Corporate Tax (FAQ)

Have Questions About Corporate Tax in the United Arab Emirates? Get Your Answers Here.

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FAQ

Corporate Tax is a direct tax levied on the net income or profit of corporations and businesses. It may also be referred to as “Corporate Income Tax” or “Business Profits Tax” in certain areas.
UAE Corporate Tax is applicable to: Juridical persons incorporated in the UAE. Foreign juridical persons that are managed and controlled within the UAE. Foreign juridical persons operating through a Permanent Establishment or with a taxable presence in the UAE. Natural persons conducting business activities in the UAE.
Examine the Corporate Tax Law and relevant information from the Ministry of Finance and the Federal Tax Authority. Identify whether and when your business will be liable for Corporate Tax. Familiarize yourself with your business’s registration, filing, and record-keeping obligations as per the law. Stay updated on any changes and guidance provided.
The Tax Period refers to the financial year designated for preparing financial statements, usually aligning with the Gregorian calendar year unless another 12-month period is chosen.
For natural and juridical persons: 0% on taxable income up to AED 375,000 9% on taxable income exceeding AED 375,000 For qualifying free zone entities: 0% on qualifying income 9% on non-qualifying income
Yes, the 0% rate applies to the income of each taxable person up to AED 375,000, regardless of how many businesses they operate. However, for tax groups, the threshold is shared among the members. Attempts to artificially divide businesses to exploit the threshold multiple times will result in penalties.
Yes, natural persons will be liable for UAE Corporate Tax if their annual turnover exceeds AED 1 million from a ‘Business’ or ‘Business Activity’ in the UAE.
A natural person is liable for UAE Corporate Tax if they engage in any Business or Business Activity that generates an annual turnover exceeding AED 1 million. This does not include income from: Employment, Personal investments, Real estate investments.
No, personal investment income and real estate investment income earned in an individual capacity are not subject to UAE Corporate Tax. Personal investment income includes earnings from investments made personally, such as interest or dividends, and does not include income from commercial businesses or activities that require a UAE license. Real estate investment income comes from activities related to land or property in the UAE, as long as these activities do not require a UAE license.
Yes, businesses with revenues of AED 3 million or less can opt for ‘Small Business Relief’ for tax periods ending on or before December 31, 2026. This allows them to be regarded as having no taxable income. An election must be made in the Corporate Tax Return for the applicable tax period.
Small Business Relief enables qualifying businesses to bypass the need for calculating and paying Corporate Tax, as well as the associated reporting obligations. Businesses with revenues of AED 3 million or less in the current and previous tax periods can choose to be regarded as having no taxable income. However, if their revenue exceeds AED 3 million in any tax period, they will no longer qualify for this relief.
The Free Zone Corporate Tax regime offers a 0% Corporate Tax rate on income derived from qualifying activities and transactions for Free Zone companies and branches that meet certain criteria.
They are taxed at 0% on income from Qualifying Activities and transactions with other Free Zone Persons, unless the income comes from Excluded Activities. Income generated from a Permanent Establishment in mainland UAE or abroad is subject to a 9% tax, with provisions in place to prevent double taxation.
The benefits will cease at the conclusion of the tax incentive period outlined in the Free Zone legislation, unless extended by a Cabinet Decision.
Only irrecoverable input VAT may be deductible. Recoverable VAT amounts are not deductible

Yes, tax losses can be applied against taxable income in future periods, up to 75% of the taxable income for each of those periods. Any unused tax losses can be carried forward indefinitely.

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