What is Corporate Tax in the UAE?
WHAT IS CORPORATE TAX IN THE UAE?
What is Corporate Tax in the UAE? Learn how UAE corporate tax works, who it applies to, the rates, and how to stay compliant. TAXESMAN explains.
What Is Corporate Tax in the UAE?
What is Corporate Tax in the UAE?
This is one of the most important questions business owners, freelancers, and entrepreneurs are asking today, especially those operating in Dubai, Abu Dhabi, Sharjah, and UAE free zones.
For decades, the UAE was known as a low-tax jurisdiction. With the introduction of Corporate Tax, businesses now need to understand how profits are taxed, who is affected, and what compliance really looks like.
In this article, you will learn what Corporate Tax in the UAE is, who must pay it, the applicable rates, and how to prepare properly without stress.
If you want clarity instead of confusion, TAXESMAN is here to help.
What Is Corporate Tax in the UAE? Explained Simply
Corporate Tax in the UAE is a federal tax applied to the net profits of businesses operating in the country.
Unlike VAT, which is charged on sales and collected from customers, Corporate Tax is based on:
- Business profits
- Adjusted accounting income
- Annual financial results
It applies to companies and certain individuals carrying out business activities in the UAE.
If you are unsure whether your activity is subject to Corporate Tax, TAXESMAN can review it for you.
When Was Corporate Tax Introduced in the UAE?
Corporate Tax in the UAE applies to financial years starting on or after 1 June 2023.
This means:
- Businesses with financial years beginning after this date may be subject to Corporate Tax
- Profits earned before the effective date are not taxed retroactively
Many companies misunderstood this point and assumed they were exempt for longer than they actually were.
If you want to confirm your Corporate Tax start date, contact TAXESMAN today.
What Is the Corporate Tax Rate in the UAE?
One of the most common questions when asking what is Corporate Tax in the UAE relates to the tax rate.
The UAE Corporate Tax structure is:
- 0% on taxable profits up to AED 375,000
- 9% on taxable profits above AED 375,000
This structure supports startups and SMEs while aligning the UAE with international tax standards.
If you want help calculating your taxable profit correctly, TAXESMAN can assist.
Who Does Corporate Tax in the UAE Apply To?
Corporate Tax in the UAE generally applies to:
- Mainland companies
- Free zone companies (subject to conditions)
- Foreign companies with a UAE permanent establishment
- Freelancers and sole proprietors conducting business activities
The key factor is whether you are carrying out a business or commercial activity, not your nationality or visa type.
If you are a freelancer or consultant, TAXESMAN can clarify whether Corporate Tax applies to you.
What About Corporate Tax in UAE Free Zones?
Free zones are one of the most misunderstood areas when asking what is Corporate Tax in the UAE.
Some free zone businesses may still benefit from:
- 0% Corporate Tax on qualifying income, if conditions are met
- Ongoing substance and reporting compliance
However, not all free zone income is automatically exempt.
If you operate in a free zone, TAXESMAN can assess whether you qualify and what compliance steps are required.
How Is Corporate Tax Different From VAT?
Many business owners confuse VAT and Corporate Tax.
The difference is simple:
- VAT is charged on sales and paid by customers
- Corporate Tax is charged on business profits
Your business may be subject to:
- VAT only
- Corporate Tax only
- Both VAT and Corporate Tax
If you want a clear tax map for your business, TAXESMAN can build it for you.
Real Examples: What Is Corporate Tax in the UAE in Practice?
Dubai example: Tech startup
A tech startup in Dubai generates AED 600,000 in annual profit.
- First AED 375,000 taxed at 0%
- Remaining profit taxed at 9%
Corporate Tax applies, even though the company is young.
Abu Dhabi example: Free zone consultancy
A consultancy in an Abu Dhabi free zone earns income from UAE mainland clients.
Part of the income may be subject to Corporate Tax depending on its classification.
Sharjah example: Family-owned SME
A family business in Sharjah crosses the profit threshold for the first time.
They must now register, calculate, and file Corporate Tax returns.
TAXESMAN can manage the full process smoothly.
What Records Are Needed for Corporate Tax Compliance?
Understanding what is Corporate Tax in the UAE also means understanding compliance requirements.
You will need:
- Proper accounting records
- Financial statements
- Profit calculations aligned with tax rules
- Supporting documentation
Poor bookkeeping increases compliance risk.
If you want audit-ready records, TAXESMAN is here to help.
What Is Corporate Tax in the UAE?
To recap, what is Corporate Tax in the UAE?
It is a federal tax on business profits, effective for financial years starting on or after 1 June 2023, with:
- 0% on profits up to AED 375,000
- 9% on profits above that threshold
Corporate Tax is now a core part of doing business in the UAE, but it does not need to be complicated.
Don’t take chances with compliance. Let TAXESMAN guide you through Corporate Tax registration, calculation, and filing so you can focus on growing your business.
FAQs: What Is Corporate Tax in the UAE?
What is Corporate Tax in the UAE?
It is a tax applied to the net profits of businesses operating in the UAE.
Is Corporate Tax applicable to free zone companies?
Some free zone companies may qualify for 0% tax on certain income, subject to conditions.
What is the Corporate Tax rate in the UAE?
0% on profits up to AED 375,000 and 9% above that amount.
Does Corporate Tax apply to freelancers?
Yes, if they are conducting a taxable business activity.
Who can help me with Corporate Tax compliance?
TAXESMAN can handle Corporate Tax registration, accounting, and filings.