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Corporate Tax Services
Our Corporate Tax Services are designed to help businesses remain compliant while strategically enhancing efficiency through tailored tax solutions tailored tax solutions.
The United Arab Emirates has long been celebrated for its business-friendly environment. In a strategic move to align with international frameworks and diversify its economy, the UAE introduced a federal Corporate Tax (CT) effective for financial years commencing on or after June 1, 2023. This establishes a new fiscal era for businesses in the region.
This KVGC overview provides a clear breakdown of the UAE Corporate Tax, detailing its core principles, applicable rates, and the essential steps for compliance to ensure your business operations remain seamless.
Understanding the UAE Corporate Tax
Corporate Tax is a direct tax imposed on the net profit or taxable income of businesses operating within the UAE. It is a federal tax, meaning it is applied consistently across all seven emirates and is overseen by the Federal Tax Authority (FTA).
The law, enacted under Federal Decree-Law No. 47 of 2022, has a broad scope, impacting domestic companies as well as foreign entities that derive income from the UAE.
Applicable Corporate Tax Rates
- Taxable Income up to AED 375,000 → 0%
- Taxable Income exceeding AED 3 75,000 → 9%
- Businesses in natural resource extraction → Subject to emirate-level taxation
- Large multinational corporations (MNEs) meeting specific criteria → Subject to different rates under global minimum tax rules
Defining a Taxable Entity
- Resident Entities: T his includes all juridical persons established in the UAE (including Free Zones) and foreign entities that are effectively managed and controlled from within the UAE.
- Non-Resident Entities: Foreign entities that have a permanent establishment (PE) in the UAE or those that generate UAE-sourced income.
The Corporate Tax Registration Process
Entities identified as taxable persons are required to register for Corporate Tax with the FTA and obtain a unique Tax Registration Number (TRN). The requirement to register applies to:
- Onshore companies
- Free zone enterprises
- Foreign legal entity branches
- Individuals conducting licensed business activities above a specified threshold
Deadline: Registration must be completed by the specified deadline set by the FTA for each category of taxpayer.
How Corporate Tax is Calculated
- Compute total accounting income
- Apply adjustments for non-taxable income and disallowable expenditures
- Factor in tax loss relief and incentives
- Determine the final taxable income
- Apply the relevant CT rate (0% or 9%)
Maintaining comprehensive financial records compliant with International Financial Reporting Standards (IFRS) is mandatory for accurate calculation.
CT Treatment for Free Zone Businesses
- Qualifying Free Zone Persons can benefit from a 0% CT rate on approved 'Qualifying Income'.
- All Free Zone entities must fulfill their registration and annual filing obligations, irrespective of their eligibility for the 0% rate.
Categories Exempt from CT
- Governmental and governmental-controlled entities
- Businesses engaged in natural resource extraction
- Qualifying public benefit organizations
- Wholly-owned and operated UAE subsidiaries of exempt entities
- Qualifying investment funds and private pension plans
Small Business Relief Provisions
- Taxable persons can claim relief if their revenue does not exceed AED 3 million per relevant period.
- This relief allows eligible businesses to be treated as having no taxable income, effectively reducing their CT liability to zero.
- Specific conditions and exclusions apply, and businesses must elect to apply for this relief.
Salient Features of the UAE CT System
- Competitive statutory tax rate of 9% on income above the threshold
- No CT on qualifying intra-group transactions and reorganizations
- Tax grouping provisions available for certain entities
- Withholding tax is not applicable on domestic and cross-border payments
- Extensive double tax treaty network to avoid dual taxation
How KVGC Can Support Your Business
Adapting to the UAE's Corporate Tax landscape requires expert guidance. KVGC offers comprehensive tax advisory services, including CT registration, compliance filing, tax health checks, and strategic planning. Our experts ensure your business meets all regulatory obligations efficiently, allowing you to focus on growth and performance.
Frequently Asked Questions
Profits up to AED 375,000 are taxed at 0%, and profits above AED 375,000 are taxed at 9%. Specific sectors like foreign banks and oil & gas may face up to 20%, while MNEs with global revenues exceeding AED 3.15 billion have additional provisions.
All taxable entities, including mainland companies, free zone entities, branches of foreign companies, and qualifying sole establishments, must register with the FTA before filing their first return.
Free Zone entities can qualify for a 0% tax rate if they meet Qualifying Free Zone Person (QFZP) conditions, earn qualifying income, and avoid excluded activities. However, they must still register and file returns.
Exemptions include UAE government entities, extractive industries, public benefit entities, qualifying investment funds, and pension/social security funds.
SBR allows businesses with revenue up to AED 3 million (until Dec 31, 2026) to pay 0% corporate tax, provided they file an SBR notification and meet eligibility criteria.