Corporate Tax in UAE: Complete Guide to Rates, Rules, and Compliance

Corporate Tax in the UAE: Everything You Need to Know

The incorporation of the Corporate Tax policy by the UAE aimed for greater integration into the global taxes system and diversification of the economy. UAE's tax friendly policies took a sharp turn with the introduction of federal corporate taxes in 2023.

All companies whose fiscal years commence on or after June 1, 2023, are legally compelled to complete corporate tax returns. Corporate tax applies at a minimum threshold of 9% if taxable profit exceeds AED 375,000.

The reform is intended to improve revenue diversification away from oil and tourism while increasing competitiveness in a globalized world and enhancing transparency in fiscal governance.

Also, the UAE stated that any individual commercial activity earning above AED 1 million annually, whether marketed as a freelancer or a sole proprietor, is liable to registration for corporation tax by March 31, 2025, with AED 10,000 penalty for failure to comply.

While the 2025 deadline for tax registration marks a critical point in UAE corporation tax history, multinationals (MNEs) operating in the region expecting to see the most substantial changes in 2025 will not be let down.

The purpose of this guide is to provide you the complete picture on corporate tax in UAE, including rates, deadlines, registration processes, and penalties as of the year 2025.

What is Corporate Tax

The net income or profit of companies and other businesses is subject to a direct tax known as corporate tax. Both resident and non-resident companies doing business in the United Arab Emirates are subject to the corporation tax law.

Key Updates in UAE Corporate Tax Law for 2025

The UAE has introduced several updates to its corporate tax law in 2025:

• Domestic Minimum Top-up Tax (DMTT): A 15% tax on MNEs with global revenues of €750 million or more, effective from 1 January 2025. 
• Interest Deduction Limitation Rules: New guidelines on the deductibility of interest expenses have been issued.
  
   
• Enhanced Compliance Requirements: Stricter enforcement measures and increased penalties for non-compliance have been implemented. 

Who Needs to Register for Corporate Tax in the UAE?

The following entities are required to register for corporate tax in the UAE: 

1. Businesses on the mainland: All mainland organisations that work in the commercial, professional, or industrial sectors must pay 9% corporate tax on earnings over AED 375,000.
2. Businesses in the free zone whose income does not qualify: Even entities in the Free Zone lose their tax-free status if they: 

• Generate revenue from the UAE mainland without meeting the requirements to be classified as restricted distribution businesses.
• Do not satisfy the FTA's QFZP requirements.

1. International businesses With UAE presence: A foreign business must abide by the corporation tax law if it maintains a permanent establishment (PE) in the UAE or receives income from sources within the UAE.
2. Consultants, independent contractors, and business owners: If a licensed business's annual turnover surpasses AED 1 million, its operators are required to register and may be liable to corporate tax by March 31, 2025, failing which they risk an AED 10,000 punishment.

In summary, even though the UAE is still one of the most tax-efficient countries in the world, the new corporate tax structure mandates that all businesses, particularly those in Free Zones and SME organisations, comprehend their categorisation and take appropriate action under the UAE corporate tax reform 2025.

Corporate Tax Registration Deadlines UAE

 It's important to register for corporate tax in UAE within the given/allotted deadlines to avoid any penalties.

Entity Type	Registration Deadline	Notes
Natural Persons	31 March 2025	If revenue exceeds AED 1 million in 2024.
Resident Juridical Persons	31 March of the following year	For financial years starting on or after 1 June 2023.
Non-Resident Persons	6 months from the date of establishing nexus	Applies to entities with a permanent establishment or nexus in the UAE.

Entities that are exempt from corporate taxes:

1. Qualifying Free Zone Persons (QFZPs): Businesses registered in UAE Free Zones can maintain a 0% corporate tax rate if they meet certain Federal Tax Authority (FTA) requirements.

• Qualified revenue must come from activities within the Free Zone or with overseas entities.
• Revenue from UAE mainland transactions may be taxed unless it fits into a qualified category (e.g., warehousing, limited distribution).
• Failure to achieve these standards leads to full taxation at the regular 9% rate. 

1. Government entities and public institutions: Entities that are entirely owned and operated by the government that execute sovereign or public benefit activities are completely exempt.

2. Extraction business: Oil, gas, and other extractive sector enterprises are taxed at the emirate level, hence they are not subject to federal corporation taxes.

3. Charities and non-profit organisations: Non-profit organizations may be exempt if they are approved by the FTA and their operations are linked with public benefit goals.

4. Small enterprises under the threshold: Companies and individuals with annual taxable profits of less than AED 375,000 are exempt from paying corporation tax. However, they may still be required to register with the FTA for compliance purposes.

UAE Corporate Tax Rates (2025)

The corporate tax rates in the UAE are structured to support small businesses while ensuring compliance with international tax standards.
 

Taxable Income	Corporate Tax Rate	Applicable Entities
Up to AED 375,000	0%	All taxable persons.
Above AED 375,000	9%	All taxable persons.
Multinational Enterprises (MNEs) with global revenue ≥ €750 million	15%	Under the Domestic Minimum Top-up Tax (DMTT) regime.

How to Register for Corporate Tax in UAE

Corporate tax UAE registration is completed using the EmaraTax system of the Federal Tax Authority (FTA). This is a detailed guide:

1. Make an account on EmaraTax: Enter your phone number and email address to register on the EmaraTax site.
2. Create or Choose a Taxable Person Profile: If you have several tax registrations, choose an existing one or create a new one after logging in.
3. Select the 'Corporate Tax Registration' option and fill out the application form with the required information to register for corporate tax.
4. Send in the necessary documents: Upload the required files, including financial accounts and trade licenses.
5. Review and Submit: Double-check all information and submit your application.

UAE Corporate Tax Penalty for Late Registration

Failing to register for corporate tax within the specified deadlines can result in penalties.

• Administrative Penalty: AED 10,000 for late registration. 
• Additional Penalties: May apply for non-compliance with other tax obligations.

UAE Tax Incentives for 2025–2026: What Businesses Should Know

The new UAE corporate tax rules come with more paperwork, but also smarter benefits for businesses that invest in the right places.

1. Refundable Tax Credit for Hiring Top Talent (2025)

To attract global professionals, the UAE will offer a refundable tax credit to companies hiring for high-value roles, think C-level execs, tech experts, healthcare specialists, and finance pros. A portion of these costs can be claimed back through your corporate tax filing.

2. R&D Tax Credits (2026)

From 2026, businesses spending on innovation, from product development to scientific research, can claim 30–50% R&D tax credits. This is big news for tech firms, pharma, and startups driving innovation in the UAE.

These business incentives aim to lower your tax bill while encouraging long-term, high-impact growth. It’s clear: the UAE tax 2025–2026 strategy is shifting from neutral to proactive, and businesses willing to innovate will benefit most.

Conclusion

Understanding and complying with the UAE's corporate tax requirements is essential for businesses operating in the country. Ensure timely registration, accurate reporting, and adherence to the latest regulations to avoid penalties and support your business's growth.