Corporate Tax is a direct tax applicable to the net profits of companies operating within the country. The Ministry of Finance introduced this tax on 31 January 2022.
The UAE Corporate Tax became applicable either on 1 June 2023 or on 1 January 2024, depending on the financial year followed by the business. As per the rules specified by the FTA, if you are a business operating in the UAE and meet the eligibility for corporate tax, you need to pay a certain percentage of your profit as tax.

The tax period shall be the financial year commencing on or after 01 June 2023.

UAE Businesses have a timeframe of 9 months from the end of the tax period to submit their tax return and pay the Corporate Tax to the Federal Tax Authority (FTA). The deadlines vary based on the start of the tax period. Benefits of filing corporate tax returns include efficient cost and proper control of time, a single tax return for a group, and the ability to combine the amount of group tax paid, wherein certain companies make a taxable profit while others may have a tax loss. You will face AED 10,000 penalty if you fail to comply with the due dates.

Corporate tax planning aims to reduce a business’s tax liability. It involves strategies like making use of tax reliefs, considering the most tax-efficient business structure, planning for minimizing tax on major transactions, and other such methods to ensure tax efficiency and meet corporate tax obligations. Find out more here: Corporate Tax Planning: Key Techniques for Businesses in Dubai.

As per the UAE Corporate Tax law, you will be subjected to corporate tax rules if you fall into any of the following buckets:

1. Business activities under a commercial license in the UAE:
   This includes both local and foreign entities, regardless of their size or industry. If you are conducting business activities under a commercial license in the mainland UAE, you should be ready for the corporate tax.
   For licensed businesses operating on the UAE mainland, the corporate tax structure is as follows:
   A taxable person is subject to a 0% tax rate on taxable income up to AED 375,000.
   A 9% corporate tax applies to taxable income above AED 375,000.
   A 15% corporate tax applies to Multinational Enterprises subject to OECD Base Erosion and Profit-Sharing laws that belong within Pillar 2 of the BEPS 2.0 framework. It applies to corporations with combined worldwide revenues above AED 3.15 billion.
2.  Free zone businesses:
   If you run a free zone business that is not a QFZP (Qualified Free Zone Person) and does not meet the qualifying income criteria, you will be subject to the free zone corporate tax.
   
   Businesses operating in Free Zones face a different tax structure:
   A 0% corporate tax applies to the qualifying income of businesses recognized as a Qualifying Free Zone Person (QFZP).
   Non-qualifying income in the Free Zone is subjected to a 9% corporate tax, although other exceptions or relief may apply.
   
3. Foreign entities and individuals:
    If you are a foreign entity or a foreign individual, then you will be subject to the corporate tax only if you conduct a trade or business in the UAE in an ongoing manner as per a Cabinet Decision. The corporate tax law covers enterprises that have a physical presence in the UAE, such as a branch or office.
   
4.  Banking operations:
    Banks and other financial institutions will also be subject to corporate tax. This includes both local and foreign banks operating in the UAE.
   
5. Real estate and construction businesses:
   The new corporate Tax will also cover businesses engaged in real estate management, construction, and development, or brokerage activities.
   
6. 6- In addition, non-resident persons will be applicable for UAE Corporate Tax if they:
   Have a permanent establishment in the UAE: Non-resident businesses that have a fixed place of business in the UAE in the form of an office, branch, warehouse, or factory will be covered under the corporate tax. Only the income earned through UAE operations will be subjected to Corporate Tax, not global income.
   
   Generate UAE source income: Non-resident businesses that earn income from selling goods, providing services, or other business activities in the UAE will be subject to corporate tax.
   Have a nexus in the UAE (decision awaiting): This refers to the connection or link that a non-resident business has with the UAE. The specific criteria for what constitutes a nexus (significant presence) for a juridical person are still under consideration by the UAE authorities.

1. Natural Person:
    If you are a freelancer, a sole proprietor, or part of a civil company, you are considered a 'Natural Person' as per the law. While you might enjoy some Free Zone benefits, your income will still be subject to Corporate Tax. The corporate tax rules applicable here will be the same as those for individuals and businesses outside the Free Zones.
   
2. Juridical Person:
   If your business is a corporation or a partnership, it is recognized as a 'Juridical Person' for corporate tax purposes. These businesses are eligible for the 0% Corporate Tax rate on qualifying income if they meet the criteria set out in the UAE tax laws.
   

1. Maintain adequate substance in the UAE: Your business should have a significant presence in the UAE, including physical premises and employees.
   
2. Generate qualifying income: Your income should primarily come from compliant business activities conducted within the Free Zone or with international clients.
   
3. Do not elect to be part of normal Corporate Tax rates: You should not choose to be taxed under the standard corporate tax rates applicable to non-Free Zone businesses.
   
4. Non-qualifying revenue does not exceed the de minimis threshold: Your non-qualifying income should be below 5% of total revenue or AED 5 million, whichever is lower.
   
5. Have audited financial statements in accordance with IFRS: You should maintain accurate financial records and have them audited in line with the International Financial Reporting Standards (IFRS).
   
6. Meet any other specific conditions prescribed by the Free Zone authority: You should comply with any additional requirements set by the respective Free Zone authority.

1. Transaction with another Free Zone person: If your business transactions are with another business entity within the same Free Zone, the income generated from these transactions can be considered as qualifying income.
   
2. Transaction with a non-Free Zone person: If your business transactions are with an entity outside the Free Zone, the income from these transactions may not be considered as qualifying income.
   
3. Income from all other transactions: All other income, provided they satisfy the de minimis requirements, can be considered as qualifying income.

1. Manufacturing of goods or materials
2. Processing of goods or materials
3. Trading of Qualifying Commodities
4. Holding of shares and other securities for investment purposes
5. Ownership, management, and operation of Ships
6. Reinsurance services
7. Fund management services
8. Wealth and investment management services
9. Headquarter services to Related Parties
10. Treasury and financing services to Related Parties
11. Financing and leasing of Aircraft
12. Distribution of goods or materials in or from a Designated Zone
13. Logistics services.
14. Any activities that are ancillary to the above Qualifying Activities

1. Transactions with natural persons, except some specific transactions related to ‘Qualifying Activities.
2. Banking activities.
3. Insurance activities, without prejudice to the ‘Qualifying Activities’ listed as reinsurance services and headquarters services.
4. Finance and leasing activities without prejudice to some specific ‘Qualifying Activities’.
5. Ownership or exploitation of immovable property, other than Commercial Property located in an FZ where the transaction in respect of such Commercial Property is conducted with an FZ Person.
6. Any activities that are ancillary to the ‘Excluded Activities’ specified.

1. Having adequate staff.
2. Having adequate assets.
3. Incurring adequate operating expenditure.

1. Identify tax-deductible expenses: Tax Star allows you to manage your cash flow in real-time and ensure that you are making the most of the tax deductions available to your business.
2. Save time and money: With automated expense management, Tax Star helps reduce potential errors in tax filing, saving you both time and money.
   
3. Get valuable insights: As a centralized solution, Tax Star provides valuable insights into where your company spends its money. This information is useful to plan strategic measures to control costs.
   

1. Have a permanent establishment (PE) in the UAE: The company must have a fixed place of business in the UAE through which its business is wholly or partly carried on.
   
2. Derive UAE-sourced income: The company must derive income from its business activities conducted in the UAE.
   
3. Meet the definition of a 'Taxable Person': The company must meet the definition of a 'Taxable Person' under the UAE Corporate Tax Law. This includes entities that are residents of the UAE or have a PE in the UAE.
   

1. Entities engaged in natural resource extraction are subject to corporate taxes as determined by the respective Emirates.
   
2. If certain conditions are met, transactions and reorganizations within the same corporate group.
   
3. Corporate dividends and capital gains from eligible shareholdings within the UAE if they meet the participation exemption rules.
   
4. Interest income earned from saving schemes or bank deposits.
   
5. Income derived from salaries and similar compensation received from either a public or private sector entity.
   
6. Income from dividends, capital gains, interest, royalties, and other investment returns earned by a foreign investor.
   

1. own at least 95% of the share capital of the subsidiary;
2. hold at least 95% of the voting rights in the subsidiary; and
3. is entitled to at least 95% of the subsidiary’s profits and net assets.

1. If your revenue for the relevant tax period is AED 3 million or less, you can use the cash basis to prepare your financial statements.
   
2. If your revenue for the relevant tax period is AED 50 million or less, then you can use IFRS for SMEs to prepare your financial statements.
   
3. Otherwise – IFRS are required to be used for the preparation of the financial statements.
   

1. Read the Corporate Tax Law and the supporting information available on the websites of the Ministry of Finance and the Federal Tax Authority.
   
2. Ensure QFZP Compliance: As a business, you must meet all conditions for the Qualified Free Zone Person (QFZP) status. Pay close attention to guidelines related to qualifying income, substance requirements, de-minimis thresholds, and other criteria.
   
3. Review Accounting Policies: It is important to review your accounting policies thoroughly. Pay special attention to policies that could have a significant impact on your tax liabilities, such as those related to depreciation, provisioning, and amortization. This review will help ensure compliance with the new UAE corporate tax law.
   
4. Consider Deferred Tax: For the financial year 2023, consider whether you need to provide for deferred tax in your financial statements. This step is important, especially if you have made significant capital investments this year. Accounting for depreciation over the coming years is necessary.
   
5. Check Tax Deduction Requirements: Take time to review your major expense categories. Ensure that they meet the requirements for the tax deduction, especially categories like exempt income, interest, etc., which are directly covered under corporate tax legislation.
   
6. Plan Transfer Pricing Profile: With the new tax law in place, you must factor in the new transfer pricing rules. This profile will have a direct impact on your company's effective UAE corporate tax rate. On-time planning will help ensure that your business complies with the new regulations and avoids potential penalties.
   

1. Invoices: Ensure all sales and purchase invoices are systematically detailed and stored. This can help you accurately report your taxable income and claim allowable deductions.
2. Agreements and contracts: These documents can provide evidence of the terms and conditions of your business transactions. This can be vital during audits to establish the legitimacy and context of your expenses and revenues.
3. Financial statements: Maintain comprehensive financial statements, including profit and loss statements, balance sheets, and cash flow statements, for a detailed overview of your financial activities.
4. Bank statements: Keeping these statements assists in verifying the income and expenses mentioned on the tax returns and ensures transparency in financial dealings.
5. Payroll records: These records should include salary payments, bonuses, and any other employee-related expenses to support your expense claims and ensure compliance with employment laws.
6. Receipts and payment vouchers: These documents provide proof of the expenses incurred and can be crucial during an audit.
7. Transfer pricing documentation: This documentation should demonstrate that these transactions are conducted at arm's length and comply with the UAE corporate tax law.

1. Tax registration: Obtain a tax registration number from the Federal Tax Authority (FTA) by submitting the required documents and information
2. Record keeping: Maintain proper records of all financial transactions and tax-related documents in accordance with the UAE tax laws.
3. Preparation of tax return: Calculate taxable income and prepare a tax return based on the records maintained, taking into account tax deductions and exemptions as per the UAE tax laws.
4. Filing of tax return: Submit the tax return to the FTA through their online platform, e-Services, on or before the due date.
5. Payment of tax: Pay the tax liability as per the tax return filed on or before the due date.
6. Tax audit: In case of a tax audit, the FTA may request additional information or documents to verify the accuracy of the tax return filed.

1. A Qualifying Free Zone Person (refer to Question 11)
2. A Company deriving Revenue exceeding AED 50 million during the relevant Tax Period

1. You are aware of when your first tax period will be;
2. You know when your first tax return is due;
3. You register for Corporate Tax before the deadline date as indicated
4. You have proper accounting records to substantiate your Small Business Relief application;
5. You have proper accounting records to substantiate your tax return.

1. You can file Corporate Tax Returns online through the EmaraTax portal. Currently, the FTA approves the pre-registration of corporate tax for selected entities. If you are one, you can register for corporate tax in EmaraTax.
   
2. Step-by-Step Guide to Register for Corporate Tax on EmaraTax
   To register for corporate tax, businesses must complete the process via the Federal Tax Authority’s EmaraTax platform. Below is a detailed step-by-step guide to ensure your business is properly registered.
   

1. Step 1: Log into the EmaraTax Platform
   Visit the EmaraTax portal.
   If you already have an account, log in using your credentials or via UAE Pass.
   If you’re new to EmaraTax, click on ‘Sign Up’ to create an account. You will need to verify your email before proceeding.
   
2. Step 2: Navigate to Corporate Tax Registration
   Once logged in, you will see the dashboard showing all taxable entities linked to your account.
   If you do not have any taxable entities linked, you will need to add one.
   Click on ‘Register for Corporate Tax’ in the dashboard to begin.
3. Step 3: Provide Entity Details
   Select the entity type (mainland business, free zone company, etc.).
   Enter the details of your trade license and specify the business activities your entity is involved in. This is crucial for determining the correct tax obligations.
   
4. Step 4: Add Business Owners and Branches
   If your business is owned by individuals or entities holding more than 25% of the company, their details must be provided.
   For businesses with multiple branches, ensure that each branch’s trade license and business activity details are included in the registration.
   
5. Step 5: Contact Information
   Provide your business’s registered address and contact details, including phone numbers and email addresses.
   Make sure these details are accurate to avoid any communication issues with the FTA.
   
6. Step 6: Authorized Signatories
   Add the details of individuals authorized to sign tax documents on behalf of your business.
   Ensure that these individuals are legally registered and have the authority to represent the business.
   
7. Step 7: Review and Declaration
   Once all information is filled in, carefully review the application.
   Tick the declaration box to confirm that all the details provided are correct and accurate.
   Submit the registration form by clicking ‘Submit’.

1. Utilise tax incentives and exemptions: The UAE government offers various tax incentives and exemptions to promote economic growth and attract foreign investment. For instance, certain industries and sectors enjoy specific tax incentives, such as exemptions from corporate tax or reduced tax rates.
   
2. Optimise your business structure: Your tax liability is also affected by the legal structure of your business. Consider whether your current structure is the most tax-efficient option. For example, if you have multiple businesses, you may be able to reduce your tax liability by forming a group structure.
   
3. Leverage Double Taxation Avoidance Agreements (DTAAs): The UAE has signed DTAAs with several countries, aiming to avoid double taxation of income in both jurisdictions. By leveraging these agreements, you can benefit from reduced tax rates or exemptions on certain types of income.
4. File returns on time: File the corporate tax returns and pay the tax amount before the due date to avoid late payment fines and penalties.
5. Seek professional advice: While these strategies can help you reduce your corporate tax liability, it is crucial to seek professional advice from a qualified tax advisor or consultant. They can create custom strategies to meet your specific needs and ensure compliance.

1. Identifying Expenses
   A spend management system can be used to identify tax-deductible expenses while managing cash flow in real time. This means businesses can quickly spot any deductions or credits that may be available to them when it comes time to file corporate taxes.
   
2. Accurate Reporting
   Additionally, a spend management system can help ensure accurate reporting of expenses during tax season. By automating this process, businesses can save time and money while reducing potential errors in their tax filing.
   
3. Long Term Insights
   Finally, a spend management system can provide valuable insights into where the company spends its money so that those costs can be reduced over time. This could mean negotiating better pricing with vendors or switching to a more cost-effective supplier for specific goods or services—all without sacrificing quality or customer service. When costs are lowered across the board, this translates directly into lower taxes owed at the end of the year.