calendar year. Total Revenue not includes Wages, Salaries, personal rental income, personal capital gains, Real estate Rental income, Real Estate capital gains.

CT Registered Person File Tax Return and Pay CT within 9 months end of reporting period.

UAE Corporate Tax is mandatory based on Terms and Conditions

UAE Corporate Tax (CT) Small Business Relief

Purpose: To Support Startups & Other Small or Micro business BY Reducing Their Corporate Tax Burden and Compliance Costs.

Applies To: Resident Taxable Person – (either a Natural Person or a Juridical Person) with Revenue below or equal to AED 3,000,000 in a relevant Tax Period and all previous Tax Periods that end on or before 31 December 2026.

Not Applies to:

1. Qualifying Free Zone Persons

2. Members of Multinational Enterprise Groups

3. for a foreign company

In order to claim Small Business Relief:

❖ Eligible Taxable Person must first be registered for Corporate Tax

❖ Then can elect for the relief through the filing of a Tax Return

❖ An election must be made in each Taxable Period If election for Small Business Relief is elect:

➢ Can file a simplified Tax Return (not full tax return)

➢ No Corporate Tax to pay

➢ Not required to calculated taxable income

➢ Can carry forward Tax Losses and Excess Interest Expenditure from previous Tax Periods

➢ Must comply with the Arm’s Length Principle

➢ Cannot accrue and utilize Tax Losses for the relevant Tax Period

➢ Cannot accrue and utilize Excess Interest Expenditure for the relevant Tax Period

➢ Cannot apply reliefs for transfers within a Qualifying Group or for Business restructuring transactions

➢ No need complies with transfer pricing documentation requirements

Other Views:

✓ This relief is optional

✓ The relief is given based on Gross revenue (sales)

✓ Businesses are not allowed to artificially separate the revenue

✓ Revenue exceeds AED 3,000,000 in a Tax Period; the Taxable Person will no longer be able to elect for Small Business Relief

✓ Where a Natural Person derives income from Businesses or Business Activities above the AED 1,000,000 threshold during a Gregorian calendar year, he will be subject to Corporate Tax and will be required to register for Corporate Tax. In this instance, he may be able to claim Small Business Relief if they meet the requirements of the Small Business Relief.

✓ A Tax Group is able to elect for Small Business Relief if its Revenue is equal to or below AED 3,000,000.

✓ Businesses need to maintain records for 7 years (kept include but is not limited to:

● Bank statements;

● Sales ledgers;

● Invoices or other records of daily earnings, such as till rolls;

● Order records and delivery notes; and

● Other relevant Business correspondence.) ✓ There is no requirement that documents are maintained in their original (scanned and stored electronically)

UAE Corporate Tax On UAE Free Zones – Article 18 &19

Free Zone Person: A Juridical Person incorporated, established, registered in a Free zone, including a Branch of Non – Resident person registered in a Free Zone.

Free Zone Person – Corporate Tax Rate: Entities established in a Free Zone that meet the conditions to Benefit from the Free Zone CT Regime (“Qualifying Free Zone Persons”) will be subject to UAE CT at the following rate: 0% – on Qualifying Income 9% – on Non Qualifying income

Qualifying Free Zone Person: A Qualifying Free Zone person, the Free Zone must:

(i) Maintain adequate substance in the UAE

(ii) Derive “ Qualifying Income” as specified in a cabinet decision

(iii) Comply with Transfer pricing (TP) rules and maintain relevant TP documentation.

(iv) Not have made an election to be subject to CT in full.

Free Zone Person – Other Conditions:

i) UAE CT Treatment will be same for all UAE Free Zone Entities.

ii) Qualifying Free Zone Person that meets the relevant conditions will be able to benefit from 0% free zone CT regime automatically.

iii) Qualifying Free Zone Person can make Election (Application) Not to apply 0% free zone CT regime; but instead be subject to the regular CT regime and rates.

iv) Ministry may prescribe the conditions or circumstances under which a person may continue or cease to be qualifying free zone person from a different date.

v) All Free zone entities will be required to Register and File CT return whether they are Qualifying Free Zone or not

vi) All Free zone entities will be required to Register and File CT return whether they are Qualifying Free Zone or not.

UAE Corporate Tax on Free Zone Person (FZP): Qualifying Free Zone

Tax Rates: Qualifying Free Zone Person (QFZP) eligible for a 0% (Zero) corporate tax on its qualifying income (QI).

Qualifying Free Zone Person: Free Zone Person must meet the following conditions to be considered as QFZP: Derive qualifying income from relevant transactions, maintain adequate substance within UAE, Not selected to be subjected to normal tax rate @ 9%, Maintain and comply transfer price rules and documents, Prepare and maintain audited financial statements.
(A QFZP fails to meet any conditions at any particular time during tax period shall cease to be a QFZP from the beginning of that tax period and for the subsequent 4 tax periods.)

Qualifying income (QI): Income derived from other FZP except income derived from excluded activities, Income derived from Non-Free Zone, domestic and foreign only for qualifying activities which are not a part of excluded activities, any other income subjected to the de minimis requirement.

Excluded activities: includes Transaction with natural person except ships and aircraft related, Banking, insurance, finance and leasing activities (except reinsurance, treasury and finance services to related parties, financing and leasing of air craft.), Ownership or exploitation of UAE immoveable property (except commercial property located on free zone provided such activity in relation to immoveable property located in free zone is conducted with other free zone person),Intellectual property asset ownership or exploitation, Ancillary activities to above activities.

Qualifying activities: (i)Goods/material: Manufacturing / processing pf goods or materials. (ii)Services: Holding shares and other securities, Ship ownership management and operations, Reinsurance service, Fund management service, Wealth and investment management service, headquarter service to related parties, Treasury and financing services to related parties, Aircraft financing and leasing, Distribution of goods / materials in or form a designated zone to customer that resell such goods / materials, Logistics services, Ancillary activities to the above activities.

De minimis Requirement: where the non-qualifying revenue derived by the QFZP in a Tax period does not exceed lower of the following: Aed 5,000,000 or 5% of total revenue of the QFZP in that tax period.

Other points:

Election to be subjected to the corporate tax shall be effective from either tax period or following tax period
Adequate substance includes: adequate asset, adequate number of qualified employees and adequate amount of operating expenditure,
QFZP corporate tax rates: 0% – Qualifying income, 9% – non qualifying income
QFZP any taxable income that is non qualifying income will be subjected to tax at @ 9% (not entitled to a 0% rate on their first Aed 375,000.),
QFZP that earns income from immoveable property located outside a free zone would not be eligible to benefit from the free zone corporate tax regime.
A free zone person that is not a qualifying free zone person will be able to benefit from the Aed 375,000 0% band.
0% corporate tax is available QFZP until the expiry of the tax period provided by respective legislation of the relevant free zone.
Only juridical person can benefit from the FZ corporate tax regime.
Foreign company branch in a free zone can get benefit from the free zone corporate regime.
A QFZP does not want to benefit from the FZCT regime can elect to apply the standard UAE CT rate.
QFZP cannot be a member of tax group.
QFZP cannot claim small business relief.
QFZP cannot transfer or receive tax losses.
All free zone person required to register for CT, obtain TRN, File CT return.
A free zone branch of mainland or foreign juridical person no need to register and file a separate UAE CT return.
No foreign tax credit can be claimed by qualifying FZP.

UAE Corporate Tax Penalties and Reasons

Penalty – AED. 500:

Submit an incorrect Tax Returns

Penalty – AED. 500 to 1,000:

Failure to submit a Tax Return within timeframe specified in Corporate Tax law

Penalty – AED. 1.000 to 0,000:

Failure to submit Deregistration application within time specified by authority

Penalty – AED. 1.000 to 5,000:

Failure to inform amendment information to Authority on time

Penalty – AED. 10.000 to 20,000:

Failure to Keep required Records and other information as specified in Corporate Tax Law

Penalty – AED. 5,000:

Failure to submit Records and documents in Arabic when authorities required

Penalty – 14% Per Year:

Failure to settle / Pay Corporate Tax Payable in specified period.

Penalty – AED. 20,000:

Person failed to subject Tax Audit in a specified given period

Significant Official Publications Relating to UAE Corporate Tax:

CT Tax Payer User Manual
TRC User Manual
CT Amend Registration Manual
Tax deregistration timelines
Small business Relief Guide
Taxable nonresident person
CT Exempt income
Transfer pricing Guide
Ministerial Decision on – Tax Residency
Ministerial Decision on- Accounting standards and methods for Corporate Tax purposes
Ministerial Decision on – Transition Rules
Ministerial Decision on – Tax Group
Ministerial Decision on – Interest deductions
Ministerial Decision on – Transfers within a Qualifying group
Ministerial Decision on – Business Restricting relief
Ministerial Decision on – Determining Taxable income for CT
Ministerial Decision on – Tax Residence Certificate
Cabinet Decision on – Corporate Tax Administrative Penalties