Company tax in the UAE usually means UAE Corporate Tax, a federal direct tax on the taxable income of companies and other businesses. It applies to financial years beginning on or after 1 June 2023. In general, taxable income up to AED 375,000 is taxed at 0%, while taxable income above AED 375,000 is taxed at 9%. BCL Globiz is an FTA-registered UAE tax consultancy backed by 35+ years of group experience and 300+ experts globally. Its Corporate Tax Advisory Services help mainland, Free Zone, startup, SME, group, and international businesses meet their UAE obligations.
The tax is not simply applied to a company’s revenue. A business normally begins with its accounting profit or loss and then makes the adjustments required under the UAE Corporate Tax Law to calculate taxable income. The Federal Tax Authority, or FTA, administers registration, returns, payments, clarifications, and compliance through the EmaraTax platform.
How Company Tax Works in the UAE?
Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses established the UAE Corporate Tax regime. The law generally applies annually on a self-assessment basis, which means each taxable person must determine its own taxable income, submit an accurate return, and pay any tax due.
Standard UAE Corporate Tax Rates
For most taxable businesses, the standard rates are:
- 0% on the portion of taxable income up to AED 375,000.
- 9% on the portion of taxable income above AED 375,000.
Example: If a mainland company has taxable income of AED 600,000, the first AED 375,000 is taxed at 0%. The remaining AED 225,000 is taxed at 9%, producing a Corporate Tax liability of AED 20,250 before any applicable credits or other adjustments.
Very large multinational groups may also need to consider the UAE Domestic Minimum Top-up Tax rules. Those rules are separate from the standard calculation and require specialist analysis.
Who Is Subject to Company Tax in the UAE?
The scope is broader than mainland limited liability companies. UAE Corporate Tax can apply to:
- Companies and other juridical persons incorporated or otherwise established in the UAE.
- Foreign juridical persons that are effectively managed and controlled in the UAE.
- Non-resident juridical persons with a permanent establishment or other taxable nexus in the UAE.
- Free Zone companies, even when they expect to benefit from a 0% rate on qualifying income.
- Natural persons conducting a business or business activity in the UAE when annual turnover exceeds AED 1 million, subject to the applicable exclusions and rules.
A branch is usually not a separate legal person from its UAE head office. Its results are generally included in the tax position and return of the UAE parent or head office.
Who May Be Exempt?
The law provides exemptions for specified persons, subject to their relevant conditions. These may include government entities, certain government-controlled entities, qualifying public benefit entities, qualifying investment funds, public or private pension and social security funds, and certain natural resource businesses. Some exemptions are automatic, while others require notification, listing, or FTA approval. An exemption should never be assumed from the entity’s name or activity alone.
Does a Free Zone Company Pay Corporate Tax?
A Free Zone company is within the scope of UAE Corporate Tax and normally must register, maintain records, and file a return. A company that satisfies all conditions for a Qualifying Free Zone Person may apply a 0% rate to qualifying income. Income that is not qualifying is generally taxed at 9%.
Qualifying Free Zone Person status depends on requirements such as maintaining adequate substance in the UAE, deriving qualifying income, complying with transfer pricing rules, preparing audited financial statements where required, and remaining within the de minimis limit for non-qualifying revenue. Free Zone status by itself does not guarantee a 0% tax outcome.
How Is UAE Taxable Income Calculated?
The calculation generally starts with accounting income shown in financial statements prepared under accepted accounting standards. Tax adjustments are then made under the Corporate Tax Law.
Typical Adjustments
A company may need to adjust for exempt income, unrealised gains or losses where an election applies, tax losses, reliefs, related-party pricing, and expenditure that is not fully deductible. Common areas requiring review include entertainment expenses, interest expenditure, fines and penalties, donations, owner or connected-person payments, and expenses that have both business and personal elements.
A cost is not automatically deductible because it appears in the accounts. It must satisfy the purpose and documentation requirements in the law. Related-party and connected-person transactions must also be consistent with the arm’s length principle.
What Is Small Business Relief?
An eligible UAE resident person may elect for Small Business Relief for a relevant tax period if its revenue is no more than AED 3 million in that period and in all previous tax periods ending on or before 31 December 2026. The relief treats the eligible person as having no taxable income for that period.
Qualifying Free Zone Persons and members of certain large multinational groups cannot elect for this relief. Eligibility does not remove the filing obligation. The election must be made in the Corporate Tax return, and the business must retain records supporting its revenue and eligibility.
UAE Corporate Tax Registration, Filing, and Payment
Registration
Taxable persons must register with the FTA within the deadline that applies to their legal form, incorporation date, residence, or taxable presence. For example, a UAE juridical person incorporated on or after 1 March 2024 generally has three months from incorporation, establishment, or recognition to apply. Other categories have different statutory timelines, so a company should check the FTA decision applicable to its circumstances.
Return and Payment Deadline
A Corporate Tax return and any tax due are generally required within nine months after the end of the relevant tax period. For a company with a financial year ending on 31 December 2025, the ordinary filing and payment deadline is 30 September 2026. The FTA has also announced specific initiatives and conditions concerning late registration penalties, but these should not be treated as an extension of the normal compliance timetable.
Records
Businesses should maintain financial statements, ledgers, invoices, contracts, bank records, related-party support, tax calculations, elections, and evidence for deductions or exemptions. Corporate Tax records generally need to be retained for seven years after the end of the relevant tax period. Accurate bookkeeping throughout the year is much safer than rebuilding the tax position close to the deadline.
Common Company Tax Mistakes in the UAE
- Assuming that a 0% tax result means registration and filing are not required.
- Treating all Free Zone income as qualifying income without testing the statutory conditions.
- Using revenue instead of taxable profit when calculating the standard Corporate Tax bands.
- Claiming expenses without invoices, contracts, business purpose, or payment evidence.
- Ignoring transfer pricing because transactions are between UAE entities or family-owned companies.
- Missing elections or applications that must be made within a return or prescribed timeframe.
- Waiting until the filing deadline to reconcile accounts and identify tax adjustments.
How BCL Globiz Helps UAE Companies?
BCL Globiz supports companies from initial tax assessment through ongoing compliance. Its Corporate Tax work can include registration, accounting review, tax impact assessment, taxable income computation, relief and election analysis, Free Zone qualification review, transfer pricing coordination, return preparation, filing support, and assistance with FTA queries.
This joined-up approach is useful because the Corporate Tax return depends on reliable accounting data and correctly documented transactions. With an FTA-registered team, 35+ years of group experience, 300+ experts globally, and experience supporting more than 1,000 UAE businesses, BCL Globiz can help convert the law into a practical compliance process.
Frequently Asked Questions
Is company tax the same as VAT in the UAE?
No. Corporate Tax is a direct tax on taxable income. VAT is an indirect tax charged on taxable supplies and imports. A business can have obligations under both regimes, and each has separate registration, calculation, filing, and record-keeping rules.
Does every UAE company pay 9% tax?
No. The 9% standard rate applies only to taxable income above AED 375,000 for most businesses. A company may have no tax payable because of the 0% band, a valid relief, an exemption, tax losses, or qualifying Free Zone treatment. It may still need to register and file.
Can a company claim all business expenses?
No. Expenses generally need to be incurred wholly and exclusively for the business and must not be capital, personal, or specifically restricted by law. Certain categories are only partly deductible or are not deductible at all.
When must a UAE company file its tax return?
The general deadline is nine months from the end of the tax period. A different rule or administrative decision may apply in limited circumstances, so businesses should confirm the deadline shown in their EmaraTax profile and the current FTA guidance.
What Should a UAE Company Do Next?
A company should first confirm whether it is taxable, exempt, or potentially eligible for a relief. It should then verify its registration status and deadline, close accurate accounts, classify income and expenses, review related-party transactions, calculate taxable income, document every election, and file and pay on time.
For an end-to-end review, speak with BCL Globiz Corporate Tax specialists before the filing deadline. Early review gives the business time to correct bookkeeping gaps, test Free Zone or relief conditions, and prepare a defensible return.
Reach out to us at info@bcl.ae
