Running a business in the UAE has always meant low taxes and friendly policies. But that’s changing. Since June 2023, corporate tax has become a new reality. Many business owners are confused. They wonder who needs to pay it, what’s covered, and if there’s any way around it.
That confusion is fair. The rules are new, and terms like “qualifying income” or “exempt persons” can sound overwhelming. But knowing the purpose and scope of UAE corporate tax is not just helpful—it’s necessary. Once you understand what’s expected, staying compliant becomes easier and smoother.
Tax Gian, a top corporate tax consultant in UAE, helps businesses understand their tax responsibilities in the jurisdiction better.
Why did the UAE Introduce Corporate Tax?
The corporate tax in the UAE was introduced for several reasons:
- To strengthen the country’s image as a trusted and forward-thinking business centre
- To meet global expectations around fair tax practices and stop harmful tax habits
- To create a steady stream of revenue that can support the country’s long-term goals
The tax also supports the UAE’s promise to stick to international agreements on tax transparency.
What Corporate Tax UAE Covers?
The UAE corporate tax applies to all businesses and individuals conducting business activities under a valid commercial license. It doesn’t matter if the business is in a free zone or on the mainland—what matters is how and where they operate.
Here’s a clear view of what falls under the corporate tax:
- Companies and individuals with business licenses in the UAE
- Individuals crossing a specific limit
- Foreign companies that do business in the UAE regularly
This tax ensures that all businesses playing a significant role in the local market contribute fairly.
Who Needs to Register for Corporate Tax in UAE?
Every business in the UAE that falls under the taxable category needs to register. This includes:
- Companies based in the UAE, whether in free zones or not
- Foreign companies with a base or control in the UAE
- Individuals running a business regularly
There’s a timeline for when businesses must register, depending on their license issue date. Missing the deadline can result in a fine of AED 10,000.
Non-resident businesses must also register if they have:
- A permanent base in the UAE
- Earned income in the UAE that is not linked to that base
- A business link or “nexus” in the UAE
Businesses That Don’t Pay Corporate Tax in UAE
Not all businesses must pay corporate tax. Some are fully exempt, such as:
- Government and government-controlled bodies
- Oil and gas companies working under Emirate-level tax rules
- Certain public welfare organisations
- Pension and social security funds
- Qualifying investment funds
- UAE-owned companies fully controlled by these exempt bodies
There’s also relief for small businesses. If a company earns less than AED 3 million in a tax period, it qualifies for small business relief and doesn’t need to pay corporate tax until the end of 2026. Ask tax consultants in UAE whether or not you fall under the scope of paying corporation tax in UAE.
Free Zone Companies and Corporate Tax Incentives
Free zones in the UAE continue to offer benefits to companies. But to keep enjoying a 0% corporate tax rate on some income, they must:
- Follow all rules and regulations of the free zone
- Avoid doing business with the UAE mainland
If a business qualifies as a “Qualifying Free Zone Person,” it can benefit from the 0% rate on specific income streams. You can consult the best corporate tax consultants in UAE to find out if you can get any tax incentives.
Corporate Tax Rates in the UAE
The corporate tax rate in the UAE is simple:
- No tax for income up to AED 375,000
- 9% tax for income above AED 375,000
For large global companies that make over €750 million in annual revenue, the applicable Corporate Tax will be 15 %, i.e. “Top-Up Tax” of 6%. Starting January 2025, these companies must pay at least 15% on their global profits, in line with the OECD’s global tax rules.
This measure prevents large corporations from transferring profits to low-tax nations simply to evade taxes.
How can Tax Gian Help?
Understanding one’s tax liabilities is not easy. You cannot always comply if you keep doing it yourself. Taking help from expert tax agents in UAE, like Tax Gian, never lets you down. Our experts are seasoned and qualified in the field of tax and are always up to date with the ever-changing regulations. They will not only help you know your tax responsibilities but also assist you in registering and filing tax returns on time.
