Corporate tax in UAE applies to taxable business profit under federal law.
Missed registration, filing, or payment deadlines and penalties apply immediately.
Incorrect profit reporting can trigger fines, audits, and cash flow disruption.
The Federal Tax Authority enforces compliance under Federal Decree-Law No. 47 of 2022.
This guide explains official rates, thresholds, deadlines, and compliance steps for 2026 so you avoid penalties and stay fully compliant.
What is Corporate Tax in UAE?
Corporate tax in UAE is a federal tax on taxable business profit under Federal Decree-Law No. 47 of 2022.
It applies at:
- 0% on taxable profit up to AED 375,000
- 9% on taxable profit above AED 375,000
The tax applies to:
- Qualifying free zone entities that meet activity and substance rules
Businesses must:
- Register with the Federal Tax Authority
- Maintain audited financial statements
- File an annual corporate tax return
- Pay any tax due within the legal deadline
Taxable income starts with the accounting profit shown in audited financial statements.
Companies adjust that profit under UAE tax rules before applying the official rate.
The system taxes net profit, not revenue.
Accurate records and timely filing ensure compliance in 2026 and reduce exposure to penalties.
When did corporate tax start in the UAE?
Corporate tax applies to financial years starting on or after 1 June 2023.
Companies with later financial years entered the system in 2024 or 2025.
For many businesses, 2026 is the first full compliance year.
Interaction with VAT in the UAE
Corporate tax and VAT are separate federal systems.
VAT applies to goods and services, while corporate tax applies to net business profit. Each tax requires independent compliance and filing.
Corporate tax rates in the UAE
The UAE charges zero percent on profit up to AED 375,000 and nine percent above that level.
Rate structure
| Taxable profit | Tax rate |
| Up to AED 375,000 | 0% |
| Above AED 375,000 | 9% |
Some large multinational groups may follow a separate global minimum rule.
That rule links to international agreements rather than local policy alone.
Who must pay corporate tax?
Most UAE businesses must review corporate tax based on profit and legal form.
Mainland companies pay tax on taxable profit.
Free zone businesses may pay tax based on activity rules.
Foreign branches pay tax on UAE income.
Licensed individuals may also fall within the system.
However, some entities remain exempt under the taxable persons in the UAE rules.
These exemptions protect public and social roles.
They also provide fair treatment for normal business activity.
Exempt categories
- Government entities
- Government-controlled entities
- Approved public benefit organizations
- Pension and social funds
Mandatory FTA Registration Before Corporate Tax Filing
Every taxable business must register with the Federal Tax Authority before filing corporate tax.
Online registration provides a valid tax number required for 2026 compliance.
Official confirmation appears in the Federal Tax Authority registration guide and the UAE Ministry of Finance corporate tax page, which define the legal duty and reporting process.
Early registration reduces audit exposure, prevents penalties, and keeps financial records clear.
Basic registration steps
- Create an official FTA user account
- Verify email address and mobile number
- Select the corporate tax registration service
- Upload trade license and identity proof
- Enter financial year and business activity details
- Review the submitted information carefully
- Receive approval notice and tax registration number
Filing deadlines and tax periods
Companies must file the tax return within nine months after year end.
Payment uses the same deadline, so delay creates fines and risk.
No advance payment applies, which keeps planning clear.
Accurate timing protects compliance and supports steady cash flow.
Clear rules improve trust and strengthen corporate tax return visibility.
Example
- Financial year ends December 2025
- Filing deadline becomes September 2026
Late filing increases penalties and weakens compliance.
How taxable income is calculated
Taxable income begins with accounting profit and changes under UAE tax rules.
Companies use audited financial statements as the starting point.
They then adjust profit under UAE tax rules.
Some expenses are added back.
Some income is excluded.
Common adjustments
- Remove non-deductible expenses
- Exclude exempt income
- Apply transfer pricing rules
- Carry forward allowed losses
Clear calculation reduces audit risk and avoids penalties.
Small business relief in the UAE
Eligible businesses may record zero taxable income when revenue stays below the limit.
This rule supports startups.
It reduces early financial pressure.
Businesses must elect relief on the tax return.
They must review eligibility each year.
Main conditions
- Revenue below the threshold
- Election inside the return
- Accurate financial records
Free Zone Corporate Tax Treatment in UAE
Qualifying free zone entities may keep a zero tax rate on eligible income.
They must meet substance rules and restrict non-qualifying activity.
Other income is taxed at 9%.
Core requirements
- Real presence inside the zone
- Qualifying income only
- Limited mainland activity
Transfer pricing rules in the UAE
Transfer pricing requires related-party deals to match market value.
Businesses must keep proof of fair pricing.
Authorities review these records during audits.
Accurate disclosure prevents disputes and protects reputation.
Required actions
- Apply arm’s-length pricing
- Prepare the local file when needed
- Submit the disclosure with the return
Loss carryforward rules
Businesses may carry losses forward to reduce future taxable income.
This rule supports recovery and long-term investment.
Limits and ownership rules still apply.
Careful tracking protects future savings.
Important limits
- Annual offset cap
- Ownership continuity
- Similar business activity
Penalties for non-compliance
Late registration, filing, or payment creates financial penalties.
Authorities apply escalating administrative fines.
Repeated errors increase the total cost.
Strong systems prevent violations and protect operations.
Common triggers
- Missed registration
- Late return
- Incorrect figures
- Missing records
Required accounting records
Businesses must keep records for at least seven years.
These records support tax numbers and disclosures.
Authorities may request them during review.
Complete files prevent disputes and delays.
Essential documents
- Financial statements
- Contracts and invoices
- Bank records
- Transfer pricing files
How audits work under UAE corporate tax
Authorities select audits through a risk-based review.
They may request files or explanations.
Clear preparation shortens review time.
Accurate data protects reputation.
Audit focus areas
- Profit adjustments
- Related-party pricing
- Exempt income
- Free zone status
How Corporate Tax in UAE Differs from Personal Income Tax in the UAE
| Aspect | Corporate Tax | Personal Income Tax |
| Scope | Applies to business entities and licensed commercial activities | Does not apply to salary or personal employment income |
| Tax Base | Net business profit after permitted tax adjustments | No federal tax on wages or personal earnings |
| Registration | Mandatory registration through the Federal Tax Authority | No registration required for employees |
| Filing | Annual corporate tax return required | No personal income tax return required |
| Payment | The company calculates and pays the tax due | No tax payment on employment salary |
| Record Keeping | Audited financial statements and supporting records required | No tax record retention obligation for salary income |
Corporate tax targets business profit, while individuals earning employment income remain untaxed in the UAE.
How foreign companies are taxed
Foreign companies pay tax only on UAE-sourced or permanent establishment income.
Tax treaties may reduce double taxation.
Careful review protects profit and compliance.
Can a business amend a submitted corporate tax return?
Yes. A business may amend a submitted Corporate Tax in UAE filing through the Federal Tax Authority portal within the permitted legal timeframe.
When is an amendment required?
An amendment becomes necessary if the company identifies:
- Incorrect taxable income
- Omitted disclosures
- Misstated financial figures
- Transfer pricing errors
The update should be submitted immediately after the issue is detected.
How is the amendment submitted?
The business must:
- Access its FTA account
- Select the original return
- Update the relevant figures
- Upload supporting documents if requested
- Resubmit the revised return
Timely amendment protects compliance status and reduces penalty exposure under UAE tax regulations.
What happens if a company does not register on time?
- The Federal Tax Authority may impose administrative penalties.
- The company’s compliance profile becomes higher risk.
- Audit selection likelihood increases.
- Tax liability remains active from the start of the taxable period.
- Filing deadlines continue to apply without extension.
- Additional fines may arise if the return submission is delayed.
- Accumulated dues can create sudden cash flow pressure.
- Regulatory history may influence banking and investor decisions.
- Free zone status may face a closer compliance review.
- Corrective registration requires full financial disclosure.
- Supporting records must remain available for seven years.
- Continued delay increases enforcement exposure.
Timely registration preserves financial stability and protects long-term business credibility.
Compliance checklist for 2026
Businesses must finish registration, calculation, filing, and payment before deadlines.
This order prevents penalties and protects stability.
2026 action list
- Confirm registration
- Review statements
- Calculate taxable income
- Prepare disclosures
- File on time
- Pay tax due
Strategic planning for corporate tax
Businesses should align structure, contracts, and accounting with tax rules.
Professional review improves accuracy.
Smart action lowers risk and cost.
Planning priorities
- Choose the correct structure
- Track deductible expenses
- Review related pricing
- Monitor free zone status
Future outlook of corporate taxation in the UAE
The UAE will keep a clear and competitive tax system.
Authorities continue global alignment.
Low rates remain central policy.
Regular updates require monitoring.
Summary
Corporate tax in UAE applies to profits above the legal threshold and requires yearly compliance. Yet many owners still lose money through delay or unclear guidance, so the right step today shapes future stability. Therefore, start with trusted support from Business Link UAE and secure full compliance, steady cash flow, and confident growth across every financial year ahead.
Call +97143215227 , WhatsApp +971502052735 or email connect@businesslinkuae.com
for clear answers and direct expert help before your next filing deadline.
FAQ’s
When must a company register for corporate tax in UAE?
Before the deadline set by the Federal Tax Authority for its financial year.
What is the corporate tax rate in UAE?
0% on taxable profit up to AED 375,000 and 9% above that threshold.
What documents support accurate profit reporting?
Audited financial statements, invoices, contracts, and bank records.
When is the corporate tax return due?
Within nine months after the end of the relevant financial year.
Do free zone companies pay corporate tax?
Qualifying income may remain zero-rated if the substance and activity rules are met.
Can tax losses be carried forward?
Yes, subject to ownership and annual offset limits under UAE law.
How long must financial records be retained?
At least seven years from the end of the relevant tax period.
What triggers a corporate tax audit?
Late filing, inconsistent profit reporting, missing disclosures, or risk indicators.
Does corporate tax replace VAT?
No. VAT and corporate tax operate as separate federal systems.
Are foreign companies taxed in the UAE?
Only on UAE-sourced income or income linked to a permanent establishment.
