Corporate Tax in the UAE: Everything You Need to Know

For a very long time, businesses were looking for a tax-friendly environment in the UAE. But this happened with the introduction of the new corporate tax in UAE. Whether you are an investor, business owner, or freelancer in the UAE, you need to remain aware of what is corporate tax in UAE.

When you do it, you can stay compliant while optimizing the financial strategy for your business. Hence this blog, we will give you significant knowledge about the new tax in UAE. Thus, you can optimize your business by knowing how to register for corporate tax in UAE.

You have to know how to calculate corporate tax in UAE, whether you are located in Dubai or beyond. You have to know how corporate tax in Dubai will help your business boost beyond. Thus, by knowing everything regarding the new corporate tax, you manage your business accordingly, functioning within the UAE.

Significance of Corporate Tax in UAE

Before we begin, first, we should ask a basic question regarding what corporate tax is in UAE? A corporate tax is a direct tax levied on the profits of corporations and businesses operating in the UAE. 

Introduced through Federal Decree-Law No. 47 of 2022, corporate tax in UAE makes a comprehensive shift regarding the history of a tax-free environment of business within the UAE. 

The law for the financial years took effect on or after June 1, 2023. It was aimed to align the United Arab Emirates (UAE) with the standards of global tax. At the same time, it also maintained its importance as an economic hub. 

Foreign companies, businesses, mainland companies, and free zone entities all have to follow the policies of the new tax in UAE. But it is not the same for everyone, as it does not follow the approach of one-size-fits-all approach.  

The regime of corporate tax exempts and incentivizes those operating free zone companies and small businesses. But at the moment, it is important to know that the corporate tax in UAE is intended to be competitive, with standardized rates of 9% on taxable profits of more than AED 375,000.

According to this shift, the commitment of the UAE to compliance and transparency with the global frameworks, such as the Pillar Two initiative by the OECD. Thus, whether you own a multinational across the  Emirates or a startup, you have to comply with the rules of corporate tax in Dubai. Hence, the first step is to navigate through the landscape by knowing what is corporate tax in UAE.

Reasons to Introduce Corporate Tax in the UAE?

Introducing corporate tax in UAE was not an impulsive decision. But it diversifies the economy of Dubai as a part of its vision and strategy. The purpose of it was to align the economy of Dubai and align with worldwide reforms of tax. This is why it is important to know how and why the new tax in UAE came along:

1. Global Alignment: 

UAE is ranked among the OECD’s Inclusive Framework key members for globally promoting the fair taxation policy. Hence, it supports the corporate tax regime and the Pillar Two rules of the OECD. They ensure that the MNCs pay a minimum but effective amount of 15% tax rate. It came to full effect since  1st January, 2025, with a 15% minimum effective tax rate via Domestic Minimum Top-Up Tax (DMTT).

2. Economic Diversification: 

The key aspect for the UAE’s Vision 2021 and beyond was to cut down the reliance on oil revenue. Corporate tax in UAE generates revenue to fund infrastructure, innovation, and public services.

3. Competitiveness and Transparency:

With the introduction of a competitive and clear system of corporate tax, the United Arab Emirates (UAE)  strengthens its position as a worldwide hub of business. Throughout the world, the 9% rate is one of the lowest. Thus, corporate tax in Dubai and other in other emirates cities becomes appealing for the local investors.

4. Confirming with Global Standards: 

The new tax in UAE features cost-effective approaches. These include doubling tax treaties nd rules for pricing. These ensure smooth and transparent operations for the businesses in the UAE. This means that the businesses have to adapt to the new corporate tax in UAE. However, with proper preparation and correct knowledge, you can manage the compliance. a

Who Should Pay Corporate Tax in UAE?

While you may wonder whether everyone is eligible for corporate tax, in reality, this is not the case. The following are some of the key businesses that may be influenced by it: 

1. Resident Businesses: 

Organizations managed or incorporated in the UAE, including free zone and mainland entities, undergo corporate tax on their global revenue streams.

2. Non-Resident Businesses: 

Foreign companies with a permanent establishment (PE) or UAE-sourced income must pay corporate tax in UAE on that income.

3. Natural Persons: 

People who have a licensed business with yearly revenue of more than AED 1 million were asked to register for corporate tax by March 31, 2025. And those who failed in doing so had to go through a penalty of AED 10,000.

4. Multinational Enterprises (MNEs): 

Multinational Enterprises (MNEs) with massive worldwide revenues of EUR 750 million or more. These may undergo the 15% DMTT under Pillar Two rules. Thus, this results in corporate tax in Dubai and further.

1. Corporate Tax Exemptions:

Specific entities are free from corporate tax in UAE. These include:

• Government-controlled organizations and entities.
• Organizations engaged in non-extractive or extractive activities of natural resources.
• Qualifying investment funds and public benefit entities.
• Free zone businesses meeting the criteria of a Qualifying Free Zone Person (QFZP). On the qualifying income, enjoy a 0% rate. 

For instance, a free zone company in UAE can benefit from a 0% rate of corporate tax in Dubai. For this purpose, it should have earnings from its activities with either overseas entities or within the free zone. But 9% nonqualifying income is taxed. 

Thus, it is important to know the classification of your business first before determining your obligations towards corporate tax. In case you do not have a clear understanding, clarify your status by contacting your tax professional.

UAE and Corporate Tax Rates

Even though the corporate tax in UAE is a very straightforward one. However, there are many complexities within it. This is how some of the rates function:

• 0% Rate: Applies to taxable profits up to AED 375,000, supporting small businesses and startups.
• 9% Rate: Applies to taxable profits exceeding AED 375,000 for most businesses.
• 15% DMTT: Effective January 1, 2025, this applies to MNEs with global revenues of EUR 750 million or more, ensuring a minimum effective tax rate.

For instance, a company in corporate tax in Dubai with taxable profits of AED 500,000 would pay 0% on the first AED 375,000 and 9% on the remaining AED 125,000, resulting in a tax liability of AED 11,250. We’ll dive deeper into how to calculate corporate tax in UAE later.

The new tax in UAE also includes incentives, such as Small Business Relief for companies with revenues below AED 3 million until 2026, reducing compliance burdens for SMEs.

How to Calculate Corporate Tax in the UAE

Business taxes are very important for calculation and financial planning. It begins with the net loss or profit of the organization as reflected in your account books. The following is a detailed overview:

1. Find out Taxable Income:

As per the financial statements, begin by accounting for your net loss or profit. Exempt income (e.g., dividends from qualifying shareholdings) and adjust for non-deductible expenses (e.g., fines).

2. Apply the Tax-Free Threshold

If your taxable profit is at least AED 375,000 or below, you are not liable to pay company tax. However, if above, then 9% profits are taxed. 

3. Account for Tax Losses:

As long as the losses meet certain requirements, companies can offset past overdue tax losses against future income to be taxed.

4. Look towards DMTT for MNEs:

The MNEs’ effective tax rate (ETR) under the new tax in UAE needs to be computed. The DMTT bridges the gap if it is below 15% to meet OECD Pillar Two regulations.

5. Include Foreign Tax Credits:

To prevent double taxation, you can credit if your business is taxed on foreign corporate tax by earned income in the UAE.

For instance, you would deduct the AED 375,000 exemption from the net profit of AED 1 million that an organization in Dubai earned in 2024. So, you would have to pay a tax of AED 625,000. Your corporate tax in Dubai would amount to 9% for AED 56,250.  

Is it not very simple? But for complex scenarios, you should think of contacting a tax specialist, especially for revenue pricing or transfer involvement.  

How To Register For Corporate Tax In UAE? 

So, how to register for corporate tax in UAE? You need to register your company if your company is subject to corporation tax within the UAE regime. The Federal Tax Authority (FTA) has simplified the portal of EmaraTax. This is the process for registering for the UAE business tax:

1. Check Eligibility:

Verify whether you are a juridical individual subject to corporation tax. Or if your business or income level is more than AED 1 million (in case of individuals).

2. Collect Documents:

Your accounting details, records, and commercial license for your business activities are needed.

3. Log in to EmaraTax:

Visit the EmaraTax portal of the FTA, get registered, and complete the form.

4. Submit within the Deadline:

For companies that were formed before March 1, 2024, the submission deadline is according to the issuance date of your license. New organizations must be registered within 3 months of the incorporation date. People getting more than AED 1 million in 2024 were ordered to file by 31st March 2025.

5. Maintain Records: 

If a company fails to register on time, then it may have to pay an AED 10,000 fine. Thus, avoid unnecessary delay. The FTA was extended to a grace period until March 31, 2025. This allowed businesses to take measures without facing any penalties. 

6. Key Updates for Corporate Tax in 2025

Since January 1, 2025, a new rule in the UAE called the Domestic Minimum Top-Up Tax (DMTT) has been introduced. It applied a 15% tax to MNEs with consolidated group revenues of more than €750 million. This ensured they were compliant with the global minimum tax regime of OECD’s Pillar Two.

6. Global Minimum Tax Regime

The UAE also announced the Ministry of Finance Cabinet Decision No. 142 (CD142) in February 2025, detailing the application of DMTT. Ministerial Decision No. 88 also embraces the OECD’s Commentary and Administrative Guidance to ensure harmonized interpretation.

Other Changes in 2025 include:

1. Small Business Relief: 

Until 2026, revenues of less than AED 3 million can be enjoyed with simplified compliance and a 0% rate.

2. Transfer Pricing: 

The documentation procedures for transfer pricing are stricter. This is due to MNEs, or entities with more than 200 million party-related transactions. 

3. Qualifying Investment Funds (QIFs): 

As per the Corporate Tax Law of UAE, Qualifying Investment Funds (QIFs) are considered as exempt individuals if they fulfill specific requirements. The Cabinet Decision No. 34 of 2025, exempts Qualifying Limited Partnerships and QIFs that were applicable since 1st January 2025.

4. Audited Financials: 

For transparency promotion, Ministerial Decision No. 84 requires specific taxpayers to have audited financial statements.

According to these amendments, the UAE is following global standards of tax, but providing incentives such as R&D tax credits for innovation promotion. For businesses, company tax in Dubai follows these federal reforms. However, for the qualifying income rules, free zone organizations need to remain cautious.

Special Considerations for Free Zone Businesses

Dubai for years has drawn in several companies with its tax breaks for free zones. These include the likes of DIFC and ADGM. If you want to know more about how to calculate corporate tax in UAE, we will provide you with further details.
Under the corporate tax law of the UAE, Qualifying Free Zone Persons (QFZPs) also earn a qualifying income with a tax rate of 0%. This comprises revenue earned from overseas entities or within the free zone. However, the non-qualifying income tax rate is 9% for transactions in the mainland UAE. 

To maintain QFZP status, businesses must meet “adequate substance” requirements, including having sufficient employees, assets, and operational control in the UAE. For instance, a tech startup in Dubai Internet City generating AED 2 million in revenue from foreign clients could pay 0% corporate tax in Dubai, provided it qualifies for QFZP. However, if it generates AED 500,000 from mainland UAE clients, that amount is taxed at 9%. 

Organizations operational in both the free zones and the mainland need to analyze their models of operations in order to boost the benefits of corporate tax in Dubai.

Compliance Tips for Businesses in 2025:

It is important to implement forward-thinking planning for managing UAE corporate tax. Some of the actionable tips for minimizing tax strategy and remaining compliant:

1. Hire a Tax Consultant: 

Organizations can register for UAE corporate tax compliance and streamline with DMTT regulations and transfer pricing.

2. Track FTA Releases: 

The FTA periodically issues circulars and guides. Keep their X account or website (@uaetax) bookmarked for receiving information on a real-time basis.

3. Leverage Incentives: 

Research R&D tax exemptions and incentives for free zone businesses or QIFs for reducing your tax burden.

4. Prepare for Audits: 

Preserve comprehensive records for corporate tax in Dubai, including transfer audited financials and pricing documentation, to avoid penalties.

5. File on Time: 

Corporate tax returns are due within nine months of your financial year-end. For a December 31, 2024, year-end, file by September 30, 2025. For Dubai businesses, the same rules and deadlines apply for corporate tax in Dubai, but with the city’s thriving free zone environment, added focus on QFZP compliance is essential.

Why the UAE’s Corporate Tax is a Game-Changer

Corporate tax in UAE is not only about the revenue. It is about making the UAE a transparent and globally aligned business hub. The 9% rate is one of the lowest in the world, and the new UAE tax, similar to the DMTT, balances fairness for big MNEs with maintaining incentives for free zone firms and startups. By adopting OECD standards, the UAE reinforces its status as a reliable investment and innovation jurisdiction.

For companies, preparation is the key. Knowing how to register for corporate tax in UAE maximizes your tax strategy and confidence to comply. You should stay ahead of the game by being aware, whether you are an international corporation or a Dubai-based freelancer. 

Conclusion:

The corporate tax in Dubai has brought in a new business era. This combines worldwide compliance with the UAE’s business-friendly spirit. From the mainland business (9%) to the free zone business (0%) and the new MNEs in UAE, the regime is transparent and competitive. 

By understanding how to register a company for corporate tax in the UAE and how to calculate corporate tax in the UAE, organizations can benefit from incentives and avoid penalties. For organizations within Dubai, corporate tax in Dubai brings special possibilities, especially for free zone companies.