Navigating UAE Corporate Tax: What Every Business Should Know

The corporate tax system in the UAE is structured to adhere to global best practices and integrate internationally accepted principles. This dual approach fosters transparency and helps position the UAE as a competitive regional business hub. The Federal Tax Authority (FTA) is responsible for managing, collecting, and enforcing corporate tax, playing a vital role in ensuring compliance with the nation’s tax regulations. By understanding the key aspects of corporate tax in the UAE, businesses are able to make informed decisions that ensure compliance with regulatory requirements.

1. Applicability of UAE Corporate Tax Laws

There are two primary categories concerning the applicability of corporate tax in the UAE. The first category involves natural persons or individuals. In this case, corporate tax applies only if these individuals engage in business activities within the UAE and their total turnover exceeds 1 million AED in a calendar year. The second category pertains to companies that must register for corporate tax upon formation, regardless of their revenue level.

The registration process for corporate tax in the UAE requires obligatory documents from business owners. Below is a clearer outline of what will be required of you:

• Valid Business Trade License: This is evidence that your business is legally permitted to carry on business in the UAE. It indicates the nature of your business activities and includes vital information such as your business name and address.
• Emirates ID and Passport of Authorized Persons and Company Owners: These are primary forms of identification within the UAE. If an authorized person is not a UAE resident and does not possess an Emirates ID, a passport will be acceptable. In all cases, it is important to note that a passport is mandatory for submission.
• Memorandum of Association (MOA) or Articles of Association (AOA): These documents establish the ownership and operational rules for your business, including how the company will be managed.
• Contact Details: It is important to include comprehensive contact information, such as an active email ID and phone number for individuals permitted to represent the business, along with the complete company address and P.O. Box.

Remember, timely registrationis important to avoid penalties and ensure compliance with local regulations. Once your business is operational, you should complete corporate tax registration immediately, as delayed registration may lead to penalties from the Federal Tax Authority (FTA). Being proactive not only spares you penalties but also sets a solid foundation for your company in the UAE.

2. Corporate Tax Registration Timeline

Entrepreneurs must know the timeline of corporate tax registration in order to be compliant with the law. The Federal Tax Authority (FTA) has set specific deadlines for registration that are linked to the issue date of a business license. Failure to register on time may result in a penalty of 10,000 AED. For example, if your business license is issued in July 2024, you must complete your corporate tax registration by September 2024. Companies incorporated after 1 March 2024 need to register within 3 months of incorporation.

It is always advisable for business owners to always stay updated and informed about the specific requirements and deadlines associated with their business license. This includes continuously monitoring updates from the FTA.  You can also visit and read our dedicated blog on the corporate tax registration timeline at https://www.excellenceauditing.com/registration-timeline-for-corporate-tax/.

3. Corporate Tax Rates

As of 2024, the corporate tax rate for businesses is set at 9%. It is important to keep in mind that tax regulations frequently change, so businesses must stay informed about updates in this dynamic market. As of last January 2025, there has been a significant change for multinational companies, as the tax rate increased from 9% to 15%.

Apart from multinational companies, other businesses will continue to benefit from the general tax rate of 9% on net profits above 375,000 AED.

4. Annual Corporate Tax Filing

The Federal Tax Authority (FTA) mandates all taxpayers to submit their corporate tax returns within nine months following the conclusion of their company’s financial year. For example, if your financial year spans from January to December 2024, your corporate tax return must be filed by September 30, 2025.

Adhering to the FTA’s deadlines is crucial to avoid fines and prevent operational disruptions. The penalty for failing to file your corporate tax on time is AED 500 per month during the initial 12 months. After this period, starting from the 13th month, the penalty increases to 1,000 AED per month. Additionally, if you have a corporate tax liability, further penalties can apply, amounting to 14% of that liability.

Compliance is not only to avoid financial penalties; it is also important for maintaining a good business reputation and preventing any potential backlogs or interruptions in your operations.

5. Compliance Under Corporate Tax in the UAE

• Maintaining accurate bookkeeping and accounting is crucial for compliance with UAE regulations. Businesses should ensure that their financial data is precise and in line with local laws. Engaging reputable accounting and bookkeeping companies in the UAE can help ensure the proper management of financial documents.
• For businesses that meet the prescribed threshold of 50 million AED in annual revenue, auditing is mandatory. However, even if your business falls below this threshold, conducting a responsible financial audit is advisable. This not only facilitates trade license renewal but also ensures that financial accounts are compliant with acceptable regulations.
• In case your company is involved in related-party transactions among internal entities, proper transfer pricing documentation and compliance procedures must be in place to meet regulatory requirements.
• In the event of company liquidation, it is crucial to initiate the de registration process within three months. Failure to do so will result in penalties of 1,000 AED per month.

How Excellence Can Assist You with Corporate Tax Compliance in the UAE ?

Navigating the requirements of corporate tax in the UAE is essential for businesses, but it doesn’t have to be overwhelming nor should you do it alone. Working with expert companies that specialize in tax compliance services can significantly simplify this process.

At Excellence, our goal is to make your experience easier by managing all aspects of corporate tax planning, paperwork, and regulatory compliance. Our dedicated and expert team of corporate tax specialist ensures that every detail of your tax obligations is handled with precision, quality, and efficiency, allowing you to meet the regulations governing corporate tax.

To keep your business on track, it’s important to stay informed and ask questions. If you need assistance or have any inquires, you can reach out to us for support.