Corporate Tax services UAE: Best Corporate Tax
Consultant and Advisor

An interface for the latest corporate tax updates in UAE

Ask a Tax Consultant
Corporate Tax UAE Calculator
Explore Corporate Tax Law
Corporate Tax Registration
Show more details

The UAE government has announced a new federal corporate tax of 9% on net profits excess of AED 375,000.Net profit up to 3,75,000 is tax-free. All annual taxable profits up to AED 375,000 are subject to a zero percent rate. Annual taxable profits exceeding AED 375,000 are subject to a 9% tax rate. The OECD Pillar 2 framework sets different tax rates for multinational corporations to prevent base erosion and profit shifting. If you have any queries regarding the impact of this new tax on your business, our corporate tax UAE team is here to assist you. We offer a range of corporate tax services, including Corporate tax registration, corporate tax assessment, corporate tax audit, corporate tax return filing, and transfer pricing. We can help you optimize your tax position, reduce your tax liabilities, and avoid any penalties or disputes. To find out more about our corporate tax services in the UAE, Contact us today.

What is the corporate tax rate in the UAE?

corporate tax in UAE, annual taxable profits up to AED 375,000 qualify for a 0% corporate tax rate, while income above this amount is subject to a 9% tax, effective for financial years starting on or after 1 June 2023. In contrast, taxable income below this threshold will be subject to a 0% Corporate Tax rate. It's worth noting that large multinationals companies falling under Pillar Two may potentially face a higher tax rate of 15%. The table below provides a concise summary of corporate tax rates in the UAE:

TierTaxable IncomeCorporate Tax Rate
1.Up to AED 375,0000%
2.Above AED 375,0009%
3.Large multinationals Companies with Total annual revenue over EUR 750 million (around AED 3.15 billion) under Pillar Two of the Organisation for Economic Cooperation and Development (OECD) base erosion and profit shifting (BEPS) project.15%
Read More

Tax Guidance from Expert


News Update

Get the latest corporate tax news updates

Explore Corporate Tax Laws

Explore corporate tax latest laws and articles

Q & A

Ask any question & get advice from Tax Consultant

Calculator

Explore corporate tax calculator

Corporate Tax UAE FAQs

What is the deadline for registering for business corporate tax in UAE ?

As the initial UAE corporate tax registration deadline of 31 May 2024 rapidly approaches, it is essential for companies and other business entities to confirm their registration deadlines for becoming a taxable person. According to the Federal Tax Authority (FTA), taxable entities are allotted a registration period extending until their first tax filing deadline. For example, if a financial year ends on May 31st, entities have 26 months to register, allowing them to complete the registration process by February 28th, 2025. Conversely, if the financial year concludes on December 31st, there is a 33-month registration window, permitting registration up until September 30th, 2025.

What is the penalty for not registering Corporate Tax in UAE ?

No.Description of ViolationAdministrative Penalty Amount in AED
1.Failure to keep required records and information under the Tax Procedures Law or Corporate Tax Law.1. 10,000 per violation. 2. 20,000 for repeated violation within 24 months.
2.Failure to submit tax-related data, records, and documents in Arabic as requested by the Authority.5,000
3.Failure to submit deregistration application within the specified timeframe.1,000 for late submission, and 1,000 monthly up to a maximum of 10,000.
4.Failure to inform the Authority of information amendments for the Tax record.One of penalties shall apply:
1. 1,000 per violation.
2. 5,000 for repeated violation within 24 months.
1.Failure to keep required records and information under the Tax Procedures Law or Corporate Tax Law.1. 10,000 per violation. 2. 20,000 for repeated violation within 24 months.
5.Failure of the Legal Representative to provide timely notification of appointment.1,000
6.Failure of the Legal Representative to file a Tax Return within specified timeframes.1. 500 per month for the first twelve months.
2. 1,000 per month from the thirteenth month onwards.
The penalty starts the day after the Tax Return deadline and continues monthly thereafter.
7.Failure of the Registrant to submit a Tax Return 1. 500 For each full or partial month within the specified timeframe.1. 500 For each full or partial month within the specified timeframe. throughout the first 12 months,
2. 1,000 for each month or part of a month
after the thirteenth month. The penalty starts the day after the Tax Return deadline and continues monthly thereafter.
8.Failure to settle the Payable Tax.A monthly penalty of 14% per annum, for each month or part thereof, on the unsettled Payable Tax amount from the day following the due date of payment and on the same date monthly thereafter.
1. The due date of payment is 20 Business Days from the date of submission in case of voluntary Disclosure.
2. The due date of payment is 20 Business Days from the date of receipt in case of Tax Assessment.
9..Submission of an incorrect Tax Return.500 unless the Person corrects the Tax Return before the deadline.
10.Submission of a Voluntary Disclosure for errors in the Tax Return, Tax Assessment, or Tax refund application.Monthly penalty of 1% on the Tax Difference until Voluntary Disclosure is submitted.
11.Failure to submit a Voluntary Disclosure before being notified of a Tax Audit.1. Fixed penalty of 15% on the Tax Difference.
2. Monthly penalty of 1% on the Tax Difference until Voluntary Disclosure is submitted or Tax Assessment issuance.
12.Failure to offer facilitation to the Tax Auditor in violation of Article (20) of the Tax Procedures Law.20,000
13.Failure to submit or late submission of a Declaration as required by the Corporate Tax Law.1. 500 per month for the first twelve months.
2. 1,000 per month from the thirteenth month onwards.

What is the due date for filing corporate tax return in UAE ?

Financial Year EndApplicability of Corporate Tax LawFirst Tax PeriodReturn Filing Due Date
May 31stJune 1, 2023June 20, 2023 to May 31, 2024February 28, 2025
December 31stJanuary 1, 2024January 1, 2024 to December 31, 2025September 30, 2026

Additionally:
Businesses with accounting period from June 1st to May 31st have 26 months for registration.

Businesses with accounting period from January 1st to December 31st have 33 months for registration.

What are Corporate tax filing, documentation and administrative requirements ?

AspectDetails
Corporate Tax RegistrationBusinesses must register with the FTA and obtain a Tax Registration Number within the specified time frame. FTA can register qualifying entities if voluntary registration is not done.
Record-Keeping RequirementsBusinesses must maintain financial and other records explaining corporate tax return details and submit them to the FTA. Exempted entities must maintain records to prove their exempted status.
Audited Financial StatementsThe need for financial statement audits is determined by company laws. Free zone businesses must audit statements to avail the 0% corporate tax rate. Consult tax consultants for details.
Corporate Tax DeregistrationA person with a Tax Registration Number must submit a Tax Deregistration application to the Authority when their business ceases, following specified procedures and timelines.
Deregistration is only allowed if all Corporate Tax, Penalties, and Tax Returns have been paid and filed. If approved, the deregistration is effective from the cessation date.
Non-compliance may lead to deregistration based on specific criteria determined by the Authority.
Corporate Tax Return FilingBusinesses file one corporate tax return per tax period and related supporting schedules within nine months after the end of the relevant Tax Period. No provisional tax return or advance payments are necessary.
Corporate Tax Payments RefundsThe Corporate Tax Payable under the Corporate Tax Law must be settled within nine months from the end of the relevant Tax Period or as decided by relevant authority. Refunds are applicable in cases where Taxable Persons have overpaid and are owed money by the Authority. Consult tax consultants for assistance.
Corporate Tax AssessmentsUAE corporate tax operates on a self-assessment principle. Businesses are responsible for accurate and compliant tax returns. FTA reviews and issues assessments within prescribed timeframes. Taxpayers can challenge amended assessments following procedures in the Tax Procedures Law. Consult tax agents for assistance.

Is corporate tax uae applicable on Free Zones Company also ?

Corporate Tax RateApplies toDefinition
0%Qualifying IncomeA Free Zone Person who meets certain conditions and is taxed at a 0% UAE corporate tax rate on their qualifying income.
9%Taxable Income that does not qualify as Qualifying IncomeA Free Zone Person who does not meet the conditions for Qualifying Free Zone Person.

Qualifying Income includes the following categories of income, provided that such income is not attributable to a Domestic Permanent Establishment or a Foreign Permanent Establishment in the UAE:

1. Income derived from transactions with other Free Zone Persons, except for income derived from Excluded Activities.
2. Income derived from transactions with a Non-Free Zone Person only in respect of Qualifying Activities that are not Excluded Activities.
3. Any other income provided that the Qualifying Free Zone Person satisfies De Minimis Requirement threshold.

To be considered a Qualifying Free Zone Person, the Free Zone Person must meet all of the following conditions:

1. Maintains Adequate Substance in the UAE
2. Derives Qualifying Income
3. Has not specifically elected to be subject to Corporate Tax under the Corporate Tax Law
4. Complies with Transfer Pricing regulations
5. Maintains audited financial statements as per IFRS / IFRS for SMEs.

Is UAE Corporate Tax is applicable on SMEs also ?

Yes, the UAE Corporate Tax applies to small businesses operating in the UAE. However, the UAE government has introduced a Small Business Relief scheme designed to facilitate a smooth transition to the new tax framework for SMEs. As outlined in the Small Business Relief Guide published by the UAE Ministry of Finance, a taxable UAE resident entity can claim Small

Business Relief if its revenue does not surpass the AED 3,000,000 threshold for both the relevant and preceding tax periods within each tax year.

It's important to note that Small Business Relief is not applicable to:
businesses qualifying as Free Zone Persons under the Corporate Tax Law or
to members of Multinational Enterprises Groups (MNE Groups) with consolidated group revenues exceeding AED 3.15 billion, as defined in Cabinet Decision No. 44 of 2020.

Consequently, small businesses or SMEs in the UAE are eligible for Small Business Relief if their revenue remains below the AED 3,000,000 threshold for each relevant tax year.

What is Transfer Pricing rules in UAE ?

Transfer pricing constitutes a set of rules and regulations governing the pricing of goods and services exchanged between related entities, including companies within the same multinational enterprise group. Its purpose is to prevent pricing anipulation influenced by their relationships.

In the UAE, transfer pricing rules have a substantial impact on businesses. Recently introduced by the UAE Ministry of Finance, these regulations mandate companies to conduct transactions with related parties at arm's length. This means the prices for goods and services must align with those in transactions between unrelated parties.

As per Ministerial Decision No (97) of 2023 on the Requirements for Maintaining Transfer Pricing Documentation, companies are obligated to maintain a master file and a local file under specific conditions:

If their revenues in a relevant tax period are at least AED 200 million.
If they are part of a multinational group with a total consolidated group revenue of at least AED 3.15 billion in the relevant tax period.

These documentation requirements serve to enable taxpayers to demonstrate the arm's length nature of their transactions with related parties and connected individuals. Standardized files are utilized to ensure consistency and accuracy in this process.

What is Country by Country Reporting in UAE ?

The UAE has implemented Country-by-Country Reporting (CbCR) rules in line with the guidance issued by the Organization for Economic Cooperation and Development (OECD) on CbCR.
The CbCR rules apply to:

The Ultimate Parent Entity (UPE) of a Multinational Group of Entities (MNE) which is a ‘tax resident’ in the UAE and
If consolidated revenues equal to or exceeding AED3.15 billion (approximately USD858 million) in the preceding financial year.

The following table summarizes the CbCR requirements:

CriteriaRequirement
ApplicabilityUAE-headquartered MNE Groups with ‘financial reporting years’ starting on or after January 1st 2019.
Filing deadline for CbCR SubmissionWithin 12 months from the end of the financial reporting year. For ex. The MNE Group, with a financial year from January 1, 2023, to December 31, 2023, must file the CbC Report by December 31, 2024.
Reporting formatCountry-by-Country Report (CbC Report)
Reporting thresholdConsolidated revenues equal to or exceeding AED 3.15 billion in the preceding financial year.
Penalty for Non-ComplianceIndividuals failing to file the CbCR on time may face an administrative fine of up to AED 1,000,000. Additionally, there is an additional fine of AED 10,000 for each day of delay, with a maximum cumulative fine of AED 250,000.

Is Corporate Tax is applicable on freelancers in UAE ?

Under the corporate tax laws in the UAE, any taxable income surpassing AED 375,000 is subject to Corporate Tax. This taxation framework also encompasses freelancers and independent contractors in the UAE who are self-employed, provided their income exceeds the AED 375,000 threshold.

The UAE's Corporate Tax system is extended to freelancers and other independent contractors who operate autonomously once their income surpasses the AED 375,000 limit. According to the law, these independent contractors must possess a valid license or permit.

Here are some key scenarios in which corporate tax applies to freelancers:

Individuals possessing the recently introduced freelance permit, accessible under the updated labor law for self-sponsored expatriates, are exempt from corporate tax on their income.
In the case of independent contractors holding business licenses within free zones, if they engage in work for other companies, the sponsoring entity is obligated to pay the corporate tax.
For freelancers employed by a company, their income from salaries remains untaxed at the individual level. Instead, it is the responsibility of the company issuing the visa to pay income tax on its net profit.

What is small business relief under UAE corporate tax ?

Under the corporate tax laws in the UAE, any taxable income surpassing AED 375,000 is subject to Corporate Tax. This taxation framework also encompasses freelancers and independent contractors in the UAE who are self-employed, provided their income exceeds the AED 375,000 threshold.

The UAE's Corporate Tax system is extended to freelancers and other independent contractors who operate autonomously once their income surpasses the AED 375,000 limit. According to the law, these independent contractors must possess a valid license or permit.

Here are some key scenarios in which corporate tax applies to freelancers:

Individuals possessing the recently introduced freelance permit, accessible under the updated labor law for self-sponsored expatriates, are exempt from corporate tax on their income.
In the case of independent contractors holding business licenses within free zones, if they engage in work for other companies, the sponsoring entity is obligated to pay the corporate tax.
For freelancers employed by a company, their income from salaries remains untaxed at the individual level. Instead, it is the responsibility of the company issuing the visa to pay income tax on its net profit.

How do you calculate corporate tax in UAE ?

In the UAE, corporate tax is computed at a rate of 9% based on the net profit indicated in the company's financial statements. This calculation is done after subtracting all eligible deductions and excluding income that is exempt from taxation. Foreign taxes paid can also be deducted from the profit stated in the financial statement. The taxable income is determined as the net profit remaining after all deductions. Corporate tax at 9% is applicable only if the taxable value exceeds AED 375,000. To calculate your corporate tax, use online corporate tax calculator. It will estimate your corporate tax liability.

Who is exempted from Corporate Tax in the UAE ?

CategoryType of Exempt PersonsConditions for Exemption
Automatically Exempt PersonsGovernment EntitiesNone
Exempt upon notification and conditionsExtractive Businesses and Non-Extractive Natural Resource BusinessesNotify Ministry of Finance and meet relevant conditions
Exempt upon Cabinet Decision and conditionsGovernment Controlled Entities and Qualifying Public Benefit EntitiesListed in Cabinet Decision and meet relevant conditions
Exempt upon application and approvalPublic and private pension or social security fundsApply to and get approval from the FTA
Qualifying Investment FundsApply to and get approval from the FTA
Juridical persons incorporated in the UAE owned and controlled by specific Exempt PersonsApply to and get approval from the FTA
Any other Person as determined by Cabinet DecisionDecision issued by the Cabinet at the suggestion of the Minister

If an individual or entity classified as an Exempt Person no longer fulfills the necessary criteria for exemption, they typically lose their exempt status starting from the Tax Period in which the criteria are no longer met. Consequently, they become liable for Corporate Tax on all their Taxable Income.

However, in specific temporary and unforeseen situations, the individual or entity has the option to apply to the FTA. They can seek permission to maintain their Exempt Person status even if they temporarily fail to meet the exemption criteria.

Our Clients

Customer Testimonials

MAF / Farhat Office & Co has been terrific in making sure that everything was done properly, smoothly and timely and I received my trading license and visa well ahead More About Fabrizio Balestrini

farahat & co clients

Fabrizio Balestrini

MD | Mistral Consulting DWC LLC.

I found MAF / Farhat Office & Co tremendously helpful, the staff is courteous, punctual and intelligent, and I got my company up and running, a process More About Husam Alsaleh

farahat & co clients

Husam Alsaleh

Co-Founder | Hamilton International.

Farhat Office & Co team are always professional dealing with the client, that makes them relax and makes them SMILE. And they always provide quality services More About GAMELOFT

farahat & co clients

GAMELOFT

I want to express my heartfelt thanks to MAF / Farhat Office & Co, for your hard work in this Matter. As usual, you carried out the involved process in a professional More About Sanam-Saeed

farahat & co clients

Sanam Saeed

Celebrity

UAE New Tax Update

whatsapp

© 2024 Corporate Tax UAE, All Rights Reserved.