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The UAE corporate tax at 9% became effective for financial years starting on or after 1 June 2023. For most businesses with a December year-end, the first corporate tax return was due by 30 September 2024. If you haven't registered yet or aren't sure how this affects your business, this guide covers everything you need to know.
Who does UAE corporate tax apply to?
UAE corporate tax applies to all UAE-incorporated companies and foreign companies with a permanent establishment in the UAE. This includes mainland companies, free zone companies, and branches of foreign companies. Individuals carrying on business activity through a sole establishment are also within scope.
Individuals earning employment income, investment returns, or real estate income do not pay corporate tax on those amounts — only business income is taxable. UAE government entities, qualifying public benefit entities, and pension funds are exempt.
What is the 9% rate and who pays 0%?
The 9% rate applies to taxable profits exceeding AED 375,000. Businesses with taxable profits below this threshold pay 0% — effectively a small business relief. Free zone businesses that meet the "qualifying free zone person" criteria and earn "qualifying income" from qualifying activities can also benefit from a 0% rate on that income.
The qualifying free zone status requires meeting economic substance requirements, not earning income from mainland UAE (beyond permitted thresholds), and complying with transfer pricing rules. Getting this classification right from the outset is critical — a single non-qualifying transaction can lose the 0% status for the entire year.
CT registration: what you must do
All UAE businesses — even those expecting to pay 0% — must register with the FTA for corporate tax and obtain a Corporate Tax TRN. Registration is done through the EmaraTax portal. Failure to register carries a penalty of AED 10,000.
You must register within 3 months of incorporation for new businesses, or by the deadline set by the FTA for existing businesses. Even if your profits are below the AED 375,000 threshold, you must still register, file a return, and claim the small business relief.
What can you deduct? Key allowable expenses
The UAE CT Law allows deductions for expenses incurred wholly and exclusively for business purposes. This includes salaries and wages, rent, depreciation, interest (subject to a 30% EBITDA cap for businesses with net interest exceeding AED 12 million), and other ordinary business costs.
Certain expenses are specifically disallowed: fines and penalties, bribes, expenses relating to exempt income, and entertainment expenses beyond 50% of the cost. Related-party transactions must be at arm's length — inflated or deflated intercompany charges will be adjusted by the FTA.
When is the corporate tax return due?
The CT return must be filed within 9 months of the end of your financial year. For most businesses with a 31 December year-end, this means 30 September the following year. Payment is due at the same time as filing — there is no separate payment deadline.
Late filing and late payment penalties apply from the day after the due date. Interest accrues on unpaid tax at 14% per annum. Getting your books in order well before the deadline, and filing early if possible, is strongly advisable.
How to legally minimise your UAE corporate tax
Legal tax minimisation involves structure — not avoidance. Key strategies include: structuring free zone income as qualifying income where possible, using tax groups to offset profits against losses across related entities, correctly applying small business relief for entities under AED 3 million revenue, and ensuring transfer pricing documentation is in place before the FTA requests it.
Every business situation is different. The best time to plan is before transactions occur — not at year-end when the numbers are already locked. Book a consultation to discuss the options specific to your business.
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