Question 1

What is the UAE corporate tax rate?

Accepted Answer

The UAE corporate tax rate is 0% on taxable income up to AED 375,000 and 9% on taxable income above AED 375,000. This was introduced by Federal Decree-Law No. 47 of 2022, effective for financial years starting on or after 1 June 2023. A 15% rate will apply to large multinationals with global revenue above EUR 750 million under OECD Pillar Two.

Question 2

Are free zone companies exempt from corporate tax?

Accepted Answer

Qualifying Free Zone Persons (QFZPs) benefit from a 0% corporate tax rate on qualifying income, provided they maintain adequate substance, comply with transfer pricing rules, and earn qualifying income (primarily from transactions with other free zone entities or foreign sources). Non-qualifying income is taxed at the standard 9% rate.

Question 3

What expenses are deductible for UAE corporate tax?

Accepted Answer

Business expenses that are wholly and exclusively incurred for business purposes are deductible. This includes employee costs, rent, utilities, professional fees, and depreciation. Non-deductible items include fines and penalties, donations (except to approved entities), entertainment costs above certain limits, and income tax paid in other jurisdictions (though foreign tax credits may apply).

Question 4

Do I need to register for UAE corporate tax?

Accepted Answer

All businesses subject to UAE corporate tax must register with the Federal Tax Authority (FTA) and obtain a Tax Registration Number (TRN). This includes mainland businesses, free zone entities, and foreign entities with a permanent establishment in the UAE. Registration must be completed within the timeframe set by the FTA.

Question 5

How is corporate tax calculated on free zone profits?

Accepted Answer

For Qualifying Free Zone Persons, qualifying income is taxed at 0% and non-qualifying income at 9%. If the entity fails to meet qualifying conditions, all income is taxed at 9%. The qualifying income definition includes income from transactions with other free zone entities, income from foreign sources, and certain specified activities.

Question 6

When are UAE corporate tax returns due?

Accepted Answer

Corporate tax returns must be filed within 9 months from the end of the relevant tax period. For example, if your financial year ends on 31 December 2024, the return and tax payment are due by 30 September 2025. Failure to file on time attracts penalties as prescribed by the FTA.

Question 7

Does the AED 375,000 threshold apply per entity or per group?

Accepted Answer

The AED 375,000 tax-free threshold applies per taxable entity, not per group. However, if companies form a tax group (parent owning 95%+ of subsidiary), they are treated as a single taxable entity and only one AED 375,000 threshold applies to the group.

UAE Corporate Tax Calculator — 9% Tax Calculation