UAE Corporate Tax Guide 2025: Everything Investors Need to Know
The introduction of UAE Corporate Tax in 2025 marks a historic shift in the Emirates’ pro-business landscape, replacing a long-standing zero-tax model with a 9 % corporate tax rate on profits above AED 375,000 . Understanding the new regime is critical for investors, Free Zone entities, and mainland companies alike.
This UAE Corporate Tax Guide 2025 explains the law, exemptions, compliance requirements, and planning strategies so you can stay profitable and fully compliant with the Federal Tax Authority (FTA).
1 – Corporate Tax Fundamentals
1.1 What Is UAE Corporate Tax?
Corporate tax is a federal levy on the net profit of companies operating in the UAE, introduced by Federal Decree-Law No. 47 of 2022. It applies to financial years starting on or after 1 June 2023.
1.2 Tax Rate Structure
- 0 % on taxable income up to AED 375,000
- 9 % on taxable income above AED 375,000
- 0 % for Qualifying Free Zone Persons on qualifying income
1.3 Who Must Pay?
- Mainland LLCs, PJSCs, and branches of foreign companies
- Free Zone entities that do not meet “Qualifying” conditions
- Foreign companies with a UAE permanent establishment
- Natural persons conducting business in the UAE under Cabinet decisions
2 – Free Zone Companies: Keeping the 0 % Rate
2.1 Qualifying Free Zone Person (QFZP)
A Free Zone entity keeps the 0 % rate if it:
- Earns qualifying income (e.g., exports, transactions with other FZ companies)
- Maintains adequate economic substance in the UAE
- Files audited accounts and CT returns on time
- Does not opt to be taxed at 9 %
2.2 Non-Qualifying Income
Revenue from mainland customers or other non-qualifying activities is taxed at 9 % even inside a Free Zone.
3 – Compliance & Registration
3.1 Mandatory Registration
All taxable persons must register for corporate tax via the FTA’s EmaraTax portal within three months of becoming liable.
3.2 Key Deadlines
| Action | Deadline |
|---|---|
| Corporate tax registration | Within 3 months of meeting criteria |
| Return filing & payment | Within 9 months of financial year-end |
| Transfer-pricing disclosure | With annual return (if applicable) |
3.3 Record-Keeping Checklist
- Audited financial statements
- Tax computation files
- Transfer-pricing documentation
- Supporting invoices & contracts
4 – Tax Planning Strategies
- Entity selection: Compare Free Zone vs mainland for every revenue stream (full comparison)
- Group structuring: Use holding companies to pool profits and losses
- Substance planning: Ensure real staff, premises, and decision-making in the UAE
- Transfer pricing: Apply arm’s-length pricing on inter-company deals
5 – Industry-Specific Impacts
1.Banking & Finance
Stricter substance and reporting rules apply, including ESR tests and FATF alignment.
2. Real Estate & Holding Firms
Rental income and capital gains are taxable; consider REIT or QFZP structures for relief.
3. Manufacturing & Trading
Evaluate inventory valuation methods and customs duty interactions to minimize effective tax.
6 – Free Zone vs Mainland: Tax Snapshot 2025
| Aspect | Qualifying Free Zone | Mainland Company |
|---|---|---|
| Corporate tax rate | 0 % on qualifying income | 9 % above AED 375 k |
| Mainland trading | Requires distributor, taxed at 9 % | Permitted directly |
| Government tenders | Generally not eligible | Fully eligible |
| Substance test | Mandatory for exemption | Mandatory for all |
7 – Practical Implementation Roadmap
- Assessment: Map all revenue streams and classify as qualifying or non-qualifying.
- Registration: Sign up on EmaraTax and obtain a CTTRN.
- Systems: Align accounting software to capture taxable vs exempt income.
- Training: Educate finance teams on new CT rules and deadlines.
- Review: Conduct annual health checks with advisors.
8 – Frequently Asked Questions
Do all UAE companies pay 9 % corporate tax?
No. Income up to AED 375,000 is taxed at 0 %, and Qualifying Free Zone Persons can retain a 0 % rate on qualifying income.
How can a Free Zone company keep its exemption?
Meet substance requirements, restrict mainland trading, and comply with FTA filings.
When must a business register for corporate tax?
Within three months of meeting the threshold—generally when revenue exceeds AED 1 million or a permanent establishment arises.
Are there penalties for late filing?
Yes. Monetary fines, interest, and potential suspension of government services apply for non-compliance.
Can existing structures be optimised?
Yes. Group restructuring, dual-licensing, or moving qualifying activities to a Free Zone are common strategies.
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