Having a business in the UAE once meant Learn Everything About Corporate Tax in the UAE 2025
enjoying a tax-free environment. Many investors saw it as the perfect hub for growth. But times have changed. Corporate tax (CT) has become a key part of doing business in the UAE.
This shift left many business owners worried. How much will they pay? Who is exempt? What about Free Zone companies? The UAE’s corporate tax system is clear and predictable once you understand it.
Tax Gian breaks it down step by step so you know what falls under the umbrella of CT and what to expect in 2025. Our expert corporate tax agents in the UAE offer comprehensive CT solutions.
Corporate Tax Basics in the UAE
The UAE introduced federal corporate tax on June 1, 2023. This was a historic move for a country that built its name as a tax-friendly hub.
- Profits up to AED 375,000→ 0% tax
- Profits above AED 375,000→ 9% tax
This system supports startups and small businesses while ensuring larger firms contribute fairly.
Filing and Payment Rules
Every business that falls under corporate tax must file a return once a year. The deadline is within nine months from the end of the financial year.
Returns and payments are done online through the FTA portal. Payments must be made in UAE Dirhams (AED). If your company uses another currency, profits must be converted before filing.
Example 1:
- Profit = AED 150,000
- Below threshold → No tax
Example 2:
- Profit = AED 500,000
- AED 375,000 at 0% = 0
- AED 125,000 at 9% = AED 11,250
- Total tax due = AED 11,250
Keeping clean financial records is essential. Late filing or wrong reporting can lead to penalties. Corporate tax agents in the UAE can help you file your returns correctly and on time.
What Changed in 2025? The Domestic Minimum Top-Up Tax (DMTT)
On January 1, 2025, the UAE introduced the Domestic Minimum Top-Up Tax (DMTT).
This rule applies to multinational enterprises (MNEs) with global revenues above €750 million (around AED 2.99 billion). These large groups must pay at least 15% tax on profits earned in the UAE.
If an MNE’s effective tax rate is lower, the DMTT adds a “top-up” to reach 15%.
Why is this important? Without DMTT, other countries could apply their own top-up tax on UAE profits. That would reduce the UAE’s appeal. With DMTT, tax stays in the UAE while keeping global rules in balance.
This mainly impacts Free Zone companies that are part of MNEs, enjoying 0% rates but falling below the 15% minimum. Consult our corporate tax agents in Dubai to determine whether your business falls within the scope of DMTT.
Who Must Pay Corporate Tax?
Corporate tax is not the same for everyone. Here’s a quick guide:
Subject to Corporate Tax
- Mainland businesses: 9% on profits above AED 375,000.
- Free Zone firms with non-qualifying income: Tax applies if they deal with the mainland beyond limited distribution.
- Foreign companies with a permanent presence in the UAE.
- Freelancers, consultants, and sole proprietorsearning AED 1 million annually or moremust register or pay a penalty of AED 10,000.
Exempt from Corporate Tax
- Qualifying Free Zone Persons (QFZPs)meeting FTA rules.
- Government-owned entities and public institutions.
- Extractive industries are already taxed at the emirate level.
- Approved charities and non-profits.
- Small businesses below AED 375,000 taxable profit.
Staying Compliant
To avoid fines, businesses should:
- Register with the FTA and get a Tax Registration Number.
- Keep proper records as per FTA rules.
- File on time: Corporate tax returns within nine months after financial year end; VAT returns within 28 days of the period end.
- Stay updated on new regulations, especially Free Zone conditions.
- Work with corporate tax agents in Dubai if unsure about classification or filings.
Setting Up a Business in the UAE
Starting a company in the UAE is attractive because of its strong economy and global access. In 2025, the country’s GDP per capita is about USD 49,500, ranking it among the wealthiest nations.
Steps to set up:
- Choose your activity (commercial, industrial, professional, etc.).
- Decide the structure (LLC, Free Zone Company, Sole Establishment, Partnership).
- Register the trade name and get approvals.
- Draft legal documents like MOA or LSA.
- Open a UAE bank account.
- Register for corporate tax through the Basher portal or with the help of a CT agent.
Your choice of structure affects your tax rate and compliance. For example, LLCs on the mainland face 9% above the threshold, while Free Zone entities may remain at 0% if they qualify.
Why the UAE Still Attracts Investors
Even with corporate tax, the UAE remains one of the most business-friendly regions.
- Low tax compared to many countries.
- Over 40 Free Zones offering 100% foreign ownership and repatriation of profits.
- Strong trade links through CEPA agreements with countries like India, Israel, and Indonesia.
- A stable banking system and world-class infrastructure.
The introduction of corporate tax also boosts the UAE’s credibility on the global stage.
How can Tax Gian help Businesses?
Tax Gian’s expert CT agents help businesses:
- Register for CT.
- Understand their tax liabilities.
- File correctly and on time.
- Manage tax disputes.
Represent before authorities if needed.
