Corporate Tax (CT) in the UAE

The UAE Ministry of Finance announced a federal Corporate Tax (CT) on business profits, effective for financial years beginning on 1 June 2023 or 1 January 2024, depending on the entity. CT applies across all emirates and aims to strengthen the UAE’s standing as a global hub, accelerate economic transformation and align with international transparency standards.

Legal basis and scope

CT is a direct tax on the net income of corporations and entities. It is governed by Federal DecreeLaw No. 47 of 2022, as amended by No. 60 of 2023. In scope are:

• Businesses and natural persons conducting activities under a UAE trade licence;
• Freezone entities (incentives honoured for Qualifying Free Zone Persons that meet conditions and do not conduct mainland business);
• Foreign entities/individuals if they carry on a trade/business in the UAE on an ongoing or regular basis;
• Banking activities; and real estate management, construction, development, agency and brokerage.

Exemptions and out of scope items

• Extraction of natural resources: out of federal CT (taxed at emirate level);
• Dividends and capital gains from qualifying shareholdings: exempt, subject to conditions;
• Qualifying intragroup transactions and reorganisations: relieved, subject to conditions.

CT does not apply to individual income from employment (public or private sector), to interest on bank deposits/savings, to dividends/capital gains and other investment returns, nor to real estate investments in a personal capacity, subject to law.

CT rates

• 0% on the first AED375,000 of taxable income;
• 9% above AED 375,000;
• Large multinationals: a distinct rate to be set in line with OECD BEPS Pillar Two.

Administration and compliance

The Federal Tax Authority (FTA) administers, collects and enforces CT. It issues guidance and handles registration and filing through the EmaraTax platform. In practice:

• Registration: all in scope entities must obtain a CT registration number (including freezone entities);
• Return: one annual CT return is filed within nine months of yearend; payment is due by the same deadline;
• Penalties: administrative fines apply for late registration, filing or payment (see FTA schedules).

Free zones and qualifying regimes

The CT framework honours existing incentives for freezone entities that meet regulatory requirements and do not conduct mainland business. Even so, such entities must register and file CT returns; qualification of income must be substantiated.

Operational watchpoints

• Map your footprint (mainland vs free zone, presence of a PE for nonresidents);
• Demarcate income/exemptions (qualifying shareholdings, intragroup, reorganisations);
• Set an internal calendar (initial registration, first return, payment) and document your positions (accounts, contracts, intragroup arrangements).

 

The UAE’s CT regime is structured and predictable: a broad scope, twotier rate, and continued incentives for freezone entities under conditions. By securing registration, income qualification and timelines, businesses can comply efficiently and minimise penalty exposure. FTA guidance and professional support will ease implementation.

Our lawyers who are experts in tax law are available to answer all your questions and provide advice. Our meetings can be held in person or via videoconference. You can make an appointment directly online at www.agn-avocats.fr.