Corporate Tax applies to financial years starting on or after 1 June 2023. For most small and medium businesses the headline is simple: 0% on taxable income up to AED 375,000 and 9% above it. The work is in registering correctly, calculating taxable income and keeping the records that support it.
Who is in scope
UAE companies and other juridical persons, foreign companies with a UAE presence, and individuals who run a business or business activity in the UAE with turnover above AED 1 million in a calendar year. Salary and personal investment income of individuals are not subject to Corporate Tax. Free zone companies are in scope too, but may qualify for a 0% rate on certain income.
Free zone companies
A Qualifying Free Zone Person can pay 0% on qualifying income, such as certain transactions with other free zone persons and qualifying activities, and 9% on other income. Meeting the conditions requires adequate substance, a qualifying activity and proper accounting. Free zone status alone does not remove the obligation to register and file.
Small business relief
Resident businesses with revenue of AED 3 million or less may be eligible for relief, which lets them be treated as having no taxable income for the relevant tax periods. The relief is time-limited and has conditions, so check the current position with the Ministry of Finance or your adviser before relying on it.
Registration and filing
- Register through the Federal Tax Authority’s EmaraTax portal by the deadline that applies to your licence or incorporation date.
- File a return within nine months of the end of your tax period (for a calendar-year company, by 30 September of the following year).
- Pay any tax due by the same date.
- Keep records for seven years after the end of the tax period they relate to.
Calculating taxable income
Taxable income starts from your accounting profit under accepted accounting standards, then adjusts for items the law treats differently, such as certain non-deductible expenses, entertainment costs, related-party transactions that must be at arm’s length, and exempt income. Clean books make this a routine exercise. Messy books make it expensive.
What good records look like
- Every sale supported by a numbered invoice and every cost by a supplier document.
- Bank accounts reconciled monthly.
- A fixed asset register with purchase dates and depreciation.
- Related-party transactions clearly flagged.
- Financial statements prepared annually, audited where required.
How software helps
Accounting and ERP software that keeps a clean ledger, attaches documents to transactions and produces profit and loss and balance sheet reports by period gives your adviser everything needed to prepare the return. It also makes it easy to see your year-to-date profit against the AED 375,000 band, so there are no surprises at year end. See also our VAT guide and our advice on choosing ERP software for a UAE SME.
This guide is general information, not legal or tax advice. Rules and thresholds change, so confirm current requirements with the relevant authority or a licensed adviser before you act.
Need software built around how your UAE business really works? Tell us what you need or browse our software and request a demo. We customise, install and support it.