The United Arab Emirates (UAE), traditionally known for its tax-free status, introduced a 9% corporate tax on business profits exceeding AED 375,000, effective June 1, 2023.
Tax Rates:
- 0% on taxable income up to AED 375,000.
- 9% on taxable income exceeding AED 375,000.
Understanding who must register for Corporate taxation is crucial for businesses and individuals operating in the region. Businesses subject to corporate tax must register with the FTA, including:
UAE-resident companies
UAE resident companies have up to 3 months after it has been formed to register for Corporate Tax. This includes Free Zone companies however, some exemptions may apply as to whether a Free Zone company is taxed or not.
Foreign entities
Foreign entities with a permanent establishment or significant presence in the UAE are also required to register.
Freelancers and sole proprietors who generate business income above the taxable threshold.
Tax Registration Requirement: If your UAE-based business turnover surpasses AED 1 million in a calendar year, you must register with the Federal Tax Authority (FTA) for corporate tax purposes.
Exempt Income: Certain income types are excluded from the AED 1 million turnover calculation and are not subject to corporate tax. These include:
- Wages (employment income).
- Personal investment income, such as dividends and interest.
Real estate investment income, provided it’s not derived from a licensed business activity. • Registration Deadline: If your turnover exceeds AED 1 million in a given year, you must register for corporate tax by March 31 of the following year. For instance, if your turnover exceeded the threshold in 2024, the registration deadline would be March 31, 2025.