The UAE's corporate tax: what businesses should know
The United Arab Emirates introduced a Federal Corporate Tax regime that became effective for financial years beginning on or after 1 June 2023. Administered by the Federal Tax Authority (FTA), the regime applies to juridical persons incorporated in the UAE and foreign entities that have a permanent establishment or derive taxable income from within the country. There is no Federal personal income tax on individuals in the UAE.
Why did the UAE introduce corporate tax?
The UAE's corporate tax framework aligns the country with international standards for tax transparency and base erosion prevention, including commitments made as part of the OECD's global minimum tax initiatives. The FTA has emphasised that the regime is designed to be simple, with a small business relief mechanism for qualifying entities and a straightforward registration and filing process through its EmaraTax digital platform.
Who must register with the FTA?
All juridical persons — including mainland companies, free-zone entities, and foreign companies with a UAE permanent establishment — are required to register for corporate tax with the FTA and obtain a Tax Registration Number (TRN). Registration is completed through the EmaraTax portal (tax.gov.ae). The FTA has issued Cabinet Decisions specifying registration deadlines by entity type and licence issuance date, and non-registration carries penalties.
Natural persons (individuals) conducting business in the UAE may also have a registration obligation depending on the nature and scale of their activity. The FTA's published guides outline the relevant thresholds.
What is the standard tax rate?
The FTA sets the corporate tax rate and any thresholds for the small business relief mechanism through Cabinet and Ministerial Decisions. Because rates and relief thresholds may be amended over time, businesses should consult the FTA's official publications rather than relying on figures stated in third-party sources. The FTA website and its public clarifications are the authoritative reference.
Qualifying small businesses may be eligible to elect for small business relief, which simplifies their compliance obligations for a given tax period. The conditions for this election are set out in the relevant Cabinet Decision.
How does free-zone status affect corporate tax?
The UAE's free zones have long offered 0% tax incentives to attract foreign investment. Under the Federal Corporate Tax law, certain Qualifying Free Zone Persons (QFZPs) may continue to benefit from a 0% rate on qualifying income, provided they meet conditions set by the FTA. These include:
- Maintaining adequate substance in the free zone
- Deriving income from qualifying activities
- Satisfying transfer pricing and documentation requirements
- Not electing to be subject to the standard rate
Free-zone entities that earn income from non-qualifying sources, or that fail to meet the substance conditions, may have that income taxed at the standard rate, or may lose QFZP status entirely for that tax period. The rules are detailed and the FTA has published a dedicated guide for free-zone persons.
Filing, accounting, and transfer pricing
Businesses subject to UAE corporate tax must:
- Prepare financial statements in accordance with accepted accounting standards
- File a corporate tax return with the FTA for each tax period through EmaraTax
- Comply with transfer pricing rules for transactions with related parties and connected persons
- Maintain a master file and local file for intercompany transactions where required thresholds are met
The tax period generally aligns with the entity's financial year. The filing deadline and payment obligation fall nine months after the end of the relevant tax period, though the FTA publishes precise deadlines through Ministerial Decisions.
Is there a personal income tax in the UAE?
No. The UAE does not impose a Federal personal income tax on individuals. Salary, investment returns, and other personal income received by individuals living and working in the UAE are not subject to Federal income tax. This remains one of the UAE's distinguishing features for expatriate workers and high-net-worth individuals.
VAT (Value Added Tax) and Excise Tax are separate Federal indirect taxes and are administered by the FTA independently of the corporate tax regime.
Where to get help
Corporate tax compliance in the UAE — particularly for free-zone entities and businesses with cross-border operations — involves technical judgements that benefit from qualified professional input.
Find recognised tax professionals in the UAE
Sources
Federal Tax Authority, United Arab Emirates — tax.gov.ae