Corporate Tax Preparation Services in UAE

Unlike VAT, UAE Corporate Tax generally applies once a business’s annual taxable income exceeds AED 375,000. Since the Corporate Tax law took effect, businesses have needed to establish formal accounting and tax preparation processes to stay compliant with Federal Tax Authority (FTA) requirements and standards.

Corporate Tax Preparation Services

Many companies find Transfer Pricing (TP) requirements genuinely challenging to understand. Farahat & Co. has experience supporting international companies with their tax requirements, and helps UAE businesses build a robust TP framework. Our Transfer Pricing services include:

• Preparing a transfer pricing framework and policies confirming related company transactions comply with the arm’s length principle
• For international transactions, compliance reporting aligned with OECD Transfer Pricing guidelines and BEPS readiness
• Preparing an optimal business legal restructure to comply with TP policies in a way that benefits the business over the long run
• Preparing a thorough analysis report covering international financial transactions, contract analysis, substance testing, and BEPS considerations relevant to Corporate Tax requirements
• Impact analysis of Corporate Tax on business transfer pricing and BEPS exposure across all relevant aspects of the business
• Building documentation policy consistent with transfer pricing documentation requirements for local and international transactions, including Country-by-Country Reporting, Local File, and Master File
• Analysis of Transfer Pricing impact on Corporate Tax, VAT, and accounting valuations
• Procurement and supply chain audits supporting a genuinely tax-efficient supply chain
• Transfer pricing assessment and compliance consistent with UAE jurisdictional requirements
• TP risk assessment and risk management
• Dispute resolution consultation, FTA representation, and legal representation tailored to your company’s specific requirements

Also check: Transfer Pricing

How to Approach Corporate Tax Preparation in the UAE

• Determine the effective tax rate applicable to the business through analysis and a thorough business impact assessment
• Establish genuine tax compliance processes
• Conduct Base Erosion and Profit Shifting (BEPS) analysis
• Provide technological support and staff training
• Undertake multi-country planning where relevant
• Complete financial audit work consistent with Corporate Tax guidelines

Must check: Corporate Tax Services in UAE

Applicable Corporate Tax Rates

• 0% Corporate Tax on taxable income up to AED 375,000
• 9% standard rate on taxable income exceeding AED 375,000
• Large multinational enterprise groups with consolidated global revenue exceeding EUR 750,000,000 (roughly AED 3.15 billion) are subject to the UAE’s Domestic Minimum Top-Up Tax at 15%, under Cabinet Decision No. 142 of 2024, consistent with the OECD’s Pillar Two framework

Corporate Tax in Free Zones: How Qualification Actually Works

A 0% rate is available for businesses in free zones, but this isn’t a simple, automatic exemption based on where transactions occur, it depends on the business genuinely qualifying as a Qualifying Free Zone Person (QFZP) and continuing to meet all required conditions every tax period, not a one-time approval. The conditions include:

1. Adequate substance in the UAE, genuine employees, premises, and operational expenditure supporting actual activity
2. Qualifying income falling within defined categories
3. Non-qualifying revenue staying within the de minimis threshold, the lower of AED 5,000,000 or 5% of total revenue
4. Mandatory audited financial statements, regardless of revenue level
5. Transfer pricing compliance on related-party transactions

Where a free zone company genuinely derives income from mainland activity beyond the permitted qualifying scope, it becomes subject to standard Corporate Tax on that income rather than the 0% qualifying rate.

Essential Considerations When Filing Corporate Tax

Transfer Pricing Policy

The arm’s length principle requires commonly controlled parties involved in a transfer pricing arrangement to price their transactions as if they were independent entities, applying one or a combination of the following methods, consistent with the FTA’s strict compliance expectations:

1. The Comparable Uncontrolled Price Method
2. The Resale Price Method
3. The Cost-Plus Method
4. The Transactional Profit Split Method
5. The Transactional Net Margin Method

Worked Example: Selecting a Transfer Pricing Method

A UAE distributor purchases finished goods from its overseas Related Party manufacturer and resells them locally without further processing. Since the distributor adds no further transformation to the goods, the Resale Price Method is generally the most appropriate approach: the analysis starts from the price at which the distributor resells the goods to independent customers, then deducts an appropriate gross margin reflecting the distributor’s own functions and risks, arriving at the arm’s length purchase price from the Related Party manufacturer. Had the distributor instead been a manufacturer selling customized products with genuinely limited comparable market transactions, the Transactional Net Margin Method, comparing overall net profit margins rather than a specific price point, would likely be the more defensible choice instead. Selecting the right method depends on the actual nature of the transaction and the data genuinely available to support it.

Redefining Business Processes for Corporate Tax

Systems and accounting software often need upgrading to align with Corporate Tax requirements. Finance departments, and often others, need training on Corporate Tax drivers and their potential impact across the business. The accounting and finance function can particularly benefit from upgraded software supporting this transition.

Farahat & Co. has assisted numerous companies planning a smooth transition following Corporate Tax’s introduction, including AI-supported system modules and data migration, key areas where day-to-day operations can genuinely be affected.

Services we offer in this area include:

• Risk assessment and management
• Accounting system automation and financial reporting
• AI process implementation
• Impact analysis and business intelligence reporting
• Outsourced qualified accounting staff
• Outsourced internal audit support

Frequently Asked Questions (FAQs)

How Farahat & Co. Can Help

Farahat & Co., a trusted Tax Firm in UAE, provides comprehensive Corporate Tax preparation services, including transfer pricing framework development, QFZP eligibility assessment, and business process readiness for Corporate Tax compliance.

Contact Farahat & Co. today to discuss your Corporate Tax preparation requirements.