The UAE has introduced a new era of taxation. Corporate Tax (CT) is now part of every business’s financial responsibility. Companies must understand how the system works to stay compliant and avoid penalties. Farahat & Co. helps businesses register, file, and manage their corporate tax returns efficiently.
CT is a directly imposed on business profits. It applies to both local and foreign companies operating in the UAE. The CT system in the UAE is transparent and based on international standards.
The UAE corporate obligations include registering with the Federal Tax Authority (FTA), maintaining proper records, and filing returns on time. The country follows a territorial taxation system, meaning businesses are taxed on income generated within the UAE.
The UAE business taxation 2025 framework outlines that profits above AED 375,000 are taxable. The CT structure ensures fair taxation while supporting small and medium enterprises. The corporate threshold in the UAE protects smaller businesses from financial pressure.
Contact UsThe Corporate Tax rate in the UAE stands at 9% for Taxable Income exceeding AED 375,000, while Taxable Income below this threshold incurs a 0% rate of Corporate levy.
Corporate levy is applicable as follows:
| Taxable Person | Applicable Tax Rate |
|---|---|
| Natural persons and juridical persons | 9% on Taxable Income exceeding AED 375,000 |
| Qualifying Free Zone Persons | 0% on Qualifying Income9% on Non-Qualifying Income |
Not all businesses are subject to paying CT; however, most are required to register. Individuals and entities that are engaged in business are taxable in the UAE.
Some of the common mistakes that businesses must avoid are:
The above pitfalls can be avoided by keeping a strict financial record and ensuring that the business is audit ready.
Businesses are required to be registered by FTA, fill in the return, and submit online by official portals. The following are the steps to filing returns in the UAE.
First, to commence business, an individual must request registration of CT and get TRN.
In the latest reforms, the FTA can impose pre-registration. Companies should also adapt the UAE reporting guidelines to comply. Delays and penalties are avoided due to proper reporting in the UAE.
The following is a breakdown of the process:
The CT Return Filing Services of Farahat & Co. incorporates the reviewing, filing, and correction services in case of voluntary disclosure.
Corporate tax deadlines in the UAE depend on each company’s financial year as stated in its MOA, with the most common year-end being 31 December.
Companies are required to adhere to the recommended dates of filing. Extensions are not accepted mostly. Delayed submissions create fines. Failure to meet deadlines may lead to punishment, therefore planning will help.
Standard Rates
Taxable profits above AED 375,000 are charged with a rate of UAE CT of 9%. Incomes that are less than this are not subject to tax. The structure helps in nurturing small businesses and startups with the lowest minimum.
Qualifying Free Zones
Some regions are given favorable taxation regulations. Qualifying Free Zone Persons (QFZPs) get an exemption or lower rates in case they meet certain criteria.
Examples include:
All the free zones are on their own schedule and compliance requirements.
Exemption Conditions
The companies would be entitled to claim CT exemptions under some circumstances. These may include:
Certain entities and individuals are automatically exempt from UAE Corporate Tax, while others may apply for exemption.
The exemptions include:
| Automatically Exempted Persons | Exempted upon Application |
| The UAE Federal and Emirate Governments, along with their departments, authorities, and public institutions. | Qualifying Investment Funds meeting prescribed conditions. |
| Companies wholly owned and controlled by a Government Entity conducting a Mandated Activity. | Public or private pension or social security funds meeting conditions specified in Ministerial Decision No. 115 of 2023. |
| Businesses engaged in extracting UAE Natural Resources or related non-extractive activities are subject to Emirate-level taxation (subject to specific conditions). | UAE juridical entities wholly owned and controlled by certain exempted entities, engaging in activities specified in Article 4(h) of the Corporate Tax Law. |
| Qualifying Public Benefit Entities listed in Cabinet Decision No. 37 of 2023 or subsequent relevant decisions. |
Lack of adherence to the policies of corporate tax in the UAE may result in severe fines and additional inspections.
Audits generated by the FTA can review the records of a company. Businesses are required to make sure that all the related-party transactions, depreciation information, and losses are properly documented.
It is particularly important to keep precise and careful records when determining corporate tax in the UAE. Failure to comply may lead to both monetary and reputation losses.
Adherence to the laws of CT in the United Arab Emirates helps to gain trust and increase credibility. Legal and financial benefits are:
Farahat & Co. provides services to companies to help them stay out of trouble and keep up with the times of corporate tax declaration and returns.
To stay compliant and avoid penalties:
Knowing who needs to file a tax return, deadlines, and common mistakes is essential for smooth compliance.
Also Read: Corporate Tax Registration Services
This procedure will provide compliance with the UAE business taxation system and adequate corporate tax impact analysis.
Adhere to the simple taxation system of the UAE, which is clear and transparent.
Corporate Tax, also known as Corporate Income Tax or Business Profits Tax, is a direct tax imposed on the net income or profit of corporations and businesses.
UAE Corporate Tax applies to legal entities incorporated in the UAE, foreign entities effectively managed and controlled in the UAE, and foreign entities operating through a Permanent Establishment or having a taxable presence in the UAE.
The UAE Corporate Tax rates are as follows:
| Taxable Person | Applicable Rate |
| Natural persons and juridical persons | 9% for Taxable Income exceeding AED 375,000. |
| Qualifying Free Zone Persons | 0% on Qualifying Income and 9% on non-Qualifying Income |
Exemptions from UAE Corporate Tax include UAE Federal and Emirate Governments, certain government-owned companies, businesses involved in UAE Natural Resources extraction or related activities, and Qualifying Public Benefit Entities.
Certain entities can apply for exemption upon approval, such as Qualifying Investment Funds, pension or social security funds, and UAE juridical persons wholly owned by exempted entities engaged in specified activities.
All Taxable Persons, including Free Zone Persons, must register for Corporate Tax and obtain a Corporate Tax Registration Number.
Documents required for Corporate Tax registration in the UAE include proof of address, company details, and audited financial statements showing the accounting period used for financial reporting, with any changes disclosed to the tax authority before filing tax returns.
Yes, most of the businesses in the UAE would have to register corporate tax. Nonetheless, it is exempt under income less than AED 375,000.
Missing the filing deadline incurs penalties. Late registration attracts a fine of AED 1,000, while late filing is subject to AED 400 per month, in addition to an annualized interest of 14% per month.
Yes, when they are making money in business inside the UAE.
Yes. For UAE SMEs with turnover below AED 3 million, there is no corporate tax liability regardless of profit, and any company with profits below AED 375,000 is exempt from corporate tax.
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Farahat & Co. confounds your whole filing and reporting procedure, registration to filing. Through professional help, your company would remain compliant and grow within the changing taxation environment of the UAE.