- UAE Corporate Tax applies for financial years starting on or after 1 June 2023.
- The headline rates are 0% on taxable income up to AED 375,000 and 9% above that threshold.
- Registration is required for most businesses — including free zone entities — even if no tax is payable.
Background
The UAE introduced a federal Corporate Tax through Federal Decree-Law No. 47 of 2022, effective for financial years beginning on or after 1 June 2023. It sits alongside VAT, which has applied at a standard rate of 5% since 1 January 2018. The regime is administered by the Federal Tax Authority (FTA).
Who is covered
Corporate Tax applies to UAE companies and other juridical persons, foreign entities with a permanent establishment or nexus in the UAE, and natural persons conducting business above a specified turnover. Certain persons — such as government entities, qualifying public benefit entities and qualifying investment funds — may be exempt, subject to conditions.
Rates
| Taxable income | Rate |
|---|---|
| Up to AED 375,000 | 0% |
| Above AED 375,000 | 9% |
| Qualifying income of a Qualifying Free Zone Person | 0% (subject to conditions) |
Large multinational groups may be subject to additional top-up tax rules. Small businesses below a revenue threshold may be able to elect small business relief for eligible tax periods.
Free zones
Free zone entities are within the scope of Corporate Tax but can benefit from a 0% rate on qualifying income if they meet the conditions to be a Qualifying Free Zone Person — including maintaining adequate substance in the UAE, earning qualifying income and preparing audited financial statements. Non-qualifying income is taxed at 9%.
Compliance essentials
- Register for Corporate Tax with the FTA within the applicable deadline
- Maintain accounting records and financial statements in line with accepted accounting standards
- File the Corporate Tax return and pay any tax, generally within nine months of the end of the tax period
- Keep transfer pricing documentation for transactions with related parties and connected persons
Considerations for Indian groups
Indian businesses with UAE subsidiaries or branches should consider the interaction with Indian tax rules — including the India–UAE tax treaty, the place of effective management, transfer pricing on intra-group transactions, and FEMA requirements for overseas direct investment.
