Corporate Tax in Dubai – 2025 Guide
Introduction
The Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses (hereinafter referred to as the “Corporate Tax Law”) was issued by the United Arab Emirates (“UAE”), on 09 December 2022.
The Corporate Tax Law provides the legislative basis for the introduction and implementation of a Federal Corporate Tax (“Corporate Tax”) in the UAE and is effective for financial years starting on or after 1 June 2023.
Corporate Tax in Dubai is a cornerstone of the UAE’s new business landscape. Introduced in 2023, the UAE Corporate Tax regime aims to align Dubai with global standards while keeping its appeal as a low-tax hub for investors and entrepreneurs.
What Is Corporate Tax in Dubai?
Corporate Tax is a direct tax levied on the net income of companies and other businesses operating in Dubai and across the UAE. The standard rate is 9% on taxable profits above AED 375,000. Profits up to that threshold are taxed at 0%, supporting startups and SMEs.
For the application of the Corporate Tax Law to companies and other juridical persons, all activities conducted and assets used or held will generally be considered activities conducted, and assets used or held, for the purposes of a “Business”.
| Taxpayer | Applicable CT rate | ||
|---|---|---|---|
|
|
||
|
0% on qualifying income 9% on taxable income that does not meet the qualify |
Who Needs to Pay Corporate Tax?
Corporate Tax applies to juridical persons incorporated in the UAE and juridical person’s effectively managed and controlled in the UAE, as well as to foreign juridical persons that have a permanent establishment
Individuals will be subject to Corporate Tax only if they are engaged in a business or business activity in the UAE, either directly or through an unincorporated partnership or sole proprietorship.
Corporate Tax is a Federal tax and will therefore apply across all the Emirates.
The terms “Business” and “Business Activity” as defined in the Corporate Tax Law identify when the activities of certain persons give rise to a UAE Corporate Tax liability by considering the person to be a taxable person.
“Business” means any economic activity, whether continuous or short term, conducted by any person. It is implied that a business is conducted with a profit motive, and that there is the existence of some system and organization to the activity conducted.
Corporate Tax applies to:
- UAE-based companies and branches
- Foreign entities with a permanent establishment in Dubai
- Free zone companies (unless they meet “qualifying income” conditions)
Some organizations remain exempt, including:
- Government entities
- Extractive industries (with a special concession)
- Qualifying public benefit entities and pension funds
Example of Corporate Tax
If a business has earned taxable income of AED 1 million, what will be the UAE Corporate Tax amount
The Corporate liability will be calculated as follows:
- Taxable income of AED 375,000 (amount to be confirmed in a Cabinet Decision) subject to CT at 0%: AED 375,000 x 0% = AED 0
- Taxable income exceeding AED 375,000 (amount to be confirmed in a Cabinet Decision) subject to CT at 9%: (AED 1,000,000 – AED 375,000) = AED 625,000 x 9% = AED 56,250
The UAE CT liability for the Tax Period will be AED 0 + AED 56,250 = AED 56,250
Key Features of Dubai’s Corporate Tax
- Low rate (9%) compared to many global markets
- Generous threshold (AED 375,000) for small businesses
- No tax on personal income or capital gains for individuals
- Free zones may enjoy 0% tax on qualifying income if substance rules are met
Registration & Compliance
All businesses in Dubai (even those expecting 0% tax) must:
- Register with the Federal Tax Authority (FTA)
- Maintain proper accounting records
- File an annual tax return within nine months of the end of their financial year
- Pay any due tax on time to avoid penalties
Penalties for Non-Compliance
Late filing or payment can lead to:
- Fixed fines starting at AED 500
- Percentage-based penalties for unpaid amounts
- Possible suspension of business licenses for repeated violations
Why Dubai Remains Attractive
Despite the new tax, Dubai still offers:
- 100% foreign ownership in most sectors
- Strategic location between Asia, Europe, and Africa
- World-class infrastructure and banking
- No withholding tax or tax on dividends
Expert Help
Understanding the Corporate Tax law can save you money and reduce risk. A licensed tax advisor in Dubai can:
- Assess your eligibility for free-zone exemptions
- Plan for optimal tax efficiency
- Ensure compliance with FTA deadlines
How We Help Businesses with Corporate Tax in Dubai
Partnering with us means you gain a dedicated tax team focused on maximizing your savings and staying fully compliant. Our services include:
- Tailored Tax Planning: We evaluate your company structure and suggest strategies to legally minimize liabilities.
- FTA Registration & Returns: End-to-end support for registering your business and filing accurate, on-time returns.
- Free Zone & SME Benefits: Guidance on qualifying income and exemptions available to small businesses and free-zone entities.
- Bookkeeping & Reporting: Setting up efficient accounting systems so you meet all documentation requirements.
- Audit & Risk Reviews: Proactive checks to ensure your operations meet the UAE’s substance and compliance standards.
- Ongoing Advisory: Regular updates on legislative changes and best practices to safeguard your business.
With expert insight and personalized solutions, we simplify Corporate Tax so you can focus on growth.
FAQs
The standard corporate tax rate is 9% on taxable profits exceeding AED 375,000. Profits up to that threshold are taxed at 0% to support start-ups and small businesses.
The UAE corporate tax regime became effective on 1 June 2023 for financial years starting on or after that date.
Corporate tax applies to:
- UAE companies and branches
- Free-zone entities (on non-qualifying income)
- Foreign businesses with a permanent establishment in the UAE
Certain organisations, like government bodies and qualifying public benefit entities, remain exempt.
Free-zone entities can continue to enjoy 0% tax on “qualifying income,” provided they meet substance rules and other conditions set by the FTA. Non-qualifying income is taxed at 9%.
No. Salaries, investment returns, real estate income, and other personal earnings (not connected to a business) are not subject to corporate tax.
Taxable income is based on accounting profits prepared under IFRS, adjusted for specific exemptions, reliefs, and deductions allowed under UAE corporate tax law.
Most expenses incurred wholly and exclusively for business purposes are deductible, except items like fines, penalties, and bribes. Certain entertainment costs have partial deductibility limits.
All taxable businesses must register with the Federal Tax Authority (FTA) and obtain a corporate tax registration number, even if their profits are below AED 375,000.
Corporate tax returns must be filed, and any tax due paid, within 9 months after the end of the financial year.
Failure to register, file, or pay on time may lead to:
- Fixed fines starting at AED 500
- Percentage-based penalties on unpaid amounts
- Possible business-license suspension for repeated breaches
Yes — professional advisors can:
- Assess your tax exposure
- Register your business with the FTA
- Prepare and file returns
- Structure operations to remain tax-efficient and compliant