UAE Corporate Tax (CT) became effective for financial years starting on or after 1 June 2023, and by 2026, all UAE businesses should be fully embedded in their compliance routines. Whether you are filing your first or third corporate tax return, understanding your obligations is essential to avoiding FTA penalties and managing your effective tax rate.
Who Is Subject to UAE Corporate Tax?
UAE corporate tax applies to:
- UAE-incorporated companies (mainland and free zone)
- Foreign companies effectively managed and controlled from the UAE
- Individuals conducting business or business activity in the UAE (earning above AED 1 million per year)
Exempt from corporate tax: UAE government entities, extractive businesses (subject to emirate-level taxation), certain qualifying public benefit organisations, and investment funds meeting specific conditions.
UAE Corporate Tax Rates
- 0% — On taxable income up to AED 375,000 (Small Business Relief also available)
- 9% — On taxable income above AED 375,000
- 0% — On Qualifying Income of a Qualifying Free Zone Person (QFZP)
- 9% — On non-qualifying income of a QFZP
Key Corporate Tax Compliance Obligations
1. Corporate Tax Registration
All UAE businesses — regardless of whether they owe tax — must register for corporate tax on EmaraTax. Registration deadlines are based on the date your licence was issued. Failure to register on time attracts an AED 10,000 penalty.
2. Annual Tax Return Filing
Corporate tax returns must be filed within 9 months of the end of the relevant tax period. For a business with a 31 December year-end, the return is due by 30 September of the following year.
3. Tax Payment
Corporate tax due must be paid by the return filing deadline. Late payment attracts a monthly 1% penalty on the unpaid amount.
4. Transfer Pricing Documentation
Businesses transacting with related parties must document that those transactions are conducted at arm’s length. This applies to both domestic and cross-border related-party transactions.
5. Financial Statements
Taxable income must be calculated based on financial statements prepared in accordance with internationally accepted accounting standards (IFRS or IFRS for SMEs).
Small Business Relief: Is Your Business Eligible?
Businesses with revenue not exceeding AED 3 million per tax period may elect for Small Business Relief. This treats them as having no taxable income for that period — effectively a 0% rate. Relief is available for tax periods ending on or before 31 December 2026.
Note: A business claiming Small Business Relief is still required to register for corporate tax and file a return.
Calculating Taxable Income: Key Adjustments
Taxable income starts with your accounting profit and then applies specific adjustments:
- Exempt income: Dividends and capital gains from qualifying shareholdings are exempt
- Non-deductible expenses: Fines, penalties, bribes, personal expenses, and interest above the general interest deduction limitation
- Depreciation: Tax depreciation follows accounting depreciation with some exceptions
- Interest deduction limitation: Net interest expense is deductible up to 30% of EBITDA (with a safe harbour of AED 12 million)
How Elysian Manages Your Corporate Tax Compliance
Elysian Consulting Group’s corporate tax team handles every aspect of your UAE CT compliance:
- Corporate tax registration on EmaraTax
- Taxable income calculation and return preparation
- Small Business Relief eligibility assessment
- Transfer pricing documentation
- QFZP eligibility review for free zone companies
- FTA audit support
Book a corporate tax consultation — visit elysianuae.com/contact/
Frequently Asked Questions
Q: What is the penalty for late corporate tax registration in the UAE?
The FTA imposes a fixed penalty of AED 10,000 for late corporate tax registration.
Q: Can losses be carried forward under UAE corporate tax?
Yes. Tax losses can be carried forward indefinitely and offset against up to 75% of taxable income in future periods.
Q: Does UAE corporate tax apply to sole traders?
Yes, if a natural person conducts business or business activity in the UAE with annual turnover exceeding AED 1 million.
