Corporate Tax UAE

UAE Corporate Tax — Key Facts

The UAE Federal Corporate Tax (CT) Law (Federal Decree-Law No. 47 of 2022) came into effect for financial years starting on or after June 1, 2023.

CT Rates

Who Must Register?

Registration is mandatory for ALL UAE businesses, regardless of profitability:

• All UAE mainland companies (LLC, sole establishment, civil company, branches)
• Free zone companies — even if claiming QFZP (Qualifying Free Zone Person) status, registration is mandatory
• Foreign companies with a permanent establishment in UAE
• Individuals earning business income above AED 1 million per year
• Non-resident companies deriving UAE-sourced income

Late registration penalty: AED 10,000. There is no grace period — register as soon as your first financial year under CT begins.

Our Corporate Tax Services

CT Registration (EmaraTax)

We register your business with the FTA for Corporate Tax via the EmaraTax portal. We manage:

• TRN (Tax Registration Number) issuance — same TRN as your VAT registration if already registered
• First financial year determination
• Return filing period setup

Timeline: 1–3 working days for standard registrations

CT Return Filing

Annual Corporate Tax returns are filed after the end of each financial year. The return covers:

• Taxable income calculation (adjusted accounting profit)
• Add-backs and allowable deductions
• Capital allowances (depreciation of business assets)
• Tax losses carried forward from prior years
• Transfer pricing adjustments
• Tax credit claims

Filing deadline: 9 months after the end of the financial year (e.g., a December 31 year-end → September 30 deadline).

Free Zone CT Exemption (QFZP)

Free zone companies that meet strict qualifying conditions continue to pay 0% CT on qualifying income. We assess your eligibility and maintain QFZP status:

QFZP conditions:

• Maintain adequate substance in the free zone (employees, physical presence, expenses)
• Derive qualifying income (passive income, transactions with other free zone persons, or exports)
• Maintain audited financial statements
• Not elect out of the QFZP regime
• Non-qualifying income is taxed at 9%

We assess your free zone entity annually to confirm QFZP status and advise on any activity changes that could jeopardize the exemption.

CT Tax Planning

Lawful Corporate Tax planning to minimize CT liability:

• Deductible expense identification and documentation
• Capital expenditure timing and depreciation strategy
• Group tax relief and consolidation (related UAE entities)
• Interest limitation rules assessment
• Business restructuring for optimal CT efficiency
• Transfer pricing and arm's-length pricing for related-party transactions

Transfer Pricing

UAE CT law requires businesses with related-party transactions to comply with arm's-length pricing rules. We prepare:

• Transfer Pricing documentation (Local File, Master File)
• Related-party transaction schedules for CT return
• Benchmarking analysis
• Country-by-Country Reporting (CbCR) assessment

CT Audit Support

FTA Corporate Tax audits require complete financial record compliance. We:

• Prepare all required financial documentation and schedules
• Respond to FTA audit notices and information requests
• Represent your business during the audit process
• File objections against incorrect assessments

Voluntary Disclosure

If an error is identified in a filed CT return, voluntary disclosure minimizes penalties. We assess the exposure and manage the FTA voluntary disclosure process.

CT and Free Zone Entities — Common Mistakes

Free zone companies commonly make these costly CT errors:

1. Failing to register because they assume their exemption means no obligation — registration is mandatory regardless.
2. Conducting mainland activities (selling directly into the mainland without a local agent) which destroys QFZP status on the income earned.
3. Inadequate substance — keeping only a flexi-desk with no real employees or operational presence fails the substance test.
4. Mixed activities — not tracking qualifying vs. non-qualifying income correctly, resulting in 9% CT applying to income that should be exempt.

We review your free zone structure annually to prevent these issues.

Interaction with VAT

Corporate Tax and VAT are separate systems under the FTA but interact in important ways:

• VAT returns and CT returns must be consistent (revenues must reconcile)
• FTA has access to both — discrepancies trigger audit flags
• We prepare both CT and VAT filings together to ensure full consistency

Frequently Asked Questions

My company made no profit this year — do I still need to file a CT return? Yes — CT return filing is mandatory every year regardless of whether profit or loss was made. Nil returns and loss returns must still be filed on time.

Does the 9% CT apply to all UAE income or only income above AED 375,000? The 0% rate applies to the first AED 375,000 of taxable income. Only income above that threshold is taxed at 9%. There is no cliff-edge effect — the 9% rate applies only to the portion exceeding AED 375,000.

I am a freelancer / sole trader — do I need to register for CT? If your annual business income exceeds AED 1 million, yes. Below AED 1 million, individual freelancers and sole traders are generally not required to register for CT (though they may be required to register for VAT separately if turnover exceeds AED 375,000).

Can I carry forward CT losses? Yes — tax losses can be carried forward indefinitely to offset future taxable income, subject to certain continuity conditions (no significant change in ownership or business activity that would trigger a loss restriction).

Is dividend income from UAE subsidiaries subject to CT? Generally no — dividends received from UAE subsidiaries are excluded from taxable income to avoid double taxation. However, conditions apply (minimum 5% ownership and holding period). We advise on the specific structure.

What is the CT deadline for financial years ending December 31, 2024? The deadline is September 30, 2025. For financial years ending June 30, 2024, the deadline is March 31, 2025 (9 months after year-end). Contact us now if you haven't filed yet.

Office 225, Oud Metha Offices, Dubai Healthcare City +971 50 380 7565 | support@hashmibusinessconsultant.com