The introduction of the UAE Corporate Tax Law introduced compliance requirements that all businesses must thoroughly understand. Regardless of whether an entity operates as a mainland limited liability company, a free zone establishment, or an individual engaged in commercial activities, it is imperative to have a thorough understanding of the applicable legal obligations to avoid penalties and ensure compliant business operations.
Below are five key considerations to ensure corporate tax compliance in the UAE:
- Mandatory Corporate Tax Registration in the UAE – Understanding the registration process.
- Key Facts About UAE Corporate Tax 2025 – The latest updates and essential information.
- Corporate Tax Rates and Exemptions – Applicable tax rates and criteria for exemptions.
- Filing Obligations and Deadlines – Ensuring timely annual submissions to prevent penalties.
- Compliance Beyond Filing – Adhering to transfer pricing regulations and preparing for potential tax audits.
The sections below outline these five essential aspects of UAE Corporate Tax, along with practical guidance to help businesses stay compliant:
1.Corporate Tax Registration in the UAE is Mandatory
One of the initial requirements for compliance with the UAE Corporate Tax Law is obtaining Corporate Tax registration in the UAE. All taxable persons are required to register with the FTA through the EmaraTax portal. These include:
1. Mainland businesses such as LLCs, PSCs, and PJSCs
2. Branches of foreign companies operating in the UAE
3. Qualifying free zone companies
4. Natural persons (individuals) carrying on business activities if their annual turnover is more than AED 1 million
Practical Tip: Apply early to avoid last-minute issues. Last-minute applications may incur higher penalties and less preparation time for filing responsibilities.
2.Key Facts About UAE Corporate Tax 2025
The UAE Corporate Tax framework has been structured to align with international tax standards. The key fundamentals are as follows:
It applies to both mainland and qualifying free zone companies.
It is levied on taxable profits, not turnover.
Certain businesses, such as those engaged in the extraction of natural resources, remain exempted.
Companies are required to maintain proper financial records and submit annual returns.
3.UAE Corporate Tax Rates and Exemptions
The UAE Corporate Tax Rates are:
- 0% on taxable income up to AED 375,000
- 9% on taxable income above AED 375,000
For Free Zone Corporate Tax, qualifying free zone businesses can enjoy a 0% tax rate on qualifying income if they meet substance requirements and comply with all conditions.
4.Filing Requirements and Deadlines
UAE Corporate Tax Filing is an annual obligation for all taxable persons. The corporate tax return must be filed within nine months of the end date of the relevant tax period. Failure to file on time can result in penalties, interest, and higher audit risk.
5.Beyond Filing Compliance – Transfer Pricing and Audits
Compliance with the UAE Corporate Tax Law extends beyond the mere submission of tax returns. Two essential areas requiring particular attention are:
- Transfer Pricing in the UAE – Transactions with related parties must be conducted on an arm’s length basis and substantiated with appropriate documentation by the applicable regulations.
- UAE Tax Audits – The FTA may examine a company’s operational and financial records to verify compliance. Businesses are required to maintain all supporting documentation for a minimum period of seven years.
Seek The Expert Services of Top Tax Consultants in the UAE
Understanding and complying with the UAE Corporate Tax Law is essential. From timely corporate tax registration and determining applicable rates to meeting filing deadlines and preparing for transfer pricing assessments, adherence to the law is essential to avoid penalties. At Farahat & Co., a premier Tax and Audit Firm in the UAE, we provide comprehensive support throughout the entire corporate tax process, from registration and filing to audit preparation. Contact us today, and we shall be glad to assist you.
FAQs
Who must register for UAE corporate tax?
All Mainland businesses, qualifying free zone businesses, and individuals who earn more than AED 1 million annually from business activity in the UAE must register for corporate tax.
What is the UAE corporate tax rates?
The standard rate is 0% on taxable income not exceeding AED 375,000 and 9% on taxable income exceeding the above amount. Qualifying free zone entities may continue to enjoy a 0% rate on qualifying income.
When is the UAE corporate tax return filing deadline?
The filing deadline is usually nine months from the end of the applicable financial year. Delays in filing may be subject to penalties and potential loss of relief.
Do free zone companies have to pay UAE corporate tax?
Not necessarily. Free zone companies that qualify can benefit from a 0% rate of charge on qualifying income if they meet substance and compliance requirements.
What do I need to do in anticipation of a UAE tax audit?
Maintain proper financial statements, keep all invoices and contracts for at least seven years, and have transactions with related parties performed within transfer pricing parameters.
