General Information
- What is Corporate Tax Filing in the UAE?
- Who Needs to Consider UAE Corporate Tax?
- Corporate Tax Returns — The Nine-Month Rule
- Small Business Relief
- Documents Commonly Required for Corporate Tax Filing
- Step-by-Step Corporate Tax Filing Process
- Understanding Deductible Business Expenses
- Common Corporate Tax Filing Mistakes
- How Connect Us Can Assist
Corporate Tax Filing in the UAE
The introduction of UAE Corporate Tax represents one of the most significant developments in the country’s business and regulatory environment. Corporate Tax is a federal direct tax imposed on the Taxable Income of businesses and other Taxable Persons, subject to the exemptions, reliefs and special regimes available under UAE Corporate Tax legislation.
The regime applies to financial years commencing on or after 1 June 2023 and is administered by the Federal Tax Authority (FTA). For businesses operating in the UAE, Corporate Tax compliance extends beyond calculating whether tax is payable. Companies must consider registration, accounting records, taxable income adjustments, available elections and reliefs, return filing, payment obligations and ongoing record retention.
UAE Corporate Tax Rates
For most Taxable Persons subject to the standard Corporate Tax regime, the principal rates are:
Taxable Income - Up to AED 375,000(Corporate Tax Rate-0%)
Above AED 375,000 - (9%)
The AED 375,000 threshold relates to Taxable Income rather than revenue or turnover.
For example, if a company has:
Taxable Income: AED 600,000
the calculation would broadly be:
First AED 375,000 × 0% = AED 0
Remaining AED 225,000 × 9% = AED 20,250
Corporate Tax Payable = AED 20,250
The actual calculation may be more involved because accounting profit can require adjustments before arriving at Taxable Income.
- The actual calculation may be more involved because accounting profit can require adjustments before arriving at Taxable Income.
Revenue, Accounting Profit and Taxable Income Are Different
One of the most important concepts for businesses to understand is that Corporate Tax is not simply charged on turnover.
Consider a business with:
Revenue: AED 2,000,000
Business expenses: AED 1,500,000
Accounting profit: AED 500,000
The Corporate Tax calculation does not necessarily end with the AED 500,000 accounting profit. The resulting figure forms the basis for determining the company’s Taxable Income.
Adjustments may be required for matters such as:
- Non-deductible expenditure
- Exempt income
- Entertainment expenditure
- Interest deduction limitations
- Related-party transactions
- Tax losses
- Unrealised gains or losses, depending upon the applicable basis
- Other adjustments prescribed by Corporate Tax legislation
Who Needs to Consider UAE Corporate Tax?
Corporate Tax can apply to a broad range of businesses and legal structures operating in or connected with the UAE.
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Mainland Companies
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Free Zone Companies
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Natural Persons Conducting Business
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Foreign Businesses
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Holding & Investment Structures
UAE incorporated companies operating under mainland commercial licences will generally fall within the Corporate Tax regime unless a specific exemption applies.
Free zone incorporation does not automatically remove a business from Corporate Tax.
Free Zone Persons are within the UAE Corporate Tax framework and must consider their registration and filing obligations.
Certain Free Zone Persons that satisfy the relevant conditions may qualify as Qualifying Free Zone Persons (QFZPs) and benefit from the special Free Zone Corporate Tax regime.
Corporate Tax can also apply to natural persons conducting a Business or Business Activity in the UAE where the applicable turnover and other statutory conditions are met.
Employment income, qualifying personal investment income and qualifying real-estate investment income are treated differently and should not automatically be regarded as taxable business income.
Non-resident persons can become subject to UAE Corporate Tax in certain circumstances, including where they have a Permanent Establishment or other taxable presence in the UAE, subject to the applicable legislation.
Holding companies and investment structures may also fall within the Corporate Tax framework even where a significant proportion of their income may potentially qualify for an exemption.
Corporate Tax Filing Is Separate From Corporate Tax Registration
Corporate Tax registration and Corporate Tax return filing are two distinct compliance requirements.
Registration establishes the Taxable Person’s Corporate Tax account and Tax Registration Number with the FTA.
Filing involves reporting the Taxable Person’s financial and tax information for a particular Tax Period.
Obtaining a Corporate Tax TRN does not mean the company’s annual compliance has been completed.
Once registered, the Taxable Person must continue to consider its return filing obligations for the relevant Tax Periods.
Corporate Tax Returns — The Nine-Month Rule
A Corporate Tax return must generally be submitted within nine months from the end of the relevant Tax Period. Any Corporate Tax payable is generally due within the same period.
For Example:
Corporate Tax for Free Zone Companies
Free zone companies require particular attention because the 0% Free Zone Corporate Tax regime is conditional.
A Free Zone Person does not automatically receive a 0% Corporate Tax rate merely because its licence was issued by a UAE free zone.
A company seeking to benefit as a Qualifying Free Zone Person must satisfy the applicable statutory requirements.
These include considerations relating to:
- * Qualifying Income
- * Adequate substance
- * Qualifying Activities
- * Excluded Activities
- * Transactions with Free Zone and Non-Free Zone Persons
- * Transfer Pricing compliance
- * Audited financial statements
- * The applicable de minimis requirements
- * Whether an election has been made to become subject to the standard Corporate Tax regime
Accordingly, Free Zone Corporate Tax should be reviewed on the basis of the company’s actual activities, customers, transactions and income, rather than simply the jurisdiction appearing on its trade licence.
A Company With No Revenue May Still Need to File
A common misconception is that Corporate Tax filing is required only when a company has generated revenue or made a profit. That is not necessarily the case. A registered Taxable Person may still have a filing obligation where:
Revenue = AED 0
Expenses = AED 0
Profit = AED 0
Corporate Tax Payable = AED 0
Similarly, a loss-making company may still be required to file its Corporate Tax return.
The fact that no Corporate Tax is payable should therefore not be confused with the absence of a Corporate Tax compliance obligation.
Small Business Relief
Small Business Relief (SBR) provides an important simplification for eligible UAE Resident Persons. Subject to the applicable conditions, a Resident Person whose Revenue does not exceed AED 3 million for the relevant Tax Period and all previous relevant Tax Periods may select for Small Business Relief.
Where a valid election is made, the eligible Taxable Person is treated as having no Taxable Income for that Tax Period. However, Small Business Relief is not automatic. The election must be made through the Corporate Tax return for the relevant Tax Period.
Under the current rules, Small Business Relief applies to eligible Tax Periods ending on or before 31 December 2026.
Who Cannot Elect for Small Business Relief?
Small Business Relief is subject to eligibility conditions and is not available to every business with Revenue below AED 3 million. In particular, it is not available to:
* A Qualifying Free Zone Person
* A member of certain multinational enterprise groups meeting the applicable consolidated revenue threshold
Businesses should therefore establish their eligibility before making the election.
Small Business Relief Does Not Mean “No Filing”
This distinction is particularly important. An eligible business cannot simply decide that its Revenue is below AED 3 million and therefore ignore Corporate Tax.
To benefit from Small Business Relief, an eligible Taxable Person must generally:
Register for Corporate Tax → Maintain appropriate records → File its Corporate Tax Return → Make the SBR election Only then can the relief be applied for the relevant Tax Period.
Documents Commonly Required for Corporate Tax Filing
The documentation required will depend upon the size, structure and activities of the business.
- * Trade licence
- * Certificate of Incorporation
- * Memorandum and Articles of Association
- * Shareholder information
- * Corporate Tax Registration Certificate
- * Tax Registration Number
- * Group structure, where relevant
- * Trial Balance
- * General Ledger
- * Profit and Loss Statement
- * Balance Sheet
- * Cash flow information, where relevant
- * Bank statements
- * Sales records
- * Purchase records
- * Expense schedules
- * Fixed asset register
- * Loan and financing information
- * Related-party transaction details
- * Connected Person transactions
- * Interest expense schedules
- * Entertainment expenditure
- * Exempt income details
- * Dividend income
- * Capital gains information
- * Tax loss schedules
- * Foreign income and tax information
- * Free Zone qualifying income information, where applicable
- * Transfer Pricing information, where applicable
Step-by-Step Corporate Tax Filing Process
1. Confirm the Tax Period & Filing Deadline
The first stage is to establish the company’s correct financial year and corresponding Corporate Tax period. The filing deadline can then be determined using the applicable nine-month rule.
2. Finalise the Accounting Records
Corporate Tax calculations depend upon reliable financial information. Before preparing the return, the company’s bookkeeping should therefore be completed and reconciled.
This ordinarily involves reviewing:
- * Bank accounts
- * Revenue
- * Purchases
- * Expenses
- * Receivables
- * Payables
- * Fixed assets
- * Loans
- * Shareholder balances
- * Other material accounts
3. Determine Accounting Income
The starting point for the Corporate Tax calculation is generally the company’s accounting income determined from properly prepared financial statements.
The applicable accounting standards and requirements should be considered according to the circumstances of the Taxable Person.
4. Identify Tax Adjustments
Accounting treatment and Corporate Tax treatment are not always identical.
The company’s accounting profit should therefore be reviewed for adjustments required under Corporate Tax legislation.
These can include:
- * Non-deductible expenses
- * Entertainment expenditure
- * Exempt income
- * Interest limitations
- * Tax losses
- * Related-party adjustments
- * Connected Person payments
- * Unrealised gains and losses
- * Other statutory adjustments
5. Review Available Elections, Exemptions & Reliefs
Before finalising Taxable Income, consideration should be given to any relevant elections or reliefs. These may include:
- * Small Business Relief
- * Participation Exemption
- * Tax Loss Relief
- * Qualifying Group Relief
- * Business Restructuring Relief
- * Realisation Basis election
- * Foreign tax credits
- * Other applicable Corporate Tax provisions
Eligibility should be established before any relief or election is applied
6. Review Related-Party & Connected Person Transactions
Transactions involving shareholders, directors, group companies and other Related Parties should be reviewed carefully. UAE Corporate Tax incorporates the arm’s length principle, meaning that relevant transactions should generally reflect terms that would have been agreed between independent parties under comparable circumstances. Transfer Pricing requirements may therefore apply even where the parties are located within the UAE.
7. Determine Taxable Income
Following the relevant adjustments, elections, exemptions and reliefs, the company’s Taxable Income can be established. For a business subject to the standard rates:
AED 0 – AED 375,000 → 0%
Amount exceeding AED 375,000 → 9%
Any available tax credits should then be considered in accordance with the applicable requirements.
Unexplained differences should be investigated before the return is filed.
8. Prepare the Corporate Tax Return
The return should then be prepared using the company’s financial and tax information.
The return may require information concerning:
- * Revenue
- * Accounting income
- * Taxable Income
- * Adjustments
- * Exempt income
- * Elections
- * Reliefs
- * Tax losses
- * Related Parties
- * Connected Persons
- * Free Zone status
- * Tax credits
- * Corporate Tax payable
The information reported should be consistent with the company’s supporting financial records.
9. Submit Through EmaraTax
Corporate Tax returns are submitted electronically through the FTA’s EmaraTax platform.
The return should be reviewed carefully before final submission. Once submitted, the acknowledgement and supporting filing records should be retained.
10. Settle Corporate Tax Payable
Where Corporate Tax is due, payment should be made within the applicable statutory deadline.
Businesses should allow sufficient time for the payment to be processed and correctly reflected within their FTA account. Return submission and payment of Corporate Tax are related but separate obligations.
375,000 → 9%
Any available tax credits should then be considered in accordance with the applicable requirements. Unexplained differences should be investigated before the return is filed.
As a general principle, expenditure incurred wholly and exclusively for the purposes of the Taxable Person’s Business may be deductible, subject to the specific rules and limitations contained within the Corporate Tax legislation.
Examples can include qualifying:
- * Salaries and employee costs
- * Office rent
- * Professional fees
- * Accounting expenditure
- * Marketing costs
- * Software and technology expenditure
- * Business insurance
- * Utilities
- * Operational expenses
- * Depreciation or other relevant accounting expenses, subject to tax treatment
However, simply recording an expense in the accounts does not automatically make it fully deductible for Corporate Tax purposes.
Certain business entertainment expenditure is subject to specific deduction restrictions.
Where the applicable conditions are met, only 50% of qualifying entertainment expenditure may be deductible for Corporate Tax purposes.
This can include certain expenditure associated with entertaining customers, shareholders, suppliers and other business partners.
Accordingly, entertainment costs should be separately identified during the Corporate Tax review rather than being treated in the same manner as ordinary operating expenditure.
A company making a tax loss should not assume that its Corporate Tax return is unimportant.
Subject to the applicable conditions, tax losses may potentially be carried forward and utilised against Taxable Income in future periods.
The amount that can be utilised in a subsequent period is subject to the applicable statutory limitation and other conditions.
Maintaining accurate records of tax losses is therefore an important part of long-term Corporate Tax compliance.
Transfer Pricing is no longer relevant only to very large international businesses. UAE Corporate Tax legislation requires relevant transactions and arrangements between Related Parties to satisfy the arm’s length principle. This can potentially include dealings between:
- * Group companies
- * Parent companies and subsidiaries
- * Companies under common ownership
- * Businesses and their shareholders
- * Certain directors or officers
- * Other persons falling within the statutory Related Party rules
Depending upon the circumstances and applicable thresholds, additional disclosure or Transfer Pricing documentation requirements may arise.
Common Corporate Tax Filing Mistakes
Corporate Tax Filing Checklist
Before submitting a Corporate Tax return, confirm that:
- * The correct Tax Period has been established.
- * The filing deadline has been verified.
- * Accounting records have been completed.
- * Bank accounts have been reconciled.
- * Financial statements have been prepared where applicable.
- * Accounting income has been reviewed.
- * Non-deductible expenditure has been identified.
- * Entertainment expenses have been considered.
- * Exempt income has been reviewed.
- * Related-party transactions have been identified.
- * Connected Person payments have been considered.
- * Transfer Pricing requirements have been reviewed.
- * Tax losses have been assessed.
- * Available exemptions and reliefs have been considered.
- * Small Business Relief eligibility has been assessed, where relevant.
- * Free Zone status has been reviewed, where applicable.
- * Relevant elections have been considered.
- * Taxable Income has been calculated.
- * Corporate Tax payable has been determined.
- * The Corporate Tax return has been reviewed before submission.
- * The return has been submitted through EmaraTax.
- * Any Corporate Tax liability has been paid within the applicable deadline.
- * Filing acknowledgements and supporting records have been retained.
Corporate Tax Compliance Should Begin With the Accounts
Corporate Tax should not be considered only when the annual filing deadline approaches.
A reliable Corporate Tax position begins with accurate bookkeeping and properly maintained financial records throughout the year. A structured compliance process can be viewed as:
Bookkeeping → Financial Statements → Tax Review → Adjustments → Elections & Reliefs → Taxable Income → Corporate Tax Return → Payment → Record Retention
Businesses that consider Corporate Tax throughout the financial year are generally better placed to identify potential issues, preserve supporting evidence and make informed decisions regarding available elections and reliefs.
How Connect Us Can Assist
Connect Us can support businesses with the coordination and administration of their UAE Corporate Tax compliance requirements.
Our support can include reviewing available financial and corporate information, assisting with the preparation of Corporate Tax filing documentation, identifying outstanding compliance requirements, coordinating the return preparation process and supporting the administrative aspects of submission through EmaraTax.
Where a matter requires an FTA-registered Tax Agent, licensed auditor or another regulated professional, the relevant services can be coordinated through appropriately qualified and authorised independent professionals in the UAE.
Any regulated tax representation, audit opinion or other reserved professional service remains the responsibility of the independently appointed professional.
Our approach is designed to provide businesses with an organised and coordinated Corporate Tax compliance process, whilst ensuring that specialist regulated work is undertaken by appropriately authorised professionals.