When was Corporate Tax Introduced in UAE

UAE Corporate Tax applies from the start of the first financial year beginning on or after 1 June 2023. This rule comes from Federal Decree‑Law No. 47 of 2022 on the Taxation of Corporations and Businesses, issued on 9 December 2022, following the Ministry of Finance’s initial announcement in January 2022.

Timeline at a Glance

Date	Event
31 Jan 2022	Ministry of Finance announces plan to introduce corporate tax
9 Dec 2022	Federal Decree‑Law No. 47 of 2022 published in Official Gazette
1 Jun 2023	Law becomes effective for businesses whose financial year starts on or after this date

How the Start Date Works in Practice

The effective date is not the same for everyone as it depends on your financial year start:

• Calendar Year (Jan to Dec): First taxable period begins 1 Jan 2024; first return due in 2025.
• Mid‑Year (Jun to May): First taxable period begins 1 Jun 2023; among the earliest to be taxed.
• Other Mid‑Year (Oct to Sep): First taxable period begins 1 Oct

Takeaway: The trigger is the first full financial year starting on or after 1 June 2023, not a single fixed date for all.

Core Tax Rates and Thresholds

The introduction of corporate tax marked a major shift in the UAE's fiscal policy. The system operates on a tiered basis.

• A 0% tax rate applies to taxable income up to AED 375,000. This provision supports startups and small businesses.
• A 9% standard tax rate applies to any taxable income that exceeds AED 375,000.

For instance, if a company has a taxable income of AED 400,000, the first AED 375,000 is taxed at 0%. The remaining AED 25,000 is taxed at 9%. The total tax liability would be AED 2,250.

(AED 25,000×0.09)

Rules for Free Zone Companies

Companies operating in UAE's numerous Free Zones have a special status. A "Qualifying Free Zone Person" can benefit from a 0% Corporate Tax rate on their "Qualifying Income."

To get this benefit, they must meet specific conditions, such as maintaining adequate substance in the UAE and deriving qualifying income as defined by law.

Income from transactions with mainland UAE companies (except for certain strategic activities) is generally subject to the standard 9% rate.

Thus, this dual-rate system maintains the appeal of Free Zones while integrating them into the federal tax structure.

Final Words About Corporate Tax Introduction in UAE

The real impact on the ground is not just the date; it is the end of informal bookkeeping. Since the law took effect, the entire business focus has shifted to maintaining audit-proof records. Your financial year determined your start date, but your financial discipline will now determine your company's future here.

FAQs About the Introduction of Corporate Tax in UAE

What is the official start date for Corporate Tax in the UAE?

The UAE Corporate Tax law became effective for businesses starting their first financial year on or after June 1, 2023.

Does every company in the UAE start paying tax from June 1, 2023?

No. The start date depends on each company's financial year. For example, a business with a January-December financial year became subject to the tax from January 1, 2024.

When was the UAE Corporate Tax law actually announced and issued?

The government planned to introduce tax on January 31, 2022. The official law, Federal Decree-Law No. 47 of 2022, issued on December 9, 2022.

My company's financial year is from June 1 to May 31. When did we fall under the new tax law?

For a company with a financial year starting on June 1, the first taxable period began on June 1, 2023.