UAE Corporate Tax Services

Who has to register

The single most common misunderstanding in this regime is that corporate tax registration follows profit. It does not. It follows the act of carrying on a business in the UAE. A company that traded at a loss, a company that has been dormant since incorporation, and a free zone company paying nothing at all are all inside the system.

The categories that are caught:

• Mainland companies — every entity licensed by DET in Dubai or ADDED in Abu Dhabi, from the day the licence is issued.
• Free zone companies — including those that expect to qualify for the 0 per cent rate. Qualifying Free Zone Person status is a rate, not an exemption from the system.
• Natural persons — individuals carrying on business under a licence whose turnover exceeds AED 1,000,000 revenue in a calendar year. Registration is due 31 March of the following year. Freelancers, consultants and sole establishments are routinely caught here and almost never told in advance.
• Non-resident persons with a permanent establishment or a nexus in the UAE.
• Branches of foreign companies, which are treated as part of the parent but still bring UAE-source income into scope.

The rates

The 0 per cent band is not an allowance in the way a personal allowance works elsewhere. It applies to the first AED 375,000 of taxable income, and 9 per cent applies to income above it. A business with AED 500,000 of taxable income pays 9 per cent on AED 125,000, not on the whole amount.

Taxable income starts from accounting income prepared under IFRS and is then adjusted. The adjustments that matter most in practice are the partial disallowance of entertainment expenditure, the interest deduction limitation, the testing of related-party transactions against the arm’s length principle, and the exclusion of income covered by the participation exemption. This is why a well-kept ledger is not a bookkeeping nicety — it is the starting point of the computation and the first thing an FTA reviewer asks to see.

Small Business Relief

Businesses with revenue at or below AED 3,000,000 in the relevant tax period, and in all previous periods, may elect Small Business Relief. The effect is that the taxable person is treated as having no taxable income for the period.

Two things about it are routinely misunderstood. First, the election is made in the return — it is not automatic. A business that qualifies but never elects is assessed on ordinary principles, and discovering that afterwards is expensive. Second, it is time-limited: as things stand it expires on 31 December 2026.

The expiry is worth planning for now rather than in the final quarter. A business that has been relying on the relief has probably not been keeping records to the standard a full computation requires, has not been tracking the adjustments, and has no baseline for what its liability will look like. Spreading that transition over a year costs a fraction of compressing it into a month.

Free zone companies and qualifying income

A Qualifying Free Zone Person pays 0 per cent on qualifying income and 9 per cent on everything else. The status is conditional, and the conditions are tested every year rather than granted once:

• Adequate substance in the free zone — people, premises and expenditure proportionate to the activity, not a registered address.
• Income derived from qualifying activities, with excluded activities kept inside the de minimis threshold.
• Transfer pricing rules complied with, including documentation.
• Audited financial statements prepared.
• No election made to be taxed at standard rates.

Breaching the de minimis threshold does not cost you the excess — it costs you the status, for that period and typically the following four. That asymmetry is why the review is worth doing before year end, while the revenue mix can still be managed, rather than after it, when it cannot.

Filing, and what the return actually involves

The return is filed through EmaraTax within nine months of the end of the tax period. For a financial year ending 31 December 2025, that is 30 September 2026. A June year end gives you until the following March.

What goes into it: the audited or management financial statements, the reconciliation from accounting income to taxable income, disclosure of related-party transactions and connected person payments, any elections being made, and the calculation of tax payable. Payment is due at the same time as the return.

The practical failure point is rarely the filing itself. It is that the underlying records were never maintained to a standard that supports a defensible computation, so the nine months get spent reconstructing a ledger instead of preparing a return.

What late costs, under the rules that apply now

Cabinet Decision No. 129 of 2025 took effect on 14 April 2026 and replaced the compounding late-payment model with a flat 14% per annum on overdue tax on overdue tax.

A great deal of guidance still online — including on the sites of established Dubai firms — describes the previous monthly compounding structure. If somebody has quoted you an exposure figure calculated on that basis, it is wrong. Registration and filing penalties are separate from the late-payment rate and are not affected by it, which is the part that most often gets left out of the estimate.

Transfer pricing

Transactions with related parties and connected persons must be priced at arm’s length. In a market where family groups commonly hold several entities under one ownership, this is not an edge case — management fees between group companies, intercompany loans, shared staff costs and owner remuneration all sit inside it.

Documentation requirements scale with size and group structure: disclosure in the return for everyone, a local file and master file above the relevant thresholds. Owner salary is the quiet one. A payment exceeding what an unconnected party would command for the same role is not deductible in full, and it is the adjustment most commonly missed by businesses preparing their own returns.

Tax groups

Two or more UAE resident companies under common ownership of 95 per cent or more can elect to form a tax group and be treated as a single taxable person. One return, one computation, and losses in one member set against profits in another.

It is not automatically the right answer. Members are jointly and severally liable for the group’s tax, the 0 per cent band applies once across the group rather than once per company, and a free zone member holding QFZP status cannot generally be brought in without losing it. Where a group has one profitable trading company and several loss-making entities, the arithmetic usually favours grouping. Where it has several independently profitable companies each sitting under the threshold, it usually does not.

What is deductible, and what is not

Expenditure incurred wholly and exclusively for business purposes is deductible, with specific exceptions that account for most of the adjustments in a typical computation:

• Entertainment — only partially deductible. Client hospitality is the usual line item, and the disallowance is a standing adjustment rather than a one-off.
• Interest — subject to a general limitation, with specific rules for interest paid to related parties. Highly leveraged group structures need this modelled rather than assumed.
• Fines and penalties — not deductible, including tax penalties. The cost of a missed deadline is therefore higher than its face value.
• Donations — deductible only where made to an approved public benefit entity.
• Owner and connected person payments — deductible only to the extent they are at market value for the service actually provided.
• Provisions — general provisions are not deductible; specific ones meeting the criteria are. The distinction is often the largest single adjustment in a set of accounts.

Tax losses can be carried forward indefinitely, subject to continuity of ownership and business, and can offset up to 75 per cent of taxable income in a later period. This is why filing in a loss-making year matters: an unfiled return is a loss you may not be able to use.

Deregistration

Closing a business does not end the obligation — it creates a new one. A taxable person that ceases to carry on business must apply to deregister within three months, file a final return covering the period up to cessation, and settle any liability.

Companies that stop trading and simply let the licence lapse leave a registration open, accruing filing obligations against an entity nobody is looking at. The penalties keep accumulating against the owner. If you have a dormant entity in this position, it is far cheaper to close it properly than to leave it running quietly.

What we do

• Registration through EmaraTax, including entities incorporated some time ago that were never registered.
• Return preparation and filing, with the computation and supporting reconciliation documented so it can be defended rather than just submitted.
• Small Business Relief assessment and the election itself, plus planning for the expiry.
• Free zone qualifying income reviews before year end, while the mix can still be influenced.
• Transfer pricing policy, benchmarking and documentation.
• Tax group formation where consolidation helps, and the analysis of whether it does.
• Penalty waiver and reconsideration applications where a deadline has already been missed.
• FTA representation during audits and clarification requests.
• Deregistration on closure, which has its own deadline and its own penalty.

Frequently Asked Questions

Last reviewed 27 July 2026. Rates, thresholds and deadlines change — the e-invoicing provider deadline has already moved once. Confirm current requirements with the Federal Tax Authority before acting, or ask us to check your position.