Corporate Income Tax Summary

Overview of the Corporate Income Tax Regime in the UAE

The United Arab Emirates (UAE) introduced a federal Corporate Income Tax (CIT) regime effective June 1, 2023, marking a significant shift in its fiscal policy aimed at aligning with global tax standards and supporting economic diversification.

Key Features:

Standard Rate:

  • A 9% corporate tax applies to taxable income exceeding AED 375,000.

Zero Tax Threshold:

  • 0% tax applies to taxable income up to AED 375,000, supporting small and start-up businesses.

Scope:

CIT applies to:

  • UAE-incorporated businesses.
  • Foreign entities with a permanent establishment in the UAE.
  • Freelancers and sole proprietors earning business income above the threshold.
  • Certain free zone entities, unless they meet specific conditions to retain tax-free status.

Exemptions:

Certain entities remain exempt, such as:

  • Government and government-controlled entities.
  • Extractive and non-extractive natural resource businesses (subject to emirate-level taxation).
  • Qualifying public benefit entities and pension funds.

Small Business Relief:

Available for resident businesses with revenue not exceeding AED 3 million in a tax period (available until the end of 2026), allowing them to be treated as having no taxable income.

Transfer Pricing Rules:

Businesses must comply with OECD-based transfer pricing regulations and maintain documentation for related party transactions.

Registration & Filing:

All taxable persons must register with the Federal Tax Authority (FTA) and file annual tax returns, regardless of their income level.