The UAE introduced a federal corporate tax for financial years starting on or after 1 June 2023. The rate remains among the most competitive in the world, but the regime brings real compliance obligations — and structuring choices that are best made early.
The basics
Corporate tax is governed by Federal Decree-Law No. 47 of 2022 and administered by the Federal Tax Authority (FTA). It applies to companies incorporated or effectively managed in the UAE, to individuals conducting business above a turnover threshold, and to non-residents with a permanent establishment or certain UAE-sourced income.
| Taxable income / situation | Rate |
|---|---|
| Up to AED 375,000 | 0% |
| Above AED 375,000 | 9% |
| Qualifying income of a Qualifying Free Zone Person | 0% |
| Large multinational groups (from 2025) | Top-up to an effective 15% under the Domestic Minimum Top-up Tax |
Free zone companies
A free zone company can benefit from a 0% rate on its qualifying income if it qualifies as a Qualifying Free Zone Person. Among other conditions, it must:
- maintain adequate substance in the free zone;
- derive qualifying income and meet the de minimis test — non-qualifying revenue may not exceed the lower of 5% of total revenue or AED 5 million;
- comply with transfer pricing rules and prepare audited financial statements;
- not elect to be subject to the standard corporate tax regime.
Income that is not qualifying is taxed at 9%. Failing a condition can remove the benefit for several tax periods, so the position should be reviewed every year.
Small Business Relief
Resident businesses with revenue of AED 3 million or less in a tax period (and in all previous periods) may elect to be treated as having no taxable income. The relief is available for tax periods ending on or before 31 December 2026 and is not available to Qualifying Free Zone Persons or members of large multinational groups.
Transfer pricing
Transactions with related parties and connected persons must follow the arm’s length principle, in line with OECD guidelines. Businesses may need to file a disclosure form with their tax return, and larger businesses — for example those with revenue of AED 200 million or more, or belonging to groups with consolidated revenue of AED 3.15 billion or more — must maintain a master file and local file.
Registration and compliance
- Registration. All taxable persons, including free zone companies, must register through the FTA’s EmaraTax platform within the applicable deadline. Late registration attracts an administrative penalty.
- Returns and payment. The tax return must be filed, and tax paid, within nine months of the end of the tax period.
- Financial statements. Audited financial statements are required for Qualifying Free Zone Persons and for businesses with revenue above AED 50 million.
- Records. Accounting and tax records must generally be kept for seven years.
Large groups: the minimum top-up tax
For financial years starting on or after 1 January 2025, the UAE applies a Domestic Minimum Top-up Tax to multinational groups with consolidated revenue of EUR 750 million or more, aligning with the OECD Pillar Two framework. In-scope groups are topped up to an effective rate of 15% on their UAE profits.
What to do now
- Confirm that every UAE entity in your group is registered and knows its filing deadlines.
- Review whether free zone entities meet — and will keep meeting — the qualifying conditions.
- Document intra-group transactions and pricing.
- Make sure your accounting systems produce IFRS-based statements that support the tax return.
This article provides general information only and does not constitute tax or legal advice. Tax rules and thresholds change and depend on specific facts; please consult a registered tax agent or advisor on your situation.
