UAE Corporate Tax Guide: Rates, Registration, Deadlines and Penalties

Corporate Tax was introduced by Federal Decree-Law No. 47 of 2022 and applies from the first financial year starting on or after 1 June 2023. Below are the rules most businesses need, with the points we see go wrong most often.

Corporate Tax rates

Use our Corporate Tax calculator for a quick estimate, including the Small Business Relief test.

Who is subject to Corporate Tax

• Companies and other legal entities incorporated in the UAE — including free zone companies.
• Foreign companies with a permanent establishment or a taxable presence in the UAE.
• Individuals doing business in the UAE whose business turnover exceeds AED 1 million in a calendar year. Salaries, personal investment income and personally held real estate investment income are generally not business income.

Registration: every taxable person must register

Registration is required even if you expect to pay 0% or plan to elect Small Business Relief. Companies incorporated on or after 1 March 2024 must apply within three months of incorporation, under FTA Decision No. 3 of 2024. Registration is done on EmaraTax and gives you a Corporate Tax Registration Number.

Tax periods, returns and payment deadlines

Your tax period is normally your 12-month financial year. The Corporate Tax return must be filed, and any tax paid, within nine months of the end of that period.

Late filing is penalised at AED 500 for each month (or part of a month) during the first 12 months, and AED 1,000 per month after that. Unpaid tax attracts a separate monthly late-payment penalty from the day after the due date — so filing on time but paying late still costs money. See every fine in our guide to UAE Corporate Tax penalties.

From accounting profit to taxable income

The starting point is your accounting profit under IFRS (or IFRS for SMEs). It is then adjusted. The adjustments we see most often:

• Only 50% of client entertainment expenses is deductible.
• Fines, penalties and donations to bodies that are not Qualifying Public Benefit Entities are not deductible.
• Net interest expense above AED 12 million is limited to 30% of adjusted EBITDA.
• Dividends from UAE companies, and from qualifying foreign shareholdings, are generally exempt.
• Tax losses can be carried forward and set off against up to 75% of taxable income in later periods, subject to ownership and business-continuity conditions.
• Transactions with related parties and payments to connected persons — owners, directors and their relatives — must reflect arm's-length, market values.

Small Business Relief, extended to 2029

Resident businesses with revenue of AED 3 million or less can elect to be treated as having no taxable income. Ministerial Decision No. 131 extended the relief to tax periods ending on or before 31 December 2029. The election is made in the return, so you still register and file. Read our full guide to Small Business Relief.

Free zone companies

A free zone licence does not automatically mean 0%. Only a Qualifying Free Zone Person that meets every condition — substance, qualifying income, audited financial statements and the de minimis test — pays 0% on its qualifying income. See how to keep the 0% free zone rate.

Records, audit and transfer pricing

• Keep accounting records and supporting documents for seven years after the end of the tax period.
• Audited financial statements are required if revenue exceeds AED 50 million, for every Qualifying Free Zone Person and for every Corporate Tax group — see who needs audited financial statements.
• A master file and local file are required where your revenue is AED 200 million or more, or your group's consolidated revenue is AED 3.15 billion or more.

Common mistakes we see

• Not registering because "we will pay 0% anyway".
• Forgetting to elect Small Business Relief in the return — the relief is not automatic.
• Missing the deadline because the financial year does not end in December.
• Paying owners, directors or related companies without documentation that the amounts are at market value.
• Filing from unreconciled books, so taxable income is wrong from the start.

How Business Future CPA helps

We handle Corporate Tax end to end: registration, tax computations from your IFRS accounts, Small Business Relief and free zone assessments, returns, and follow-up with the FTA. See our VAT and Corporate Tax services.