UAE Corporate Tax – The Only Comprehensive Guide You’ll Need in 2026

Introduction

Corporate Tax (CT) is a form of direct taxation levied on the net profits earned by businesses and other entities from their commercial activities. Globally, it may also be referred to as Corporate Income Tax (CIT) or Business Profits Tax, depending on the jurisdiction.

For many years, the United Arab Emirates enjoyed a reputation as a corporate tax-free economy. While individual Emirates did issue corporate tax decrees, in practice, taxation was limited almost exclusively to oil and gas companies and branches of foreign banks.

This landscape began to shift in January 2022, when the UAE Ministry of Finance formally announced the introduction of a federal corporate tax regime, effective for financial years commencing on or after 1 June 2023, with a standard headline rate of 9%.

The move was largely influenced by the global push for tax transparency led by the OECD’s Base Erosion and Profit Shifting (BEPS) initiative, aimed at preventing profit shifting and tax avoidance by multinational enterprises. The UAE became a member of the G20/OECD Inclusive Framework on BEPS in 2018, thereby committing to implement internationally agreed minimum standards.

This step followed a broader transformation of the UAE’s tax framework, which began with the introduction of Value Added Tax (VAT) in 2018, followed by Economic Substance Regulations (ESR) and Country-by-Country Reporting (CbCR) in 2019. The enactment of Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses represents the next phase of this evolution.

The Corporate Tax regime is designed to align the UAE with global best practices while maintaining its competitiveness and ensuring that compliance requirements remain proportionate and business-friendly.

Effective Date and Corporate Tax Rates

Standard Corporate Tax Rate: 9%

The UAE Corporate Tax framework adopts a tiered rate structure, as outlined below:

• 0% Corporate Tax applies to annual taxable profits up to AED 375,000, ensuring relief for startups and small businesses.

• 9% Corporate Tax applies to taxable profits exceeding AED 375,000.

• Multinational Enterprises (MNEs) falling within the scope of OECD BEPS Pillar Two—specifically those with consolidated global revenues exceeding AED 3.15 billion (€750 million)—will be subject to a global minimum effective tax rate of 15%, implemented through the Domestic Minimum Top-up Tax (DMTT).

Filing of the Corporate Tax Return

Corporate Tax returns in the UAE must be filed within 9 months from the end of the relevant financial year.

The timing of corporate tax applicability and return filing depends on the financial year adopted by the business:

• Businesses with a financial year from 1 June 2023 to 31 May 2024

  Corporate tax applies from 1 June 2023, and the first return must be filed by February 2025.

• Businesses following the calendar year (1 January 2023 to 31 December 2023)

  Corporate tax applies from 1 January 2024, with the first return due by September 2025.

Who Is Exempt from UAE Corporate Tax?

Exempt Persons

Certain entities are automatically exempt from corporate tax under UAE law. These primarily include government entities and government-controlled entities. Additionally, the following may qualify for exemption, subject to prescribed conditions:

• Extractive businesses operating in the UAE

• Non-extractive natural resource businesses

• Qualifying public benefit entities

• Qualifying investment funds

• Public and private pension or social security funds

• Wholly owned and controlled UAE subsidiaries of exempt entities

Exempt Sources of Income

The Corporate Tax Law also provides exemptions for specific types of income, including:

• Income earned by individuals in their personal capacity, such as salaries or passive investment income, provided the activity does not require a commercial licence.

• Dividends and profit distributions received from UAE-resident corporate entities.

• Dividends from foreign companies where the recipient holds a qualifying ownership interest (Participation Interest).

• Capital gains arising from the disposal of shares or securities forming part of a Participation Interest, subject to meeting exemption conditions.

• Income from foreign branches or Permanent Establishments, where an exemption election is made under the CT Law.

Who Needs to Register for UAE Corporate Tax?

All taxable persons, whether resident or non-resident with a UAE nexus or permanent establishment, are required to register for corporate tax and obtain a Corporate Tax Registration Number.

Resident Persons

Resident persons include:

• Entities incorporated or registered in the UAE, whether on the mainland, in free zones, or offshore.

• Foreign entities that are effectively managed and controlled in the UAE.

• Individuals conducting business activities within the UAE.

Resident taxable persons are subject to corporate tax on their worldwide income.

Corporate Tax Registration – Resident Persons

Registration deadlines are determined based on the month of trade licence issuance, regardless of the year in which the licence was issued.

Month of Licence Issuance	Registration Deadline
January – February	31 May 2024
March – April	30 June 2024
May	31 July 2024
June	31 August 2024
July	30 September 2024
August – September	31 October 2024
October – November	30 November 2024
December	31 December 2024

For entities holding multiple licences, the earliest licence issuance date determines the registration deadline.

Non-Resident Persons

Non-resident persons include entities that:

• Operate through a Permanent Establishment (PE) in the UAE, or

• Earn UAE-sourced income attributable to a nexus in the UAE.

Corporate tax for non-residents applies only to income connected with the UAE PE or nexus.

Corporate Tax Registration – Non-Resident Persons

Category	Registration Deadline
PE existing before 1 March 2024	Within 9 months of PE existence
Nexus existing before 1 March 2024	Within 3 months from 1 March 2024
PE established on or after 1 March 2024	Within 6 months of PE existence
Nexus established on or after 1 March 2024	Within 3 months of nexus establishment

Failure to register within the prescribed timelines may attract an administrative penalty of AED 10,000.

Qualifying Free Zone Persons (QFZP)

Entities meeting the conditions of a Qualifying Free Zone Person may continue to benefit from a 0% corporate tax rate on qualifying income.

Conditions to Qualify

To be treated as a QFZP, an entity must:

• Maintain adequate economic substance within the free zone

• Earn qualifying income

• Comply with transfer pricing regulations

• Prepare audited IFRS-compliant financial statements

• Ensure non-qualifying income does not exceed the de-minimis threshold

Qualifying Income Categories

Qualifying income generally falls under:

1. Transactions with other Free Zone Persons, excluding income from excluded activities.

2. Transactions with non-Free Zone Persons, provided the income arises from approved qualifying activities.

Qualifying Activities Include:

• Manufacturing and processing

• Holding of shares and securities

• Ship ownership and operations

• Reinsurance services

• Fund, wealth, and investment management services

• Headquarters, treasury, and financing services to related parties

• Aircraft financing and leasing

• Distribution and logistics within designated zones

• Ancillary activities supporting qualifying operations

Excluded Activities (Taxed at 9%)

Income from the following is not qualifying income:

• Transactions with natural persons (outside permitted activities)

• Banking, insurance, and certain financial services

• Ownership or exploitation of non-commercial real estate or IP

• Ancillary activities linked to excluded income streams

Income Type	Applicable Rate
Qualifying Income	0%
Non-Qualifying Income	9%

Entities should consult their respective Free Zone Authority to confirm eligibility.

Summary Table

Category	Income / Condition	CT Rate	Effective Date	Notes
Resident Taxable Persons	Income ≤ AED 375,000	0%	1 June 2023	Applies per tax period
	Income > AED 375,000	9%	1 June 2023	Standard rate
Qualifying Free Zone Persons	Qualifying income	0%	1 June 2023	Subject to QFZP conditions
	Non-qualifying income	9%	1 June 2023	Standard rate
Multinational Enterprises	Global revenue > €750m	15% (DMTT)	1 Jan 2025	OECD Pillar Two aligned
Small Business Relief	Revenue ≤ AED 3m	0%	Until end-2026	Optional relief

How Can Arzonell Assist?

Arzonell provides end-to-end support for UAE Corporate Tax compliance, registration, and ongoing advisory. Our in-house team of experienced Chartered Accountants delivers tailored solutions across Dubai and the wider UAE, including:

• Corporate tax registration and filings

• IFRS-compliant accounting and financial statement preparation

• Identification and application of available tax reliefs and exemptions

• Full compliance with UAE regulatory and reporting requirements

With deep expertise spanning corporate tax, transfer pricing, business structuring, and cross-border transactions, Arzonell ensures that your business remains compliant while optimising its tax position in an evolving regulatory environment.

Reach out to us: info@arzonell.com | +971 52 191 5973