What is Corporate Tax in UAE?

On June 1, 2023, Corporate Tax in UAE was introduced, a federal corporate tax regime that applies to most businesses operating in the country. This marked a historic shift as the UAE transitions from a tax-free haven to a jurisdiction aligned with international financial transparency standards.

The introduction of corporate tax in UAE is designed to:

  • Strengthen the UAE’s position as a global financial and trading hub

  • Align with OECD tax practices and combat tax evasion

  • Support the UAE’s removal from the FATF “gray” list, achieved in 2024, highlighting the country’s progress in financial compliance

 

Under the new law, all businesses — both legal entities and natural persons — conducting commercial activities in the UAE must:

  • Register with the Federal Tax Authority (FTA)
  • Obtain a Tax Registration Number (TRN)
  • File an annual corporate tax return

Failure to register within the required timeline may result in penalties of AED 10,000. Since compliance involves multiple steps, from registration to return filing, working with an experienced corporate tax consultant is highly recommended to ensure accuracy and avoid costly mistakes.

Corporate Tax in UAE, Key Definitions & UAE Federal Corporate Tax Laws

  • 9% standard rate – One of the lowest globally, making the UAE highly competitive.

  • 0% rate – Applies to qualifying free zone companies and small businesses under specific thresholds.

These tax incentives aim to:
✔️ Encourage foreign investment
✔️ Support SMEs
✔️ Promote innovation and economic diversification

Corporate tax is levied on a company’s taxable income, which equals net profits (or losses) adjusted for specific items under UAE tax regulations. Since the law is federal, it ensures uniformity across all Emirates.

Corporate tax applies to:

  • Juridical persons (companies established in the UAE, whether mainland or free zone)

  • Natural persons (freelancers, sole entrepreneurs, and individuals conducting licensed business activities)

  • Foreign entities with a permanent establishment or UAE-sourced income

Certain organizations are fully exempt from corporate tax, including:

  • Government bodies and entities

  • Investment funds

  • Pension and social security funds

  • Companies engaged in natural resource extraction

Additionally, specific income streams such as dividends, real estate income, and inheritance are excluded from corporate tax obligations.

Corporate Tax Rates & Jurisdictions

📌 Corporate Tax Rate in UAE

  • 9% standard rate – One of the lowest globally, making the UAE highly competitive.

  • 0% rate – Applies to qualifying free zone companies and small businesses under specific thresholds.

 These tax incentives aim to:
✔️ Encourage foreign investment
✔️ Support SMEs
✔️ Promote innovation and economic diversification

📌 Tax Base

Corporate tax is levied on a company’s taxable income, which equals net profits (or losses) adjusted for specific items under UAE tax regulations. Since the law is federal, it ensures uniformity across all Emirates.

📌 Taxable Persons

Corporate tax applies to:

  • Juridical persons (companies established in the UAE, whether mainland or free zone)

  • Natural persons (freelancers, sole entrepreneurs, and individuals conducting licensed business activities)

  • Foreign entities with a permanent establishment or UAE-sourced income

📌 Exempt Entities

Certain organizations are fully exempt from corporate tax, including:

  • Government bodies and entities

  • Investment funds

  • Pension and social security funds

  • Companies engaged in natural resource extraction

Additionally, specific income streams such as dividends, real estate income, and inheritance are excluded from corporate tax obligations.

Corporate Tax in UAE Registration Process

The Corporate Tax registration process involves:

Eligibility Assessment

Check if you qualify for mandatory or voluntary registration

Document Preparation

Gather essential paperwork such as trade license, financial records, passport copies, Emirates IDs, and lease agreements

FTA Portal Registration

Create an account, fill in the 8-section CT application form, and upload documents

Application Review

FTA may request additional clarifications or documents

CT Issuance

Once approved, you’ll receive a Tax Registration Number (TRN) certificate

Why Choose ProFounders Services for Corporate tax in UAE?

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Accuracy & Compliance

Preparation and submission of accurate annual returns to ensure compliance and avoid penalties.

Expert Guidance

Assistance with FTA registration, TRN application, and deadlines

End-to-End Support

From registration to filing and deregistration, we handle everything

Peace of Mind

Tailored tax planning, identifying exemptions, and compliance strategies

Corporate Tax in UAE - Frequently Asked Questions

No, natural persons conducting multiple business activities are treated as one taxable entity, requiring a single annual tax return.

No. Eligible groups can consolidate and file as one taxable unit.

Yes. Up to 75% of taxable income can be reduced by previous losses, with unlimited carry-forward under certain ownership conditions.

No. If a foreign company has no permanent establishment or UAE-sourced income, it is not liable under UAE corporate tax law.

Yes. VAT and corporate tax are separate regimes; businesses must comply with both.

Apply through the FTA portal. Once approved, the FTA issues your TRN.

Yes. All businesses must maintain IFRS-compliant financial records, invoices, and contracts to justify profits and ensure accurate filing.

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Corporate Tax in UAE