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The UAE Corporate Tax regime applies to tax periods (the financial periods for which Corporate Tax is calculated and filed) beginning on or after 1 June 2023 under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, as amended. For taxable persons (for example, companies or individuals that fall within the Corporate Tax rules) under the standard regime, 0% generally applies to the first AED 375,000 of taxable income (income after the adjustments required by the Corporate Tax Law) and 9% applies to the portion above AED 375,000. Different rules apply to qualifying Free Zone persons (Free Zone businesses that meet the conditions for the special Corporate Tax regime). Certain large multinational groups may also fall within the UAE Top-up Tax regime (a separate minimum-tax regime for large multinational groups within scope).
The UAE Corporate Tax regime was introduced as part of the UAE’s wider tax framework and applies across all Emirates. The Ministry of Finance states that the regime is intended to support the UAE’s strategic objectives while maintaining a competitive tax system aligned with international standards.
Table of Contents
What is Corporate Tax?
Corporate Tax is a direct tax imposed on the taxable income of persons that fall within the UAE Corporate Tax rules. Taxable income generally starts from accounting income (accounting profit or loss before Corporate Tax adjustments) and is adjusted under the Corporate Tax Law for items such as exempt income, reliefs, deductions and other tax adjustments.
Who is Subject to Corporate Tax?
Corporate Tax applies to resident persons (persons treated as UAE residents for Corporate Tax purposes) and non-resident persons (persons that are not UAE resident persons but fall within the UAE Corporate Tax rules). UAE-incorporated or established juridical persons (for example, companies or other entities with separate legal personality), including Free Zone persons (legal entities incorporated, established or registered in a UAE Free Zone), are generally resident persons. A foreign juridical person can also be a resident person if it is effectively managed and controlled in the UAE.
A natural person (an individual) is generally subject to Corporate Tax only where they conduct a business or business activity in the UAE and the total turnover (gross income from the relevant business or business activities) from those activities exceeds AED 1 million in a Gregorian calendar year. Wages (salary and employment-related remuneration), personal investment income (income from investments held in a personal capacity where the legal conditions are met) and qualifying real estate investment income (income from property investment held in a personal capacity where the legal conditions are met) are excluded from this test.
A non-resident person may be within scope where it has a permanent establishment (a taxable business presence of a non-resident person in the UAE), derives state-sourced income (income treated as arising from the UAE under the Corporate Tax rules), or has a nexus (a taxable connection to UAE immovable property under the applicable nexus rules) in the UAE under the applicable rules. Free Zone persons remain within the Corporate Tax framework, although a qualifying Free Zone person may benefit from the special Free Zone rates if all conditions are met.
Who is Exempt from Corporate Tax?
The Corporate Tax Law identifies several categories of exempt persons (persons that qualify for an exemption from Corporate Tax, subject to the relevant conditions). These include government entities, government controlled entities, qualifying extractive businesses (for example, businesses extracting UAE natural resources that meet the legal conditions) and non-extractive natural resource businesses (for example, qualifying businesses that separate, treat, refine or process UAE natural resources), qualifying public benefit entities (for example, approved charities or public-benefit organisations that meet the legal conditions), qualifying investment funds (investment funds that meet the conditions for Corporate Tax exemption), certain public or private pension and social security funds, certain wholly owned and controlled entities of specified exempt persons, and other persons specified by Cabinet Decision.
An exemption does not mean that every compliance requirement automatically disappears. Registration, declaration and filing obligations depend on the category of exempt person and the applicable FTA requirements.
How is a Taxable Person Subject to Corporate Tax?
The Corporate Tax base depends on whether the taxable person is a resident person or a non-resident person. A resident juridical person is generally subject to Corporate Tax on taxable income derived from the UAE and from outside the UAE. A resident natural person is taxed only on income that relates to the business or business activity conducted in the UAE under the natural-person rules.
A non-resident person can be subject to Corporate Tax on income attributable to a UAE permanent establishment, state-sourced income that is not attributable to that permanent establishment, and taxable income attributable to a UAE nexus where the applicable rules create one.
Resident Persons, Non-Resident Persons, and Permanent Establishment
Who is a Resident Person?
A juridical person is a resident person for Corporate Tax purposes if it is incorporated, established or otherwise recognised under UAE law, including in a Free Zone. A foreign juridical person can also be a resident person if it is effectively managed and controlled in the UAE.
For a natural person, Corporate Tax residence is linked to conducting a business or business activity in the UAE. The natural person is generally subject to Corporate Tax only where the turnover from those UAE business or business activities exceeds AED 1 million in a Gregorian calendar year. Wages, personal investment income and qualifying real estate investment income are not treated as business or business activity income for this threshold.
Who is a Non-Resident Person?
A non-resident person is a person that is not a resident person for UAE Corporate Tax purposes and falls within one of the non-resident person conditions in the Corporate Tax Law. This can include having a permanent establishment in the UAE, deriving state-sourced income, or having a nexus in the UAE under the applicable Cabinet Decision.
A non-resident person is subject to Corporate Tax on taxable income attributable to its UAE permanent establishment, state-sourced income that is not attributable to that permanent establishment, and taxable income attributable to a UAE nexus where applicable. State-sourced income that is not attributable to a permanent establishment or nexus is currently subject to withholding tax (tax deducted at source from specified payments) at 0%, unless a different rate is prescribed.
What is a Permanent Establishment?
A permanent establishment can arise under Article 14 of the Corporate Tax Law. It may arise where a non-resident person has a fixed or permanent place in the UAE through which its business is conducted, where a person in the UAE habitually exercises authority to conduct business on its behalf, or in other circumstances prescribed by the law.
The Corporate Tax Law also contains exclusions, including for certain preparatory or auxiliary activities and qualifying independent agents. Where an applicable UAE double tax treaty applies, its terms should also be considered when assessing whether a permanent establishment exists.
Taxable Income and Tax Calculation
What is Corporate Tax Imposed On?
Corporate Tax is imposed on a taxable person’s taxable income for the relevant tax period. The starting point is generally the taxable person’s accounting income, based on adequate standalone financial statements prepared under accounting standards accepted in the UAE.
The accounting income is then adjusted, where applicable, for items such as exempt income, reliefs, deductible and non-deductible expenditure, related party adjustments (for example, adjustments involving a parent company, subsidiary, shareholder or commonly controlled business where the legal definition is met), connected person adjustments (for example, adjustments involving an owner or director where the Corporate Tax rules apply), tax losses and other adjustments required by the Corporate Tax Law. The resulting taxable income is reported in the Corporate Tax return (the return filed with the FTA for the relevant tax period).
What Income is Exempt?
The Corporate Tax Law excludes certain income from taxable income. Domestic dividends and other profit distributions received from a juridical person that is a UAE resident person are exempt. Dividends, profit distributions and gains from foreign or other participating interests (qualifying ownership interests in another juridical person that meet the legal conditions) may also be exempt where the participation exemption (an exemption for qualifying dividends, profit distributions and gains from a participating interest) conditions are met.
A resident person may also elect for the foreign permanent establishment exemption (an election that can exempt qualifying income and associated expenditure of a foreign permanent establishment) where the relevant conditions are satisfied. Expenditure incurred in deriving exempt income is generally not deductible when determining taxable income.
What Expenses Are Deductible?
As a general rule, expenditure is deductible where it is incurred wholly and exclusively for the purposes of the taxable person’s business and is not capital in nature, subject to the specific limitations in the Corporate Tax Law. If expenditure has both business and non-business purposes, only the business portion is deductible, together with any fair and reasonable share of common expenditure where the law permits.
Capital expenditure is generally not deducted immediately. Its accounting treatment, including depreciation or amortisation where applicable, forms part of accounting income and remains subject to the Corporate Tax adjustments required by law. Separate rules can restrict or disallow items such as certain interest expenditure, entertainment expenditure, fines and penalties, non-qualifying donations and some connected person payments.
Looking for a Corporate Tax Consultant in the UAE?
Contact Beaufort Associates to discuss your Corporate Tax position, filing requirements and the practical steps relevant to your business. Professional support can help identify the applicable rules, prepare the required information and reduce the risk of avoidable filing errors.
What is the Corporate Tax Rate?
For a taxable person under the standard Corporate Tax regime, 0% applies to the portion of taxable income up to AED 375,000 and 9% applies to the portion above AED 375,000. Qualifying Free Zone persons are subject to separate rates: 0% on qualifying income (income that meets the conditions for the 0% Free Zone rate) and 9% on taxable income that is not qualifying income.
Certain large multinational groups may also be subject to the UAE Domestic Minimum Top-up Tax (a separate minimum-tax regime for large multinational groups within scope) for fiscal years beginning on or after 1 January 2025. The Top-up Tax applies under separate rules to in-scope multinational enterprise groups.
What is the Withholding Tax Rate?
State-sourced income of a non-resident person that is not attributable to a UAE permanent establishment or nexus is currently subject to withholding tax at 0%, unless another rate is prescribed for a specified category of income. Because the current rate is 0%, no amount is presently withheld and the FTA states that there are no withholding-tax registration or filing obligations for UAE businesses or foreign recipients in these cases. Withholding tax does not apply to transactions between UAE resident persons.
When Can a Free Zone Person Be a Qualifying Free Zone Person?
A qualifying Free Zone person can benefit from a 0% Corporate Tax rate on qualifying income and is subject to 9% on taxable income that is not qualifying income.
To qualify, the Free Zone person must satisfy the conditions in Article 18 of the Corporate Tax Law and the current implementing decisions. These include maintaining adequate substance (sufficient core business activities, assets and qualified employees in the UAE relative to the business), deriving qualifying income, not electing to be subject to the standard Corporate Tax regime, complying with the arm’s-length principle (pricing related-party transactions as if they were between independent parties) and transfer pricing documentation rules (records supporting the pricing of transactions between related parties and connected persons), meeting the de minimis requirements (limits on non-qualifying revenue that can be earned without losing qualifying Free Zone person status) for non-qualifying revenue, and preparing audited financial statements where required. Ministerial Decision No. 229 of 2025 contains the current qualifying activities (activities eligible for the special Free Zone treatment) and excluded activities (activities specifically excluded from qualifying treatment) rules.
If the conditions are not met, the Free Zone person can cease to be a qualifying Free Zone person from the beginning of the relevant tax period and for the subsequent four tax periods, subject to the applicable rules.
What Are Tax Groups, and When Can They Be Formed?
Two or more eligible resident juridical persons may apply to the FTA to form a tax group (eligible UAE resident companies treated as one taxable person for Corporate Tax purposes).
The parent company and subsidiaries must meet the tax group conditions throughout the relevant tax period. Among the main conditions, the parent company must directly or indirectly own at least 95% of each subsidiary’s share capital, hold at least 95% of its voting rights, and be entitled to at least 95% of its profits and net assets. The members must have the same financial year (the accounting period used for their financial statements) and use the same accounting standards. Neither the parent company nor a subsidiary can be an exempt person or a qualifying Free Zone person.
Additional administrative and residence-related rules apply under Ministerial Decision No. 301 of 2024.
How to Calculate the Taxable Income of a Tax Group?
To determine the taxable income of a tax group, the parent company consolidates the financial results, assets and liabilities of each subsidiary for the relevant tax period and eliminates transactions between tax group members. Additional rules can apply to pre-grouping tax losses, members joining or leaving the tax group and certain intra-group transfers.
Registering, Filing, and Paying Corporate Tax
Taxable persons must register for Corporate Tax and obtain a Corporate Tax Registration Number within the applicable FTA registration timeline, except where a specific exception applies. Free Zone persons are within the registration framework. The FTA may also require certain exempt persons to register.
A Corporate Tax return is generally due no later than nine months from the end of the relevant tax period, unless the FTA directs another date. Corporate Tax payable is generally due within the same nine-month period.
How to Prepare for Corporate Tax
Review the current Corporate Tax Law, implementing decisions and the latest official guidance published by the Federal Tax Authority and Ministry of Finance. Confirm whether and when your business must register, the applicable tax period, the return and payment deadlines, any elections or applications that may be relevant, and the records needed to support the Corporate Tax position.
- Whether and when the business needs to register for Corporate Tax;
- The accounting period and tax period that apply;
- When the Corporate Tax return and payment are due;
- Which elections, reliefs or applications may be relevant; and
- What financial information, supporting documents and records must be retained.
Corporate Tax records and supporting documents generally need to be retained for seven years after the end of the tax period to which they relate.
What is a Business Activity?
Under the Corporate Tax Law, a business is an activity conducted regularly, on an ongoing and independent basis by a person, such as an industrial, commercial, agricultural, vocational, professional, service or other activity involving tangible or intangible property. A business activity is any transaction or activity, or series of transactions or activities, conducted by a person in the course of that business.
The statutory definition does not require the business to be profitable in every period. For natural persons, being engaged in a business or business activity is only one part of the Corporate Tax test: the separate turnover threshold and excluded income categories must also be considered.
Are International Companies’ UAE Branches Subject to UAE Corporate Tax?
A UAE branch of a foreign juridical person is generally treated as an extension of its foreign parent rather than a separate juridical person. If the branch or other UAE presence constitutes a permanent establishment under Article 14 of the Corporate Tax Law, the foreign parent is a non-resident person subject to Corporate Tax on the taxable income attributable to that UAE permanent establishment.
Whether a particular branch creates a permanent establishment depends on the activities and facts, and any applicable UAE double tax treaty should also be considered.
Frequently Asked Questions
What is Corporate Tax in the UAE?
Corporate Tax is a direct tax imposed on the taxable income of businesses and other persons that fall within the UAE Corporate Tax rules. It applies to tax periods beginning on or after 1 June 2023.
What is the UAE Corporate Tax rate?
For most businesses, Corporate Tax is charged at 0% on the first AED 375,000 of taxable income and 9% on taxable income above AED 375,000. Different rules can apply to qualifying Free Zone persons and certain large multinational groups.
Who is subject to UAE Corporate Tax?
UAE companies and other juridical persons (for example, companies or other entities with separate legal personality) are generally within the Corporate Tax regime. Certain non-resident persons and individuals carrying on a business or business activity in the UAE may also fall within the rules where the applicable conditions are met.
Are Free Zone companies subject to UAE Corporate Tax?
Yes. Free Zone companies are within the UAE Corporate Tax framework. A qualifying Free Zone person (a Free Zone business that meets the conditions for the special Corporate Tax regime) may benefit from a 0% rate on qualifying income, subject to meeting all applicable conditions.
Mohammed Shabeeb
Last Reviewed on 29th September, 2026
This page sets out our understanding of corporate tax based on the legislation and guidance in force at the date of last review. The position may change, and the application to a particular set of facts may require further analysis. Nothing on this page constitutes professional, legal or tax advice. Beaufort Associates accepts no liability for action taken or not taken in reliance on this page. Please contact us for advice tailored to your circumstances.
Sources
Primary sources referenced on this page:
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, as amended
- Cabinet Decision No. 116 of 2022 on the Annual Taxable Income Subject to Corporate Tax
- Cabinet Decision No. 49 of 2023 on natural persons conducting Business or Business Activities
- Cabinet Decision No. 100 of 2023 on Determining Qualifying Income for the Qualifying Free Zone Person
- Cabinet Decision No. 142 of 2024 on the Imposition of Top-up Tax on Multinational Enterprises
- Cabinet Decision No. 35 of 2025 on the Non-Resident Person’s Nexus in the UAE
- Ministerial Decision No. 301 of 2024 on Tax Group
- Ministerial Decision No. 302 of 2024 on the Participation Exemption and Foreign Permanent Establishment Exemption
- Ministerial Decision No. 84 of 2025 on Audited Financial Statements
- Ministerial Decision No. 229 of 2025 Regarding Qualifying Activities and Excluded Activities
- Federal Tax Authority Corporate Tax General Guide | CTGGCT1
- Federal Tax Authority Corporate Tax Registration service page and Corporate Tax Topics
We have referenced the legislation in force as at the last review date. The UAE tax framework is evolving; later changes may affect the position. Speak with us for advice on your specific circumstances.
