Overview of Corporate Tax in the UAE
As of 1 June 2023, the United Arab Emirates (UAE) has introduced a federal Corporate Tax (CT) regime, marking a major shift in the business tax landscape. This guide supports business owners, entrepreneurs, and foreign investors in understanding their obligations and optimising their tax affairs.
Who Needs to Register?
Entities required to register with the Federal Tax Authority (FTA) via the EmaraTax portal include:
Resident Juridical Persons
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Companies incorporated in the UAE
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Entities effectively managed and controlled in the UAE, including those located in Free Zones
Non-Resident Juridical Persons
Entities that:
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Maintain a Permanent Establishment (PoEM) in the UAE
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Derive income from the UAE, including:
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Services provided to local clients
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Rental or sale of property within the UAE
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Any other income-generating activity in the country
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Note: Earning income from the UAE requires registration, even without a physical presence.
Natural Persons
Individuals conducting business in the UAE with annual turnover exceeding AED 1 million.
Registration and Filing Deadlines
Registration
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All taxable persons: Within 3 months of incorporation
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Foreign juridical persons with PoEM in the UAE: Within 3 months following the end of their financial year
Tax Return Filing
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Within 9 months after the end of the relevant tax year
Corporate Tax Rates
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0% on taxable income up to AED 375,000
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9% on taxable income above AED 375,000
Reliefs and Exemptions
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Small Business Relief: Available to businesses with revenue of AED 3 million or less (valid until 31 December 2026)
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Qualifying Free Zone Persons: May benefit from a 0% tax rate on qualifying income (subject to conditions)
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Exempt Entities: Includes government bodies, public benefit organisations, and certain investment funds
Real Estate Nexus for Non-Residents
Non-resident juridical persons earning income from immovable property in the UAE are considered to have a nexus, requiring Corporate Tax registration. This includes income from:
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Ownership, leasing, or sale of UAE property
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Any form of exploitation of real estate
Registration is due within 3 months from the date the nexus is created.
Potential Challenges
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Complex Compliance: Navigating the legislation and maintaining proper documentation
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Risk of Penalties: Fines for late registration or filing
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Transfer Pricing Requirements: Transactions with related parties must follow arm’s length principles and require supporting documentation
Our Recommendations
It is advisable to engage professional accountancy services in Dubai, such as Aurora Group, to:
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Ensure correct registration and timely filing
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Identify reliefs and optimise tax efficiency
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Provide expert support in complex areas like transfer pricing and Free Zone compliance
