Introduction
For the first time in its history, the United Arab Emirates (UAE) is implementing a corporate tax regime, marking a significant shift from its long-standing tax-friendly environment. This new development, featuring statutory rates of 0% and 9%, reflects the UAE’s commitment to maintaining its appeal as a premier business hub while aligning with global standards. This comprehensive guide will help businesses navigate the UAE’s new corporate tax landscape, ensuring compliance and leveraging available benefits.
What is Corporate Tax?
Corporate tax, also known as corporate income tax or business profits tax, is a direct tax levied on the net income of corporations and businesses. By introducing this tax, the UAE joins the ranks of many countries worldwide with established corporate tax frameworks.
Key Facts About UAE Corporate Tax
Legislative Basis: The Corporate Tax Law, issued on 9 December 2022
- Legislative Basis: The Corporate Tax Law, issued on 9 December 2022.
- Effective Date: For financial years starting on or after 1 June 2023.
- Tax Rates:
- 0% for taxable income up to AED 375,000.
- 9% for taxable income above AED 375,000.
For more information, you can check our Corporate Tax Webinar – Click here
Who Needs to Register for UAE Corporate Tax?
Taxable persons are categorized as residents or non-residents with a permanent establishment or nexus in the UAE. Here’s a breakdown:
Resident Persons
Resident persons include:
- UAE-incorporated entities (offshore, free zones, mainland).
- Foreign entities managed and controlled in the UAE.
- Individuals conducting business in the UAE.
Tax Scope: Worldwide income.
Registration Deadlines: Based on the month of trade license issuance.
| Month of Licence Issuance | Deadline for Submitting a Tax Registration Application |
| 1 January – 31 January | 31 May 2024 |
| 1 February – 28/29 February | 31 May 2024 |
| 1 March – 31 March | 30 June 2024 |
| 1 April – 30 April | 30 June 2024 |
| 1 May – 31 May | 31 July 2024 |
| 1 June – 30 June | 31 August 2024 |
| 1 July – 31 July | 30 September 2024 |
| 1 August – 31 August | 31 October 2024 |
| 1 September – 30 September | 31 October 2024 |
| 1 October – 31 October | 30 November 2024 |
| 1 November – 30 November | 30 November 2024 |
| 1 December – 31 December | 31 December 2024 |
For companies holding multiple licenses, such as a group with numerous operations, the registration deadline will be based on the earliest issued license.
Non-Resident Persons
Resident persons include:
- UAE-incorporated entities (offshore, free zones, mainland).
- Foreign entities managed and controlled in the UAE.
- Individuals conducting business in the UAE.
Tax Scope: Worldwide income.
Registration Deadlines: Based on the month of trade license issuance.
| Category of Non-Resident Person | Deadline for Submitting a Tax Registration Application |
| Has a permanent establishment prior to 1 March 2024 | Nine months from the date of existence of the permanent establishment |
| Has a nexus prior to 1 March 2024 | Three months starting from 1 March 2024 |
| Has a permanent establishment on or after 1 March 2024 | Six months from the date of existence of the permanent establishment |
| Has a nexus on or after 1 March 2024 | Three months from the date of establishment of the nexus |
Moving forward, all taxable persons must submit their corporate tax registration application. Failure to do so within the designated deadlines may result in an administrative penalty of AED10,000.
Who is Exempted from UAE Corporate Tax?
Certain entities are exempt from corporate tax, including:
- Government entities and government-controlled entities.
- Extractive and non-extractive natural resource businesses.
- Qualifying public benefit entities and investment funds.
- Pension or social security funds.
- Wholly-owned and controlled UAE subsidiaries of certain exempt entities.
Small Business Relief
Businesses with revenues below AED 3 million can avail small business relief for tax periods ending before or on 31 December 2026. To qualify, a business must:
- Be a resident person in the UAE.
- Have revenue not exceeding AED 3 million.
- Not be a Multinational Enterprise (MNE) group and Qualifying Free Zone Person.
Qualifying Free Zone Persons
Entities meeting the criteria of a Qualifying Free Zone Person (QFZP) benefit from a 0% corporate tax rate on qualifying income. Criteria include:
- Adequate substance in the UAE.
- Deriving qualifying income.
- Complying with transfer pricing rules and documentation requirements.
- Preparing audited financial statements per IFRS.
Qualifying Income Includes:
- Transactions with other free zone persons.
- Qualifying activities with non-free zone persons.
We recently concluded our webinar on Corporate tax & transfer pricing for businesses in Free Zone that you may check out – Watch here
Filing Corporate Tax
After registration, businesses must prepare for their first corporate tax filing, due within nine months after the end of their relevant tax period. For most companies operating on a fiscal year ending 31 December, the initial taxable period will be 1 January 2024 to 31 December 2024, with the filing deadline set for 30 September 2025.
Record Keeping
Businesses must maintain relevant records and documents for seven years following the end of the tax period to ensure compliance and facilitate any future audits.
Ensuring Compliance with UAE Corporate Tax
Transitioning to the new corporate tax regime can be complex, but S&B Consulting is here to help. Our team offers comprehensive UAE CT services, including obtaining the tax registration number, preparing audited financial statements, and submitting annual corporate tax returns.
Why Choose S&B Consulting?
- Expertise: Our team of chartered accountants and tax specialists ensure accurate and timely filings.
- Tailored Solutions: We conduct thorough tax research tailored to your company’s needs.
- Compliance Assurance: We ensure your corporate tax returns are prepared accurately and submitted on time.
Conclusion
The introduction of the corporate tax regime in the UAE marks a new era for businesses operating in the region. By understanding the requirements and leveraging available reliefs, companies can ensure compliance while benefiting from the UAE’s supportive business environment.
For expert guidance and comprehensive UAE CT services, visit S&B Consulting. Let us help you navigate the UAE’s tax landscape with ease and confidence.
