What is UAE Corporate Tax?
UAE Corporate Tax is the federal tax on business profits introduced by Federal Decree-Law No. 47 of 2022, effective 1 June 2023. It applies a 0% rate on the first AED 375,000 of taxable income and 9% above. Qualifying Free Zone Persons can pay 0% on Qualifying Income. Multinational groups within Pillar Two scope face a 15% Domestic Minimum Top-up Tax from 1 January 2025.
Current Rate (Calendar year by default; companies may elect a non-calendar financial year)
0% up to AED 375,000; 9% above; 15% top-up under DMTT for groups with €750m+ revenue
Example
A mainland LLC with AED 1,000,000 taxable income pays 0% on the first AED 375,000 and 9% on the remaining AED 625,000 = AED 56,250 tax.
How UAE Corporate Tax works in United Arab Emirates
Corporate Tax was introduced to align the UAE with global tax standards (BEPS, Pillar Two) while maintaining competitiveness. The headline 9% remains one of the lowest in the world for non-zero jurisdictions.
Filing: Annual CT return due within 9 months of the financial year-end via the FTA's EmaraTax portal. Registration is mandatory once turnover exceeds AED 1m or you incorporate.
Qualifying Free Zone Persons (QFZP) can retain the 0% rate on Qualifying Income (mainly transactions with other Free Zone entities or non-UAE customers in qualifying activities) — but lose the 0% benefit if they fail any de minimis test.
Related terms
A Qualifying Free Zone Person is a Free Zone entity that meets specific tests under the UAE Corporate Tax law to retain the 0% rate on Qualifying Income. Tests include: substance (people and assets in the Free Zone), audited financial statements, transfer pricing compliance, de minimis non-qualifying revenue (≤5% or AED 5m).
UAE VAT is a 5% federal tax on most goods and services, introduced 1 January 2018. Mandatory registration at AED 375,000 annual turnover; voluntary at AED 187,500. Standard rate 5%; some supplies are zero-rated (exports, healthcare, education) or exempt (residential rent, financial services, local passenger transport).
The Tax Registration Number is the 15-digit identifier issued by the FTA to every VAT-registered business and Corporate Tax-registered entity. It must appear on tax invoices and FTA correspondence.
UAE Free Zones are special economic zones offering 100% foreign ownership, customs benefits, and (subject to QFZP rules) preferential 0% Corporate Tax on Qualifying Income. There are 40+ Free Zones across the seven emirates, each with their own Authority and licensing rules.
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