UAE Corporate Tax was introduced under the Law, known as Federal Decree-Law No. 47 of 2022. The tax applies to companies and individuals conducting business in the UAE. Every business in the UAE should necessarily ensure compliance with registration, maintenance of records, filing, and payment with the FTA.
Corporate Tax Compliance means following all tax rules from registration to filing annual returns, paying the correct amount of tax in time.
Key areas of compliance include:
- Record keeping: Keep business records for seven years.
- Corporate tax filing UAE: File your Corporate Tax Return via the EmaraTax portal every financial year.
- Payment: Pay the due amount of tax before the deadlines.
- Taxable persons UAE: Check whether you fall under the resident juridical person, resident natural person, or a non-resident with a permanent establishment in UAE.
What do you need to know about UAE Corporate Tax and Taxable Persons?
It applies to taxable persons, whether residents or non-residents. The related law in UAE defines who is required to be registered and pay corporate tax.
Main categories of taxable persons:
- Resident juridical persons (Companies): Companies incorporated in the UAE or effectively managed herein.
- Resident natural persons: Persons engaged in commercial or professional activities.
- Non-resident juridical persons: Foreign companies deriving income through a permanent establishment in the UAE.
- Non-resident natural persons: The foreign individuals carrying on business in the UAE frequently.
- Free zone entities UAE: It would qualify for free zone tax incentives if they meet the criteria of a Qualifying Free Zone Person (QFZP).
Example:
Every freelancer in the UAE and a person with a business license must check whether their income exceeds the taxable threshold and undertakes the necessary steps toward registration.
What is the registration and filing requirements with the UAE FTA?
To obtain a TRN, every taxable person needs to register with the Federal Tax Authority (FTA) along with the necessary details on the EmaraTax portal.
Key points on registration and filing:
- Registration Process: Apply through the EmaraTax portal, using your trade license, Emirates ID, and business documents.
- Eligibility: All resident juridical persons and natural persons whose income exceeds threshold amounts must register.
- Newly established businesses: Must register before earning taxable income.
- FTA deadlines: Each business has a specific registration window depending on incorporation date.
Corporate Tax Filing Deadlines and Financial Year
Each company is required to file its Annual Corporate Tax Return within nine months from the end of its financial year.
Examples:
- Businesses on a calendar year (ending 31 December) are required to file by 30 September of the following year.
- Any person with a custom financial year should file within nine months of their year-end.
Key points:
- Keep proper books and financial records to correctly determine the taxable income.
- Any change in accounting cycle needs from FTA approval.
- The payment in UAE must also be made on the filing deadline.
What are the corporate tax rates and monetary thresholds in the UAE?
The Corporate Tax rates UAE depend on the taxable income of the business.
| Taxable Income (AED) | Corporate Tax Rate |
|---|---|
| Up to AED 375,000 | 0% tax rate |
| Above AED 375,000 | 9% tax rate |
| Large multinational groups (global revenues above €750 million) | 15% (DMTT) |
Under the OECD Pillar Two, Domestic Minimum Top-Up Tax (DMTT) applies to ensure that large companies pay a minimum of 15% effective tax globally.
Free Zone Tax Benefits and Compliance Requirements
Free Zone Persons UAE who qualifies as Qualifying Free Zone Persons (QFZPs) may enjoy special tax benefits in the UAE.
Main requirements:
- Earn qualifying income, as defined by FTA.
- Avoid doing business in the mainland.
- Meet economic substance requirements.
- Maintain proper record-keeping.
Other free zone compliance requirements include classifying income-qualifying vs. non-qualifying-and-filing corporate tax returns, even for those enjoying 0% tax on qualifying income.
Example:
A Dubai Internet City company must verify the type of income it generates and confirm that it maintains qualification for FTA free zone compliance to take advantage of 0% corporate benefits.
What Are the Penalties for Non-Compliance and How to Ensure Compliance
For Dubai corporate tax compliance, there are strict penalties imposed by the Federal Tax Authority.
Common penalties include:
- Late registration fine UAE: AED 10,000.
- Late filing penalty UAE: AED 500 to AED 1,000 per month of delay.
- Late Payment Penalty – 14% per annum on due amounts.
- Inadequate record-keeping: Consequences for failing to maintain seven-year records.
How to ensure compliance:
- Register on time with the FTA.
- File the Corporate Tax Return within the nine-month deadline.
- Records must be kept for at least seven years.
- Use the services of a professional advisor or FTA-authorized tax agent UAE.
Remaining compliant eliminates penalties and lends confidence to the taxing authorities.
FAQs
Who needs to pay Corporate Tax in the UAE?
All taxable businesses and individuals carrying out commercial activities in the UAE must pay Corporate Tax. This includes resident companies, freelancers, and certain non-residents with a permanent establishment in the UAE.
What is the Corporate Tax rate in the UAE?
The UAE Corporate Tax rate is 9% on taxable income above AED 375,000. Income up to AED 375,000 is taxed at 0%. Large multinational groups may pay 15% under the Domestic Minimum Top-Up Tax (DMTT).
How can I register for Corporate Tax with the FTA?
Businesses must register online through the Federal Tax Authority’s (FTA) EmaraTax portal. Provide your trade license, Emirates ID, and other required documents to receive a Tax Registration Number (TRN).
What are the penalties for late filing or payment?
The FTA charges AED 10,000 for late registration and AED 500–1,000 per month for late filing. A 14% annual interest may apply for delayed payments.
How can businesses ensure Corporate Tax compliance in the UAE?
Keep accurate financial records and file your Corporate Tax Return on time. Work with a professional tax advisor or FTA-authorized tax agent to avoid penalties and stay updated on new tax rules.
