By Lexor Global Tax Consulting LLC
The introduction of Corporate Tax in the United Arab Emirates marks a significant milestone in the country’s fiscal and regulatory framework. As the UAE aligns with global tax transparency standards while maintaining its competitive environment, businesses must adopt a structured and strategic approach to tax compliance and planning.
At Lexor Global Tax Consulting LLC, we assist mainland, free zone, and multinational companies in navigating UAE Corporate Tax efficiently and confidently.
What Is UAE Corporate Tax?
The UAE Corporate Tax regime was introduced under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, effective for financial years starting on or after 1 June 2023.
Corporate Tax is administered by the Federal Tax Authority (FTA).
UAE Corporate Tax Rates:
- 0% on taxable income up to AED 375,000
- 9% on taxable income exceeding AED 375,000
The regime ensures small businesses remain protected while larger enterprises contribute in line with international standards.
Who Must Pay Corporate Tax in the UAE?
Corporate Tax applies to:
- UAE mainland companies
- Free zone companies (subject to conditions)
- Foreign companies with a Permanent Establishment in the UAE
- Individuals conducting licensed business activities
- Certain entities remain exempt, including government entities and qualifying public benefit organizations.
Free Zone Corporate Tax – 0% Eligibility
Free zone businesses may qualify for a 0% Corporate Tax rate if they meet the conditions of a Qualifying Free Zone Person (QFZP).
Requirements include:
- Earning qualifying income
- Maintaining adequate economic substance
- Complying with transfer pricing regulations
- Filing proper tax returns
- Failure to meet criteria may result in taxation at 9%.
Small Business Relief in UAE Corporate Tax
Businesses with revenue below AED 3 million may elect Small Business Relief (subject to conditions), reducing compliance burden and tax exposure.
This initiative supports startups and SMEs in the UAE’s evolving tax environment.
Transfer Pricing Compliance
The UAE Corporate Tax regime aligns with the Organisation for Economic Co-operation and Development (OECD) Transfer Pricing Guidelines.
Companies must:
- Apply the arm’s length principle
- Maintain Master File and Local File (where applicable)
- Disclose related party transactions
Transfer pricing documentation is now a critical compliance requirement in the UAE.
Global Minimum Tax (Pillar Two) Considerations
Large multinational groups may also be impacted by the OECD Pillar Two Global Minimum Tax (15% effective tax rate for groups exceeding EUR 750 million in revenue).
Strategic planning is essential for multinational entities operating in the UAE.
Corporate Tax Registration & Filing Deadlines
All taxable persons must:
- Register with the FTA
- Maintain accounting records
- File annual Corporate Tax returns
- Pay tax within 9 months of the financial year-end
Even entities subject to 0% tax must generally comply with registration and filing obligations.
Why Corporate Tax Planning Is Critical
Corporate Tax affects:
- Business structuring
- Group company transactions
- Profit allocation
- Cash flow forecasting
- Mergers and acquisitions
- International expansion
Early tax impact assessments can prevent costly adjustments and penalties.
How Lexor Global Tax Consulting LLC Supports Your Business
We provide:
- UAE Corporate Tax registration
- Tax compliance and filing services
- Transfer pricing advisory
- Free zone tax eligibility reviews
- International tax structuring
- Pillar Two advisory
- Corporate tax health checks
Our goal is to ensure compliance while optimizing your tax position within UAE law.
