Corporate Tax:
from status to declaration

01

Who is included in the corporate tax system

A UAE resident entity is generally subject to taxable income as determined by federal law. A foreign person can enter the system through permanent establishment, nexus or income from sources in the UAE. For an individual, corporate tax applies only to business or business activity if established conditions are met.

UAE juridical person

Mainland and free-zone companies, including applicable special structures

Foreign juridical person

Effective management and control, permanent establishment, nexus and UAE-sourced income are checked

Natural person

Only entrepreneurial activity to the extent provided by law

Before calculation

Status of a person, tax period, exemption and registration obligation

02

Rates and tax base

For a regular Taxable Person, the rate is 0% on the first 375,000 AED of taxable income and 9% on excess. The calculation begins with accounting profit under acceptable financial reporting standards and is adjusted according to corporate tax rules.

0%

Part of taxable income up to 375,000 AED for a regular payer

9%

Part of taxable income over 375,000 AED

Starting point

Accounting income for the tax period

Adjustments

Exempt income, ineligible expenses, benefits, transfer pricing and other provisions

Currency

Tax calculations and declarations are carried out in AED according to applicable translation rules

03

Exempt Persons and exempt income

The law distinguishes between exempt persons and exempt income categories. Government agencies, individual state-owned enterprises, extractive businesses and qualified funds apply their own tests. Participation exemption for dividends and capital gains requires verification of the share, holding period, taxation of the subsidiary and other conditions.

04

Expenses, interest and losses

The expense must be incurred solely for the business and supported. Private, capital, and expressly prohibited amounts do not reduce the basis; Certain categories have restrictions. Group funding is verified by arm's length and interest expense limitation rules.

General test

Business connection, documentary evidence and correct period

Entertainment

The special deduction limitation is checked

Interest

General and special interest limitation rules, as well as transfer pricing

Tax losses

Transfer and use subject to continuity conditions and other tests

Related parties

Market price and actual receipt of goods, services or financing

05

Free zone: separate calculation of qualifying income

Free Zone Person is obliged to analyze the status of Qualifying Free Zone Person, adequate substance, qualifying and excluded activities, de minimis, transfer pricing and audited reporting. Being in the zone does not in itself guarantee 0%.

0%

Only qualifying income for QFZP

9%

Taxable income that does not receive 0% under the QFZP regime

Substance

Core income-generating activities, sufficient assets, personnel and expenses

Control

Separate analytics by counterparty, activity and place of execution

Consequence

Violation of the conditions may result in deprivation of status for a stipulated period.

Open the full free zone navigator →

Read review of QFZP mode →

06

Tax groups and reorganizations

Tax Group allows qualified resident companies to calculate their taxes as a single payer if ownership and other requirements are met. Separate group relief and business restructuring relief can ensure the neutrality of intra-group transfers and reorganizations, but require compliance with the form, ownership, period and subsequent control.

Tax Group

Verification of residence, ownership, rights to profits and net assets, as well as consistency of period and standards

Transfers within group

Separate relief when meeting the conditions of a qualified group

Business restructuring

Transfer of a business or an independent part in exchange for a share - subject to compliance with the criteria

Clawback

Subsequent sales or changes may cancel the benefit

07

Transfer pricing and related parties

Arm's length principle applies to transactions with related parties and connected persons. The company defines the perimeter of the connections, selects the method, documents the actual functions and verifies the duty of opening and preparing the master file or local file.

Operations

Goods, services, loans, guarantees, IP, cost allocations and owner compensation

Standard

Price and terms as between independent parties

Disclosure

Forms and information along with Corporate Tax Return for applicable requirements

Documentation

Master file / local file when set thresholds are met

Practice

The contract, invoice and payment must match the actual function performed

08

Registration, declaration, payment and documents

The Taxable Person registers with the FTA within the applicable deadline. The return and tax are usually filed and paid no later than nine months after the end of the tax period. The company maintains records to verify the basis, elections, benefits and transactions.

Read an overview guide to corporate tax →

09

VAT and other payments are considered separately

The standard VAT rate is 5%. The obligation to register, place of delivery, zero-rating, exemption and input tax are determined for each transaction. Customs duties, excise tax, Emirati and municipal fees may also apply.

VAT

5% standard; separate zero-rated and exempt supplies

Registration

Mandatory or voluntary - according to established thresholds and conditions

Import

Customs value, duty, import VAT and importer of record

Excise

Certain categories of goods at special rates

Emirate fees

Real estate, tourism, municipal and license fees - for a specific transaction

10

Working tax model before the first transaction

1. 01

   Determine Taxable Person, residence, PE, free-zone and exempt status.

2. 02

   Break down revenue by product, client, territory and qualifying income.

3. 03

   Review expenses, financing, losses, benefits and intercompany transactions.

4. 04

   Set up accounting, VAT, invoices, TP and substance evidence.

5. 05

   Link the tax model to contracts, licenses and bank payments.