The UAE introduced its federal Corporate Tax (CT) regime effective for financial years starting on or after June 1, 2023. This marked a significant shift for businesses operating in the Emirates.
Tax Rates
The CT rate structure is straightforward. Taxable income up to AED 375,000 is taxed at 0%. Income above AED 375,000 is taxed at 9%. Large multinational enterprises meeting specific criteria are subject to a 15% rate under the OECD's global minimum tax framework.
Who Is Subject to CT?
All UAE businesses and commercial activities are subject to CT, with certain exceptions. Free zone businesses can benefit from a 0% rate on qualifying income if they meet substance requirements and don't conduct business with mainland UAE.
Key Exemptions
Government entities, qualifying public benefit organizations, and qualifying investment funds are exempt. Dividends and capital gains from qualifying shareholdings are also generally exempt.
Registration and Filing
All taxable persons must register with the Federal Tax Authority and obtain a Tax Registration Number. Tax returns must be filed within nine months of the end of each tax period. Maintaining transfer pricing documentation is mandatory for transactions with related parties.
Planning Opportunities
Strategic planning around the AED 375,000 threshold, free zone structures, and group relief provisions can significantly optimize your CT position. Early planning is essential to take advantage of these opportunities.
Corporate Tax compliance is complex and the penalties for non-compliance are significant. If you need help with CT registration, return filing, or optimising your tax position, get in touch with our team - we stay current with all FTA regulatory updates.