Corporate tax is a direct tax imposed on the taxable income of businesses operating in the United Arab Emirates. The new corporate tax law came into effect on June 1, 2023, applying to mainland businesses based on their annual net profit.

Key Points About UAE Corporate Tax:

✔ Applicable to businesses registered in the UAE mainland.
✔ Tax is levied on net profits exceeding the exemption threshold.
✔ Businesses must register, maintain financial records, and file corporate tax returns with the Federal Tax Authority (FTA).

The United Arab Emirates has long been recognized as one of the most attractive business destinations for entrepreneurs and investors worldwide. Its strategic location, stable political environment, world-class infrastructure, and historically 0% corporate tax policy have made it a preferred hub for both large corporations and startups.

According to the International Monetary Fund (IMF), the UAE has the fifth-largest economy in the Middle East. While the country has traditionally relied on oil and natural resources, recent economic diversification efforts have reduced its dependence on oil, leading to the introduction of corporate tax laws to support sustainable growth.

With the new corporate tax regime in place, businesses must adapt to evolving financial regulations. Let Tasees & Esdar help you navigate the transition, optimize tax benefits, and ensure full compliance with UAE tax laws.

When the UAE government introduced corporate tax, many businesses initially confused it with Value Added Tax (VAT). However, corporate tax and VAT serve very different purposes.

Key Differences Between Corporate Tax & VAT

✔ VAT (Value Added Tax)

• A consumption tax applied to the sale of goods and services.
• Paid by customers at the time of purchase.
• Businesses collect VAT from sales and remit it to the government.

✔ Corporate Tax

• A direct tax on businesses’ taxable income.
• Paid by companies based on their net profits, not total revenue.
• Calculated annually, considering a business’s net earnings.

Corporate tax is a separate obligation from VAT. Understanding the differences is crucial for compliance and financial planning. Let Tasees & Esdar guide you through the corporate tax process and ensure your business meets all UAE tax regulations.

As per the UAE Ministry of Finance (MOF), all business entities operating in the UAE are subject to the new corporate tax regime starting June 1, 2023. However, the tax calculation period varies depending on a company’s financial year reporting:

✔ Businesses with a financial year starting July 1 → Tax calculation begins July 1, 2023.
✔ Businesses with a financial year starting January 1 → Tax calculation begins January 1, 2024.

Who Needs to Register for Corporate Tax?

• All commercial activities in the UAE (except for certain exempt entities).
• Mainland businesses and qualifying free zone entities.
• Foreign companies with a permanent establishment in the UAE.

The UAE Ministry of Finance (MOF) has announced that certain entities are exempt from corporate tax. If your business qualifies for one of these exemptions, you are not required to file a corporate tax report or pay taxes.

Who is Exempt from Corporate Tax?

✔ Government & Public Entities: Federal and regional offices, departments, and other public institutions.

✔ Natural Resource Businesses: Companies involved in oil, gas, and mineral extraction (already taxed at the Emirate level).

✔ Charitable & Social Organizations: Non-profits must register with MOF and obtain formal clearance to qualify.

✔ Pension & Social Benefit Funds: Public and regulated private funds dealing with retirement and social security.

✔ Real Estate & Investment Funds: Must apply for formal exemption approval from the MOF & FTA.

✔ Government-Owned Companies: UAE companies fully owned by the government and listed for exemption by ministerial decision.

Does your business qualify for corporate tax exemption? Let Tasees & Esdar assist you in assessing eligibility, obtaining exemptions, and ensuring full compliance with UAE tax regulations.

he UAE Ministry of Finance (MOF) has introduced a three-tier corporate tax system, ensuring businesses are taxed fairly based on their annual net profit.

Corporate Tax Rates in the UAE

✔ Businesses with net yearly profit up to AED 375,000 → 0% tax rate (Tax-free threshold).

✔ Businesses with net yearly profit above AED 375,000 → 9% tax rate (Standard corporate tax rate).

✔ Large multinational companies (under Pillar Two of the OECD Base Erosion and Profit Shifting (BEPS) project) → Subject to a different taxation policy.

• This applies to companies with global revenue exceeding EUR 750 million (AED 3.15 billion).

Stay compliant and optimize your tax strategy with expert guidance from Tasees & Esdar. Our team ensures your business meets UAE corporate tax requirements while maximizing tax benefits and exemptions.

The UAE has established over 60 economic free zones to attract global investors by offering zero tax, 100% ownership, and unrestricted profit repatriation. Thousands of businesses operate in free zones to leverage these advantages.

Corporate Tax Exception for Free Zone Businesses

✔ 0% Corporate Tax – Free zone businesses remain tax-free, provided they comply with government regulations.
✔ Mandatory Tax Filing – Although exempt from corporate tax, free zone businesses must still submit a proper tax return reflecting a 0% tax rate.
✔ Commitment to Business-Friendly Policies – The UAE government maintains its supportive approach to free zone enterprises while ensuring regulatory compliance.

Want to benefit from 0% corporate taxation? Let Tasees & Esdar assist you in setting up your free zone business, selecting the right location, and understanding licensing costs for a smooth and profitable entry into the UAE market.

Freelancers often wonder whether they are classified as individuals or business entities under the UAE corporate tax system. According to the UAE Ministry of Finance (MOF), individual income is not subject to corporate tax. However, freelancers who operate under a business license are treated as business entities and subject to taxation.

When Does Corporate Tax Apply to Freelancers?

✔ Freelancers Require a Business License – To legally operate in the UAE, freelancers must obtain a professional license, which brings them under the corporate tax regime.
✔ Income Threshold for Taxation – If a freelancer’s annual income exceeds AED 375,000, they will be subject to 9% corporate tax on taxable earnings.
✔ Flexible Work Environment – Dubai and the UAE remain freelancer-friendly, offering affordable coworking spaces and simplified tax regulations.

Need assistance with your freelancer license and tax compliance? Let Tasees & Esdar help you register, manage tax obligations, and optimize tax benefits for a hassle-free freelancing experience in the UAE.

In addition to general tax exemptions, the UAE Ministry of Finance (MOF) has introduced specific tax deductions and exemptions for businesses earning from dividends and capital gains.

When Can Businesses Qualify for Tax Exemptions?

✔ Dividend Earnings – Companies receiving dividends from subsidiaries may qualify for tax deductions.
✔ Capital Gains from Share Sales – Profits generated from selling shares of a subsidiary company can also be exempt from corporate tax.

Eligibility Criteria

✔ The UAE parent company must own at least 5% of the subsidiary operating abroad.
✔ Ownership requirements may vary by country. For example:

• In the UK, the UAE shareholder entity must own at least 10% of the UK company’s ordinary shares for 10 consecutive months to qualify for tax-deductible earnings.

Want to maximize your tax benefits? Let Tasees & Esdar help you understand corporate tax exemptions and deductions, ensuring compliance while optimizing your business tax strategy.

The UAE government provides tax relief options for companies with foreign branches, allowing businesses to choose between two taxation methods to minimize their corporate tax liability.

Available Tax Deduction Options:

✔ Foreign Tax Credit – If a UAE-based company has a branch in another country, it can claim a foreign tax credit for the amount of tax paid in that country.

✔ Profit-Based Tax Exemption – Companies may apply for a tax exemption on the profits earned by their foreign branches outside the UAE instead of claiming a foreign tax credit.

How to Choose the Right Option?

The choice depends on various factors such as:

• The tax rate in the foreign country where the branch operates.
• Potential benefits of an exemption vs. claiming tax credit for foreign-paid taxes.
• Long-term financial impact on overall corporate taxation.

Need help optimizing your tax strategy? Let Tasees & Esdar guide you through the best tax deduction approach for your foreign branch operations while ensuring full compliance with UAE regulations.

Businesses in the UAE can claim financing and interest costs as tax-deductible expenses. However, to ensure financial stability and reduce excessive debt reliance, the Federal Tax Authority (FTA) has introduced a 30% interest expense deduction cap.

Why Is There a Deduction Cap?

✔ Prevents excessive debt financing – Encourages businesses to maintain a balanced financial structure.
✔ Promotes equity financing – Reduces reliance on high-risk borrowing.
✔ Protects investors & stakeholders – Ensures companies operate with sustainable financial practices.

Additional Tax Deductions

✔ Loss Carryforward – Businesses can report losses as future tax-deductible expenses, allowing them to offset taxable income in later years.

💼 Maximize your tax deductions while staying compliant! Let Tasees & Esdar help you navigate financing cost deductions, tax planning, and corporate tax compliance for your business success.

The UAE Ministry of Finance (MOF) has authorized the Federal Tax Authority (FTA) to oversee corporate tax administration and compliance. All businesses subject to corporate tax must file their tax returns annually, along with their financial reports.

Key Aspects of Corporate Tax Administration:

✔ Annual Tax Filing Requirement – Businesses must submit corporate tax returns once per year.
✔ Financial Reporting Standards – Most medium and large businesses in the UAE follow International Financial Reporting Standards (IFRS).
✔ Flexible Tax Filing Methods – While IFRS is widely used, the FTA allows alternative reporting methods to simplify the tax filing process for businesses.

Ensure compliance with UAE corporate tax laws! Let Tasees & Esdar assist you in tax registration, annual filings, and financial reporting for a smooth and hassle-free tax process.

The Federal Tax Authority (FTA) requires all businesses to register for corporate tax filing. The process is designed to be simple and accessible online. While businesses are expected to register voluntarily, the FTA may enforce mandatory participation if needed.

Steps to File Corporate Tax and Financial Reports:

✔ Register with the FTA – Businesses must complete the corporate tax registration process online.
✔ Obtain a Tax Registration Number (TRN) – Similar to VAT registration, companies will receive a TRN for corporate tax purposes.
✔ Prepare Financial Reports – Businesses must compile their annual financial statements following IFRS or other accepted reporting standards.
✔ File Corporate Tax Returns – After the financial year ends, companies have nine months to submit their tax filing and financial reports.

Need help with corporate tax registration and filing? Let Tasees & Esdar guide you through the entire tax compliance process, ensuring accuracy and on-time submissions.

The introduction of corporate tax in the UAE is a significant step toward a more diversified and sustainable economy. It aims to enhance financial stability while maintaining the UAE’s position as a leading global business hub. Additionally, the new tax policy makes the UAE more attractive to foreign investors, ensuring a competitive yet business-friendly environment.

How UAE’s Corporate Tax Compares to Other Countries?

✔ Middle East & Gulf Region Corporate Tax Rates:

• Saudi Arabia: 20%
• Oman: 15%
• Qatar: 10%
• Bahrain: 46% (for select sectors like natural resources) / 0% for others
• Kuwait: 15%

✔ Corporate Tax Rates in Other Global Economies:

• Montenegro: 9%
• Gibraltar: 10%
• Ireland & Liechtenstein: 12.5%
• Hong Kong: 8.5% – 16.5%
• Singapore & San Marino: 17%

How Does the UAE’s Corporate Tax Compare?

The UAE’s 9% corporate tax rate remains lower than many competing regional and global economies, reinforcing its status as a business-friendly destination while aligning with international tax standards.

As the UAE implements corporate tax regulations, businesses must stay informed about the latest government announcements to ensure full compliance. Proper tax planning is essential to optimize tax liabilities and maintain financial efficiency.

How to Stay Compliant?

✔ Stay Updated – Monitor the latest UAE government tax policy changes.
✔ Seek Professional Guidance – Work with expert tax advisors to ensure your business is structured efficiently.
✔ Plan for Compliance – Prepare for corporate tax registration, reporting, and filing in advance to avoid penalties.