Corporate Tax in the UAE

Corporate Tax in the UAE: Everything You Need to Know

The United Arab Emirates (UAE) has established itself as a global business hub, known for its favourable tax environment. In 2023, the UAE introduced a federal Corporate Tax (CT) regime, marking a shift towards a more transparent and internationally aligned tax system. The implementation of corporate tax reflects the UAE’s commitment to complying with international standards, including the OECD’s Base Erosion and Profit Shifting (BEPS) framework. This guide provides in-depth information regarding the corporate tax framework in the UAE, including tax rates, registration processes, exemptions, and compliance requirements.

What is Corporate Tax in the UAE?

Corporate tax in the UAE is a tax on the profits earned by companies operating in the country. This tax regime applies to most businesses, including those based in Free Zones, subject to specific conditions and exemptions. While businesses in the UAE have historically benefited from a tax-free environment, the introduction of corporate tax aims to create a balanced and transparent fiscal system that aligns with global tax norms.

Corporate Tax Rates in the UAE

The UAE’s corporate tax rates are structured to maintain a competitive environment for businesses while ensuring compliance with global tax standards:

9% tax rate

Applied to taxable profits exceeding AED 375,000.

0% tax rate

Applied to taxable profits up to AED 375,000, offering an incentive for smaller businesses and startups to thrive.

Benefits of the UAE Corporate Tax System

International Compliance

Aligning with global tax standards, particularly the OECD’s BEPS framework, enhances the UAE’s reputation as a reliable jurisdiction for international business.

Economic Stability

The revenue generated from corporate tax contributes to the UAE’s economic diversification efforts and the long-term stability of the economy.

Business Growth

The progressive tax structure, with a 0% rate on profits up to AED 375,000, allows businesses to grow without a heavy tax burden in the initial stages of operation.

Transparency

A formalized tax regime provides clarity and fosters a transparent business environment, which is critical for companies seeking to establish themselves in the

Corporate Tax Exemptions

Certain categories of businesses and industries are exempt from corporate tax in the UAE. These exemptions include:

Free Zone Entities

Businesses established within designated Free Zones may benefit from tax exemptions for up to 50 years, provided they meet the criteria set by the respective Free Zone authority.

Government Entities

Public sector entities, government-owned organizations, and certain subsidiaries may be exempt from corporate tax.

Qualifying Investment Funds

Certain investment funds and portfolios may qualify for tax exemptions, subject to specific conditions.

Who Needs to Register for Corporate Tax in the UAE?

Corporate tax registration is mandatory for all businesses that meet the following criteria:

Why Choose the UAE for Your Business?

The UAE offers an unparalleled business environment, making it one of the top destinations for companies seeking international expansion. Key reasons to establish your business in the UAE include:

Favourable Tax Rates

With one of the lowest corporate tax rates globally and tax exemptions for qualifying entities, the UAE offers significant savings for businesses.

Strategic
Location

The UAE serves as a gateway to Middle Eastern, Asian, and African markets, positioning businesses for regional and international trade.

Robust Infrastructure

The UAE boasts world-class infrastructure, including modern airports, seaports, and telecommunications, facilitating seamless business operations.

Ease of Doing Business

Streamlined business registration processes, especially in Free Zones, enable companies to quickly establish operations in the UAE.

Contact with us

Get Started Today!

If you’re considering Corporate Tax or need professional assistance, don’t hesitate to reach out to our team. We offer a free initial consultation to understand your business needs and ensure a smooth VAT de-registration process.

Visit office

Office 289, Mezzanine floor, Hamsah A building, Karama, Dubai, UAE