What is UAE Corporate Tax?

UAE Corporate Tax is a federal tax on the net income or profit of corporations and other businesses from their business activities in the UAE. It was introduced in 2023 and applies to financial years starting on or after June 1, 2023.

What is the UAE Corporate Tax rate?

The UAE Corporate Tax rate is 0% for taxable income up to AED 375,000 and 9% for taxable income above AED 375,000. This applies to most businesses, while certain businesses may be subject to different rates.

Who needs to pay Corporate Tax in the UAE?

Corporate Tax applies to UAE companies and other juridical persons that are incorporated or effectively managed and controlled in the UAE. It also applies to foreign companies that have a permanent establishment in the UAE or derive income from the UAE.

What expenses are allowed for Corporate Tax deduction?

Generally allowed expenses include costs incurred wholly and exclusively for the purposes of the business, such as employee salaries, rent, utilities, and other operational expenses. However, certain expenses like entertainment expenses (50% disallowed), depreciation, and interest expenses exceeding certain limits may be restricted.

When is the Corporate Tax return due?

Corporate Tax returns must be filed within 9 months from the end of the relevant tax period. For example, if your financial year ends on December 31, 2023, the return would be due by September 30, 2025.

What is UAE Corporate Tax?

UAE Corporate Tax represents a significant shift in the UAE's tax landscape: Overview Federal tax on business profits and net income Introduced in 2023 for financial years starting June 1, 2023 Applies to corporations and other business entities Administered by the Federal Tax Authority (FTA) Tax Structure 0% rate for taxable income up to AED 375,000 9% rate for taxable income above AED 375,000 Special rates for specific business types Different treatment for free zone businesses Scope of Application UAE resident companies Foreign companies with UAE permanent establishment Businesses deriving UAE-source income Partnerships and other juridical persons Key Features Comprehensive tax base with specific deductions Small business relief provisions Transfer pricing regulations Anti-avoidance measures

What is the UAE Corporate Tax rate?

The UAE Corporate Tax uses a progressive rate structure: Standard Tax Rates 0% Rate: Taxable income up to AED 375,000 9% Rate: Taxable income above AED 375,000 Small business relief threshold at AED 375,000 Special Rates Large multinational enterprises may have different rates Natural resource extraction businesses (higher rates) Free zone businesses (0% on qualifying income) Banks and financial institutions (standard 9%) Calculation Example Taxable income AED 500,000: First AED 375,000 at 0% = AED 0 Remaining AED 125,000 at 9% = AED 11,250 Total tax = AED 11,250 Rate Considerations Rates may be subject to future changes Different rates for different business activities International tax treaties may affect rates

Who needs to pay Corporate Tax in the UAE?

UAE Corporate Tax applies to a wide range of entities operating in the UAE: UAE Resident Entities Companies incorporated in the UAE Entities effectively managed and controlled in the UAE Partnerships and other juridical persons Permanent establishments of foreign entities Foreign Entities Foreign companies with permanent establishment in UAE Entities deriving UAE-source income Companies conducting business activities in the UAE Exemptions UAE government entities Government-controlled entities (subject to conditions) Investment funds (meeting specific criteria) Pension and social security funds Charitable and non-profit organizations Special Considerations Free zone businesses (0% rate on qualifying income) Natural persons (generally not subject to corporate tax) Extractive businesses (may have different rates)

What expenses are allowed for Corporate Tax deduction?

UAE Corporate Tax allows deduction of expenses incurred wholly and exclusively for business purposes: Fully Deductible Expenses Employee salaries and benefits Rent and utilities Professional services fees Insurance premiums Marketing and advertising costs Office supplies and equipment Training and development expenses Partially Restricted Expenses Entertainment expenses: 50% disallowed Interest expenses: Subject to thin capitalization rules Related party transactions: Must be at arm's length Non-Deductible Expenses Capital expenditure (subject to depreciation) Personal expenses of owners/directors Penalties and fines Charitable donations (except to approved entities) Provisions for doubtful debts (unless specific) Special Rules Depreciation calculated per UAE Corporate Tax law Transfer pricing documentation required for related parties Substance requirements for certain deductions

When is the Corporate Tax return due?

UAE Corporate Tax returns have specific filing deadlines that businesses must meet: Filing Deadlines Returns due within 9 months of tax period end First tax period: June 1, 2023 to business year-end Subsequent periods follow business financial year Examples Year-end Dec 31, 2023 → Return due Sep 30, 2024 Year-end Mar 31, 2024 → Return due Dec 31, 2024 Year-end Jun 30, 2024 → Return due Mar 31, 2025 Payment Requirements Tax payment due with return filing Quarterly advance payments may be required Late filing penalties apply Interest charged on late payments Registration Requirements Register within 3 months of tax period start Maintain proper accounting records File returns even if no tax due Notify FTA of any changes

How are free zone businesses treated for Corporate Tax?

Free zone businesses receive special treatment under UAE Corporate Tax law: Qualifying Free Zone Person Licensed and operating in a designated free zone Maintains adequate substance in the UAE Derives only qualifying income Meets all regulatory requirements Qualifying Income (0% Rate) Income from transactions with other free zone persons Income from transactions with foreign persons Income from certain UAE mainland transactions (limited) Investment income and capital gains Non-Qualifying Income (9% Rate) Income from UAE mainland business Income from UAE resident persons Real estate income in UAE mainland Domestic transportation services Substance Requirements Adequate number of qualified employees Adequate operating expenditure Physical presence in the free zone Core income-generating activities conducted in UAE

UAE Corporate Tax Calculator 2025

Calculate your Corporate Tax liability in the UAE for 2025

Profit/Loss incorporated by the company before expense

Business Turnover (AED)

Other Income

Less: Direct expenses

Less: Allowed Expenses

Salary

Travel

Accounting Fees

Other expenses allowed

Exempted Income earned

Add: Disallowed Expenses

Business Entertainment (50% only)

Depreciation

Repayment of Loan

Interest expenditure exceeding Article 29 and Article 30

Recoverable Taxes

Other expenses disallowed

Understanding UAE Corporate Tax in 2025

The UAE Corporate Tax regime, introduced in 2023, represents a significant shift in the country's tax landscape. This comprehensive guide will help you understand the key aspects of UAE Corporate Tax and how it affects your business.

Key Features of UAE Corporate Tax

Standard rate of 9% on taxable income above AED 375,000
0% rate for taxable income up to AED 375,000
Applicable to both UAE companies and foreign companies with a permanent establishment in the UAE
Comprehensive tax base with specific rules for allowed and disallowed expenses
Special provisions for free zone businesses and small business relief

Taxable Income Calculation

The taxable income is calculated by starting with the business's accounting profit and making specific adjustments for tax purposes. Key considerations include:

Business income from all sources
Capital gains and investment income
Foreign source income (subject to specific rules)
Adjustments for non-deductible expenses
Special provisions for related party transactions

Compliance Requirements

Businesses subject to UAE Corporate Tax must maintain proper records and file tax returns within specified deadlines. Key compliance requirements include:

Maintaining accounting records for at least 7 years
Filing annual tax returns within 9 months of the tax period end
Making advance tax payments if required
Preparing transfer pricing documentation for related party transactions
Complying with specific reporting requirements for free zone businesses

Streamline Your Accounting Firm with Heffl

Transform your accounting practice with our comprehensive CRM and project management solution. Designed specifically for accounting firms to enhance efficiency and client satisfaction.