Corporate Tax in the UAE | TAG Consultancy

The UAE introduced corporate tax on June 1, 2023, marking a significant shift in its tax framework. This tax applies to certain businesses operating in the UAE and is designed to enhance financial stability, align with international taxation standards, and support the nation's long-term economic growth.

The introduction of corporate tax reflects the UAE's commitment to modernizing its financial ecosystem while maintaining its reputation as a global business hub. Businesses operating in the UAE must stay informed about corporate tax regulations to ensure compliance, minimize liabilities, and optimize financial strategies.

Corporate Tax Rates in the UAE

The UAE corporate tax system is structured to support businesses while ensuring fair taxation. The tax rates are as follows:

0% Corporate Tax on taxable income up to AED 375,000, encouraging small businesses and startups.
9% Corporate Tax on taxable income exceeding AED 375,000, applicable to most businesses in the UAE.
15% Corporate Tax for multinational corporations that meet the OECD Base Erosion and Profit-Sharing (BEPS 2.0) framework, specifically those with global revenues exceeding AED 3.15 billion.

Corporate Tax in Free Zones

The UAE government continues to support businesses operating in Free Zones, offering special tax incentives:

0% Corporate Tax on qualifying income for Free Zone businesses that comply with UAE tax regulations.
9% Corporate Tax on non-qualifying income or business activities conducted in the UAE mainland.

Understanding the eligibility criteria for Free Zone tax incentives is crucial to ensure compliance while benefiting from the available exemptions.

Who is Subject to Corporate Tax?

Corporate tax in the UAE applies to various entities, including:

Businesses holding a commercial license in the UAE.
Free Zone entities conducting business in the UAE mainland (subject to applicable tax rates).
Foreign companies and investors engaged in regular trade or business within the UAE.
Banking institutions operating in the UAE.

However, certain entities are exempt from corporate tax, including:

Companies involved in natural resource extraction, as they are subject to Emirate-level taxation.
Dividends and capital gains earned from UAE businesses that qualify under specific shareholding criteria.
Certain intra-group transactions and corporate restructurings that meet exemption requirements.

Corporate Tax Compliance & Filing in the UAE

To ensure compliance, businesses must adhere to corporate tax filing regulations:

Corporate tax returns must be filed within 9 months after the end of the relevant financial period.
Timely tax payments are required to avoid penalties.
Non-compliance may lead to significant fines and legal consequences as per Federal Tax Authority (FTA) regulations.

How TAG Can Help

Navigating corporate tax regulations can be complex, but TAG is here to help businesses ensure full compliance while minimizing tax liabilities. Our expert corporate tax services include:

Corporate Tax Registration

We assist businesses in registering for corporate tax under the new UAE regulations, ensuring a hassle-free and efficient process.

Corporate Tax Assessments

Our team conducts detailed corporate tax assessments to evaluate tax liabilities, ensuring businesses understand their obligations and optimize their financial strategies.

Corporate Tax Audit

TAG provides corporate tax audit services to help businesses prepare for regulatory reviews, identify risks, and ensure compliance with UAE tax laws.

Corporate Tax Return Filing

We handle corporate tax return filing, ensuring accuracy and timely submission to avoid penalties while optimizing tax efficiency.

Stay Compliant with TAG

With the UAE's evolving tax landscape, having a trusted financial partner is essential. At TAG, we provide expert guidance, ensuring businesses remain compliant while focusing on growth and expansion.