What is Corporate Tax in UAE??

Corporate Tax (CT) in UAE, also referred to as Corporate Income Tax or Business Profits Tax, is a direct tax imposed on the net income of businesses. Unlike VAT (Value Added Tax), which is charged on transactions, Corporate Tax applies to the profits companies generate after deducting allowable expenses.

• Rate: 9% (one of the lowest in the world)

• Threshold: Applicable on taxable income above AED 375,000

• Authority: Federal Tax Authority (FTA) oversees implementation

The primary purpose of Corporate Tax in UAE is to enhance transparency, align with international standards, and diversify the economy away from oil revenues.

Who Should Register for Corporate Tax in UAE?

Not all entities need to register, but most companies must comply. According to the Ministry of Finance, the following are subject to Corporate Tax:

• UAE incorporated companies

• Foreign entities with a permanent establishment in the UAE

• Free zone companies (with some exemptions if qualifying for 0% rate)

• Individuals conducting business in the UAE under a license

Exempt entities include:

• Government entities

• Charitable organizations (subject to approval)

• Businesses involved in natural resource extraction (already taxed at Emirate level)

Tip: Even if you believe your business is exempt, you may still need to file a Corporate Tax return to declare your exemption.

How Much is Corporate Tax in UAE?

The UAE Corporate Tax rate is designed to be competitive globally:

• 0% tax on profits up to AED 375,000

• 9% tax on profits above AED 375,000

• 15% tax for large multinational companies meeting OECD Pillar Two requirements (global minimum tax rule)

Example:
If your business earns AED 600,000 net profit:

• First AED 375,000 = 0% tax

• Remaining AED 225,000 = 9% → AED 20,250 tax payable

How to Register for Corporate Tax in UAE

Corporate Tax registration is mandatory for all eligible businesses. Registration is done through the Federal Tax Authority (FTA) online portal.

Steps to register:

1. Create an account on the FTA portal

2. Submit Trade License & Emirates ID copies

3. Provide Articles of Association / Certificate of Incorporation

4. Declare financial information (revenue, profit estimates)

5. Receive your Tax Registration Number (TRN)

Deadlines: Businesses must register before their first tax period begins. For most, this started on 1 June 2023.

 Pinnacler assists clients with seamless Corporate Tax registration to avoid penalties.

How to Calculate Corporate Tax in UAE

Corporate Tax is calculated based on accounting profits reported in financial statements prepared under IFRS (International Financial Reporting Standards).

Calculation Formula:

Taxable Income = Accounting Profit – Adjustments – Exempt Income – Losses Carried Forward

Allowable Deductions:

• Salaries & wages

• Office rent & utilities

• Marketing & advertising costs

• Depreciation of assets

Non-Deductible Expenses:

• Fines & penalties

• Bribes or illegal payments

• Dividends paid to shareholders

Pro Tip: Many SMEs underestimate allowable deductions. Proper bookkeeping can help reduce your tax liability significantly.

How to File & Pay Corporate Tax in UAE

• Businesses must file an annual Corporate Tax return with the FTA within 9 months after the end of their financial year.

  Process:

  1. Prepare audited financial statements

  2. Calculate taxable income

  3. Submit return via the FTA portal

  4. Pay tax online through FTA’s payment gateway

   Penalties apply for:

  • Late registration

  • Late filing

  • Incorrect reporting

   Pinnacler ensures your filings are accurate and on time, helping you avoid fines.

Key Corporate Tax Deadlines

• 1 June 2023 → Corporate Tax law effective

• First Tax Period: Starts from 1 June 2023 or 1 January 2024 (depending on financial year)

• Filing Deadline: 9 months from the end of financial year

 Example:
If your company’s financial year ends on 31 December 2024 → you must file by 30 September 2025.

Corporate Tax in UAE for Free Zone Companies

• Free zone businesses enjoy certain tax incentives, but must meet qualifying criteria to maintain 0% tax.

  Qualifying Free Zone Person:

  • Earns income from outside UAE or from other free zones

  • Does not conduct business with the UAE mainland (except under certain conditions)

  • Maintains adequate substance & audited financial statements

  If conditions are not met → 9% Corporate Tax applies.

FAQs: Corporate Tax in UAE

Q1: What is Corporate Tax in UAE?
Corporate Tax is a direct tax on net profits of businesses, effective from 1 June 2023.

Q2: How much is Corporate Tax in UAE?
0% on income up to AED 375,000, and 9% above that threshold.

Q3: Who should register for Corporate Tax in UAE?
All businesses operating under a trade license, including free zone companies (with exemptions for certain entities).

Q4: How to register for Corporate Tax in UAE?
Through the FTA online portal by submitting required documents and receiving a Tax Registration Number (TRN).

Q5: How to calculate Corporate Tax in UAE?
Based on accounting profits with adjustments for exemptions and allowable deductions.

Q6: How to pay Corporate Tax in UAE?
Through the FTA portal after filing your annual return.

Q7: What happens if I don’t register?
Penalties apply for non-registration, late filing, and incorrect reporting.

Why Choose Pinnacler for Corporate Tax Services in UAE?

Navigating the new Corporate Tax law can be overwhelming for businesses. Pinnacler offers end-to-end Corporate Tax solutions:

• Corporate Tax registration

• Bookkeeping & accounting support

• Tax calculation & filing

• Compliance audits

• Advisory for free zone & multinational companies

With our expertise, businesses can focus on growth while staying compliant with UAE tax regulations.

Conclusion

The introduction of Corporate Tax in UAE marks a historic shift in the country’s financial landscape. While the 9% rate remains one of the lowest globally, compliance is essential to avoid penalties. Businesses must understand who should register, how to calculate, and how to file corporate tax correctly.

 Partner with Pinnacler today to ensure your business remains compliant, efficient, and future-ready.