UAE Corporate Tax

Providing highest level of information and professional services to its clients * Audit & Assurance Services * Book keeping and Accounting services * Value Added Tax (VAT) * Tax Agent

The Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses (hereinafter referred to as the “Corporate Tax Law”) was issued by the United Arab Emirates (“UAE”) on 09 December 2022.

The Corporate Tax Law provides the legislative basis for the introduction and implementation of a Federal Corporate Tax (“Corporate Tax”) in the UAE and is effective for financial years starting on or after 1 June 2023.

Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses

What is Corporate Tax?

Corporate tax is a form of direct tax levied on the net income or profit of corporations and other entities from their business.

Corporate Tax will apply to all UAE companies and other juridical persons that are incorporated or effectively managed and controlled in the UAE; Natural persons (individuals) who conduct a Business or Business Activity in the UAE as specified in a Cabinet Decision to be issued in due course; and Non-resident juridical persons (foreign legal entities) that have a Permanent Establishment in the UAE (which is explained under [Section 8]).

Juridical persons established in a UAE Free Zone are also within the scope of Corporate Tax as “Taxable Persons” and will need to comply with the requirements set out in the Corporate Tax Law. However, a Free Zone Person that meets the conditions to be considered a Qualifying Free Zone Person can benefit from a Corporate Tax rate of 0% on their Qualifying Income (the conditions are included in [Section 14]).

Corporate Tax will apply equally to all categories of profits and other (net) income reported in the financial statements prepared in accordance with internationally acceptable accounting standards.

Objectives of Corporate Tax

Cementing the UAE’s position as a world- leading hub for business and investment.

Meeting international standards for tax transparency and preventing harmful tax practices.

Accelerating the UAE’s development and transformation to achieve its strategic objectives.

Permanent Establishment

The concept of Permanent Establishment is an important principle of international tax law used in corporate tax regimes across the world. The main purpose of the Permanent Establishment concept in the UAE Corporate Tax Law is to determine if and when a foreign person has established sufficient presence in the UAE to warrant the business profits of that foreign person to be subject to Corporate Tax.

The definition of Permanent Establishment in the Corporate Tax Law has been designed on the basis of the definition provided in Article 5 of the OECD Model Tax Convention on Income and Capital and the position adopted by the UAE under the Multilateral Instrument to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. This allows foreign persons to use the relevant Commentary of Article 5 of the OECD Model Tax Convention when assessing whether they have a Permanent Establishment or not in the UAE. This assessment should consider the provisions of any bilateral tax agreement between the country of residence of the Non-Resident Person and the UAE.

Effective Date

The Corporate Tax regime will become effective for financial years starting on or after 1 June 2023.


  • A business that has a financial year starting on 1 July 2023 and ending on 30 June 2024 will become subject to Corporate Tax from 1 July 2023 (which is the beginning of the first financial year that starts on or after 1 June 2023.
  • A business that has a (calendar year) financial year starting on 1 January 2023 and ending on 31 December 2023 will become subject to Corporate Tax from 1 January 2024 (which is the beginning of the first financial year that starts on or after 1 June 2023).


  • All Taxable Persons (including Free Zone Persons) will be required to register for Corporate Tax and obtain a Corporate Tax Registration Number. The Federal Tax Authority may also request certain Exempt Persons to register for Corporate Tax.
  • There is no threshold to register the business for corporate tax. If the business is in losses, having zero income in the last year and expecting no income in the next year, still, they need to apply for Corporate Tax registration.
  • Taxpayers are required to register before they file their first Corporate Tax return.
  • Taxpayers will be able to electronically register for Corporate Tax through the website of the Federal Tax Authority. Further guidance on this will be provided in due course.
  • Taxpayers will be required to register for Corporate Tax (and update their details, if required), even if they are already registered for VAT.
  • Federal Tax Authority opens pre-registration for corporate tax. The early registration period is available through the EmaraTax platform from January 2023 to May 2023 for certain categories of companies operating in the Emirates. These selected companies will be receiving invitations from the FTA by email and SMS, allowing them to register via the EmaraTax platform. businesses are not required to take any action on corporate tax registration as of now unless they received an “invitation to register” during the January-May period.

Corporate Tax Rate


Taxpayer Applicable CT rate
Individuals and juridical persons 0% for taxable income up to and including AED 375,000 (this amount is to be confirmed in a Cabinet Decision)
Qualifying Free Zone persons

(see further information below)

0% on qualifying income

9% on taxable income that does not meet the qualifying income definition

If a business has earned taxable income of AED 400,000 in a given financial year, what will be the Corporate Tax amount payable?

The Corporate Tax liability will be calculated as follows:

  • Taxable income of AED 0 – AED 375,000 at 0% = AED 0
  • Portion of taxable income exceeding AED 375,000 (i.e. AED 400,000 – AED 375,000 = AED 25,000) at 9% = AED 2,250

The Corporate Tax liability for the year will be AED 0 + AED 2,250 = AED 2,250
The final amount of Corporate Tax payable will be reduced by any foreign taxes incurred on the relevant income.

  • Corporate Tax is imposed on Taxable Income earned by a Taxable Person in a Tax Period.
  • Corporate Tax would generally be imposed annually, with the Corporate Tax liability calculated by the Taxable Person on a self-assessment basis. This means that the calculation and payment of Corporate Tax is done through the filing of a Corporate Tax Return with the Federal Tax Authority by the Taxable Person.
  • The starting point for calculating Taxable Income is the Taxable Person’s accounting income (i.e. net profit or loss before tax) as per their financial statements. The Taxable Person will then need to make certain adjustments to determine their Taxable Income for the relevant Tax Period. For example, adjustments to accounting income may need to be made for income that is exempt from Corporate Tax and for expenditure that is wholly or partially non-deductible for Corporate Tax purposes.

Taxable Income

The taxable income will be the accounting net profit / income of a business, after making adjustments for certain items to be specified under the Corporate Tax law. The accounting net profit / income of a business is the amount reported in the financial statements prepared in accordance with internationally acceptable accounting standards.

Deductible Expenses

In principle, all legitimate business expenses incurred wholly and exclusively for the purposes of deriving Taxable Income will be deductible, although the timing of the deduction may vary for different types of expenses and the accounting method applied. For capital assets, expenditure would generally be recognised by way of depreciation or amortisation deductions over the economic life of the asset or benefit.

Expenditure that has a dual purpose, such as expenses incurred for both personal and business purposes, will need to be apportioned with the relevant portion of the expenditure treated as deductible if incurred wholly and exclusively for the purpose of the taxable person’s business.

Certain expenses which are deductible under general accounting rules may not be fully deductible for Corporate Tax purposes. These will need to be added back to the Accounting Income for the purposes of determining the Taxable Income. Examples of expenditure that is or may not be deductible (partially or in full) include:

Types of Expenditures Limitation to deductibility
  • Bribes
  • Fines and penalties (other than amounts awarded as compensation for damages or breach of contract)
  • Donations, grants or gifts made to an entity that is not a Qualifying Public Benefit Entity
  • Dividends and other profit distributions
  • Corporate Tax imposed under the Corporate Tax Law
  • Expenditure not incurred wholly and exclusively for the purpose of the Taxable person’s business
  • Expenditure incurred in deriving income that is exempt from Corporate Tax
No deduction
  • Client entertainment expenditure
Partial deduction of 50% of the amount of the expenditure
  • Interest expenditure

Deduction of net interest expenditure exceeding a certain de minimis threshold


Up to 30% of the amount of earnings before the deduction of interest, tax, depreciation and amortisation (except for certain activities)

Transfer pricing rules as part of Corporate Tax Law

  • The Corporate Tax Law will be effective from 1 June 2023 and includes several transfer pricing (TP) provisions that are broadly aligned with Organisation for Economic Co-operation and Development (OECD) principles.
  • Transactions and arrangements between related parties and connected persons should meet the arm’s-length standard.
  • The Corporate Tax Law requires UAE businesses to maintain TP documentation subject to certain conditions which will be prescribed under a Ministerial Decision.

Qualifying Free Zone Person

When a free Zone Person be a qualifying Free Zone Person?

A Free Zone Person that is a Qualifying Free Zone Person can benefit from a preferential Corporate Tax rate of 0% on their “Qualifying Income” only.

In order to be considered a Qualifying Free Zone Person, the Free Zone Person must:
maintain adequate substance in the UAE.

  • Derive ‘Qualifying Income’;
  • Not have made an election to be subject to Corporate Tax at the standard rates; and
  • Comply with the transfer pricing requirements under the Corporate Tax Law.

The Minister may prescribe additional conditions that a Qualifying Free Zone Person must meet. If a Qualifying Free Zone Person fails to meet any of the conditions or makes an election to be subject to the regular Corporate Tax regime, they will be subject to the standard rates of Corporate Tax from the beginning of the Tax Period where they failed to meet the conditions.

Tax groups

Two or more Taxable Persons who meet certain conditions (see below) can apply to form a “Tax Group” and be treated as a single Taxable Person for Corporate Tax purposes.

To form a Tax Group, both the parent company and its subsidiaries must be resident juridical persons, have the same Financial Year and prepare their financial statements using the same accounting standards.

Additionally, to form a Tax Group, the parent company must:

  • own at least 95% of the share capital of the subsidiary.
  • hold at least 95% of the voting rights in the subsidiary; and
  • is entitled to at least 95% of the subsidiary’s profits and net assets.

The ownership, rights and entitlement can be held either directly or indirectly through subsidiaries, but a Tax Group cannot include an Exempt Person or Qualifying Free Zone Person.

To determine the Taxable Income of a Tax Group, the parent company must prepare consolidated financial accounts covering each subsidiary that is a member of the Tax Group for the relevant Tax Period. Transactions between the parent company and each group member and transactions between the group members would be eliminated for the purposes of calculating the Taxable Income of the Tax Group.

Key Features

  • Individual will not be subjected to corporate tax on income from employment, real estate, investment in shares or other personal income not related to a UAE trade or business.
  • No corporate tax will be applied on foreign investors who do not carry on business in the UAE.
  • Corporate tax will apply on the adjusted accounting net profit of the business.
  • Free zone businesses that meet all the necessary requirements can continue to benefit from corporate tax incentives.
  • The extraction of natural resources will remain subject to Emirate level corporate taxation.
  • No withholding tax will apply on domestic and cross border payments.
  • No corporate tax will apply on capital gains and dividends received by a UAE business from its qualifying shareholdings.
  • No corporate tax will apply on qualifying intragroup transactions and restructurings.
  • Foreign Tax will be allowed to be credited against UAE corporate tax payable.
  • Generous loss transfer and utilisation rules will be available to business.

Filing and Paying Corporate Tax

  • Only one Corporate Tax return will need to be filed per financial period.
  • No provisional or advance Corporate Tax filings will be required.
  • Taxable Persons are required to file a Corporate Tax return for each Tax Period within 9 months from the end of the relevant period. The same deadline would generally apply for the payment of any Corporate Tax due in respect of the Tax Period for which a return is filed.
  • Given Corporate Tax is imposed on an annual basis, it is necessary to specify the “Tax Period”. The Tax Period will normally be the Gregorian calendar year (i.e. from 1 January to 31 December), unless the business applies a different 12-month period for preparing its financial statements.
  • The UAE corporate tax return will be filed electronically via an online portal similar to the VAT and ESR filings.


Based on the practices in other jurisdictions, the following documents may be required:

  • Financial statements.
  • Taxable income calculation showing adjustments made to the accounting net profit.
  • Tax depreciation schedules and worksheets.
  • Transfer Pricing documentation.
  • Details of related party transactions.
  • Movement of provisions.

What are the rules relating to filing of Corporate Tax returns, payment and refund of Corporate Tax under UAE Corporate Tax regime?

No advance Corporate Tax payment: In order to keep the administrative burden on taxpayers to a minimum, a business will only need to prepare and file one tax return and other related supporting schedules with the FTA for each tax period. There will be no requirement for a business to file a provisional Corporate Tax return and make advance payments of Corporate Tax.

Corporate Tax returns filing deadline: Each tax return and related supporting schedules will need to be submitted to the FTA within nine (9) months of the end of the relevant Tax Period.

Corporate Tax payment deadline: Payments to settle a taxpayer’s Corporate Tax liability for a Tax Period will need to be made within nine (9) months of the end of the relevant Tax Period. Where a taxpayer can demonstrate that a Corporate Tax refund may be due, the taxpayer can apply to the FTA to request a refund.

The table below illustrates the Corporate Tax filing and payment deadlines for businesses with financial year ends of 31 March, 30 June, and 31 December: How is the Corporate Tax period determined? According to the information published by the UAE MoF, the Corporate Tax will apply to financial years starting on or after 1 June 2023. The UAE Corporate Tax period for an entity is determined based on its financial year-end. As such, entities with a:

  • 31 May financial year-end should file their first UAE Corporate Tax return for the financial year-ending 31 May 2024
  • 30 September financial year-end should file their first UAE Corporate Tax return for the financial year-ending 30 September 2024
  • 31 December financial year-end should file their first UAE Corporate Tax return for the financial year-ending 31 December 2024.
UAE Corporate Tax returns filing and payment deadlines.
Financial year end 30 June 31 December  31 March
First Tax period 1 July 2023 –

30 June 2024

1 January 2024 –

31 December 2024


1 April 2024 –

31 March 2025

Filing & payment deadline 31 March 2025 30 September 2025 31 December 2025

Anti- Abuse Provisions

The business should have commercial reasons for reorganisation. A reorganisation, without valid commercial reasons, aimed to gain tax benefits could be disregarded under anti-abuse rules.

The Corporate Tax Law includes general anti-abuse rules (GAAR) intended to disregard transactions or arrangements undertaken with the main purpose of obtaining a CT advantage. These rules apply from the date the Law is published in the Official Gazette.

AAR applies not only on business transactions but also on business arrangements entered on or after the official gazette publication. Arrangements such as change of financial year, restructuring of business operations/entities, share transfer, mergers/demergers could also be covered under AAR.

Tax Planning

We assist our clients through the tax transformation taking place in the country. As a part of it, we organise workshops to educate and help our clients plan and comply with the tax rules and regulations followed by wide range of fully integrated tax services.

AGN Al MAQTARI AUDITING since 1986 is leading in advising our clients in Accounting, Audit & Tax.


The information here is meant to provide a brief understanding of the Corporate Tax regime and it is not intended to comprehensively address all possible aspects of the Corporate Tax regime or to provide definitive answers and should not be used for individual or business decisions without understanding the full interpretations of the law and ministerial decisions.