The corporate tax (CT) regime in the UAE, effective from June 1, 2023, applies to business profits and introduces a structured taxation framework for companies operating in the country. For 2025, key updates include the implementation of a 15% Domestic Minimum Top-up Tax (DMTT) for large multinational enterprises (MNEs) and stricter compliance and documentation requirements.
Understanding UAE Corporate Tax is essential for SMEs, Free Zone businesses, and multinational companies to remain compliant, avoid penalties, and plan their finances effectively.
Overview of Corporate Tax 2025
The UAE tax regime is designed to be business-friendly while aligning with international standards. Corporate Tax 2025 applies to most UAE-resident companies and certain non-resident entities. Free Zone businesses and large MNEs have specific rules and benefits, which require careful planning.
Key Features of UAE Corporate Tax (2025)
Tax Rates
The UAE follows a tiered tax system:
- 0% on taxable income up to AED 375,000, supporting small businesses and startups
- 9% on taxable income exceeding AED 375,000
- 15% DMTT for MNEs with consolidated global revenues exceeding EUR 750 million in at least two of the previous four financial years, effective from January 1, 2025
Taxable Persons
- Applies to most UAE resident juridical persons (companies incorporated in the UAE)
- Non-resident juridical persons with a permanent establishment or source of income in the UAE are also taxable
- Resident natural persons (freelancers, sole proprietors) must register if annual business income exceeds AED 1 million
Exempt Entities
Certain organizations are exempt from corporate tax, including:
- Government entities
- Public benefit organizations
- Public pension and social security funds
- Qualifying investment funds
Accounting Standards
Taxable profits are calculated based on accounting net profit as per financial statements prepared using generally accepted accounting standards (e.g., IFRS), with specific tax adjustments applied.
Special Considerations for Free Zone Businesses
Free Zone businesses can benefit from 0% corporate tax on “qualifying income” if they meet the criteria for a Qualifying Free Zone Person (QFZP):
- Maintain adequate economic substance in the Free Zone
- Derive income primarily from transactions with other Free Zone persons or foreign entities
- Do not elect to be taxed at the standard 9% rate
- Comply with transfer pricing rules and maintain audited financial statements
Non-qualifying income, such as most transactions with mainland UAE customers, is taxed at the standard 9% rate.
Compliance and Filing Requirements
Registration
Mandatory for all taxable persons, including Free Zone companies, via the Federal Tax Authority’s (FTA) EmaraTax portal. Deadlines depend on the business license issuance date or the income threshold for natural persons.
Filing Deadline
Tax returns must be filed and payments made within nine months after the end of the relevant financial year.
Documentation
Businesses must maintain detailed financial records and supporting documents for at least seven years. Audited financial statements are required for QFZP claims or businesses with revenue exceeding AED 50 million.
Transfer Pricing
Transactions with related or connected parties must follow the OECD’s arm’s length principle. Businesses may need to prepare a Master File and Local File if they exceed thresholds (e.g., AED 40 million in related-party transactions).
Key Actions for Businesses in 2025
- Assess Impact
Determine how the 9% standard rate or 15% MNE rate applies to your business model and structure. - Ensure Compliance
Verify that accounting systems produce IFRS-compliant statements and track qualifying versus non-qualifying income for Free Zone benefits. - Plan Strategically
Leverage available reliefs, such as:
- Tax grouping for commonly owned entities (95% ownership)
- Loss relief to offset up to 75% of future taxable income
- Participation exemptions on qualifying dividends and capital gains
- Seek Professional Advice
Engaging tax consultants is recommended to navigate Free Zone rules, international operations, and complex compliance requirements.
2025 UAE Corporate Tax Checklist
Use this checklist to ensure full compliance:
- Register with FTA via EmaraTax portal
- Maintain IFRS-compliant accounting records
- Identify qualifying and non-qualifying income
- Submit tax returns within nine months of year-end
- Pay corporate tax on time
- Maintain detailed documentation for at least seven years
- Ensure related-party transactions comply with arm’s length principle
AI Overview
UAE Corporate Tax 2025 introduces tiered rates, 15% DMTT for MNEs, Free Zone benefits, and strict compliance to help businesses plan, register, and stay fully compliant.
FAQs
What is the corporate tax rate in UAE 2025?
Profits above AED 375,000 are taxed at 9%, and MNEs with global revenues above EUR 750 million are subject to 15% DMTT.
Are Free Zone companies exempt from UAE Corporate Tax?
Yes, qualifying Free Zone Persons (QFZPs) can benefit from 0% tax on qualifying income if they meet all conditions.
Who must register for Corporate Tax (CT) in the UAE?
All mainland companies, qualifying Free Zone entities, and foreign businesses with UAE-sourced income must register with the FTA.
When is UAE Corporate Tax filing due?
Tax returns must be filed within nine months after the end of the financial year.
Can tax losses be carried forward?
Yes, tax losses can offset up to 75% of future taxable income indefinitely, provided ownership continuity requirements are met.
Conclusion
The Corporate Tax 2025 regime in the UAE introduces structured rules, tiered rates, and compliance requirements that businesses must follow to remain compliant and financially optimized. Free Zone entities and MNEs have specific provisions that require careful planning and documentation.
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