The introduction of corporate tax in the UAE has transformed the business landscape, requiring companies to stay compliant with new regulations. With 2025 underway, businesses must understand the latest tax policies, rates, exemptions, and compliance requirements. This guide covers everything you need to know about corporate tax in the UAE and how Premia TNC UAE can help businesses navigate this tax regime seamlessly.
What is Corporate Tax in the UAE?
Corporate tax is a direct tax imposed on the net income or profit of businesses. The UAE introduced corporate tax to align with global tax standards and reduce dependence on oil revenues. The tax is governed by the Federal Tax Authority (FTA) and applies to various businesses operating in the country.
Corporate Tax Rate in the UAE (2025)
As of 2025, the UAE corporate tax rates are:
- 0% on taxable income up to AED 375,000
- 9% on taxable income exceeding AED 375,000
- Different rates apply to large multinational corporations meeting the OECD Pillar Two criteria (typically subject to a 15% global minimum tax rate)
Who is Required to Pay Corporate Tax in the UAE?
Corporate tax applies to:
- All businesses operating in the UAE, including mainland and free zone companies
- Foreign entities with a permanent establishment (PE) in the UAE
- Individuals engaged in business activities that meet the tax threshold
Who is Exempt from Corporate Tax?
Certain entities and sectors enjoy exemptions, including:
- Government entities and government-controlled organizations
- Extractive industries (such as oil and gas companies)
- Public benefit organizations
- Investment funds and pension funds
Corporate Tax Calculation in the UAE
Corporate tax is calculated based on a company’s taxable income, which is the net profit reported in its financial statements after deducting allowable expenses and adjustments.
Formula:
Taxable Income = Total Revenue – Allowable Deductions
Corporate Tax Payable = (Taxable Income – AED 375,000) × 9%
Taxable Income and Deductible Expenses
To minimize tax liabilities, businesses must be aware of what can and cannot be deducted.
Allowable Deductions:
- Employee salaries and benefits
- Rent, utilities, and office expenses
- Marketing and advertising costs
- Depreciation of assets
- Interest expenses (subject to certain limits)
Non-Deductible Expenses:
- Personal expenses
- Fines and penalties
- Bribes and illegal payments
- Dividends paid to shareholders
Corporate Tax Compliance Requirements
To remain compliant, businesses must adhere to specific regulations:
1. Registration for Corporate Tax
All eligible businesses must register with the FTA for corporate tax, even if they qualify for exemptions.
2. Corporate Tax Filing and Payment
- Tax returns must be filed annually within nine months after the end of the financial year.
- Ensure timely tax payments to prevent fines.
3. Financial Record-Keeping
Companies must maintain accurate financial records for at least seven years to support their tax filings.
4. Transfer Pricing Compliance
Multinational companies must comply with transfer pricing rules, ensuring fair pricing for transactions between related entities.
Penalties for Non-Compliance
Failing to comply with corporate tax regulations can result in severe penalties:
- Failure to register – Heavy fines and restrictions on business operations
- Late tax filing – Monetary penalties increasing over time
- Tax evasion – Potential legal action and business suspension
Corporate Tax for Free Zone Companies
Free zone companies can benefit from tax incentives but must meet specific conditions. Businesses operating in a Qualifying Free Zone (QFZ) may enjoy a 0% tax rate on qualifying income, but non-qualifying activities are subject to the 9% corporate tax.
How Premia TNC UAE Can Help Businesses Stay Compliant
Understanding corporate tax laws and staying compliant can be challenging. Premia TNC UAE, a leading business consulting firm, offers expert services to ensure businesses meet all corporate tax obligations seamlessly.
Our Services Include:
- Corporate Tax Registration – Assisting businesses in registering with the Federal Tax Authority (FTA)
- Tax Filing & Compliance – Ensuring timely and accurate corporate tax returns
- Financial & Tax Advisory – Offering expert guidance on deductions, exemptions, and compliance strategies
- Free Zone Tax Planning – Helping free zone companies structure their business for optimal tax benefits
- Audit & Accounting Support – Providing professional accounting and bookkeeping services
With our expert assistance, businesses can avoid penalties, optimize tax efficiency, and focus on growth.
Conclusion
Corporate tax is now a reality in the UAE, and businesses must stay informed about the latest regulations, compliance requirements, and tax-saving strategies. By understanding the corporate tax framework and seeking professional guidance from experts like Premia TNC UAE, businesses can navigate the tax landscape smoothly while ensuring long-term success.
