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Corporate Tax in the UAE: 2025 Guide for Businesses and Freelancers

In a significant shift from its long-standing tax-free reputation, the United Arab Emirates officially introduced a federal corporate tax regime in June 2023. Designed to align with international standards and support the UAE’s fiscal sustainability, the new tax law applies to businesses and commercial activities across all emirates.


As of 2025, understanding how corporate tax works in the UAE is essential for all business owners, from free zone startups and sole establishments to large multinational enterprises. This guide outlines what corporate tax is, who it applies to, available exemptions, and how to stay compliant under the UAE’s evolving tax framework.


Stack of coins representing corporate tax
Corporate tax

What Is Corporate Tax in the UAE?


Corporate tax (CT) is a direct tax imposed on the net income or profit of businesses. In the UAE, the Federal Tax Authority (FTA) oversees corporate tax administration, registration, and compliance.


Key features of the UAE corporate tax regime:

  • Introduced under Federal Decree-Law No. 47 of 2022

  • Applies to financial years starting on or after 1 June 2023

  • Administered at the federal level, applicable across all seven emirates


Corporate Tax Rates in the UAE (2025)

Taxable Income

Corporate Tax Rate

Up to AED 375,000

0% (Small Business Relief)

Above AED 375,000

9%

Multinationals (turnover > EUR 750M)

15% (per OECD Pillar Two rules)

The 0% tax rate encourages small business growth and supports startups, especially in early stages of profitability.


Who Is Subject to Corporate Tax?


Corporate tax applies to all business and commercial activities conducted in the UAE, including:

  • Mainland companies

  • Free zone businesses (with exceptions and conditions)

  • Freelancers and sole proprietors (if annual net profit exceeds AED 375,000)

  • Branches of foreign companies

  • Banking institutions and insurance firms


Exempt entities include:

  • Government entities

  • Government-controlled entities (subject to conditions)

  • Extractive and non-extractive natural resource businesses

  • Charities and public benefit entities (subject to approval)

  • Investment funds meeting certain criteria

  • Pension and social security funds


Free Zone Companies: Are They Taxed?


Free zone businesses benefit from special tax regimes. However, to qualify for 0% corporate tax, they must:


  • Maintain adequate substance in the free zone

  • Earn qualifying income (e.g. trading outside the UAE or with other free zone entities)

  • Not conduct business with the UAE mainland (unless through a taxable branch)


Non-qualifying income (e.g. mainland revenue) is taxed at 9%.


The FTA has issued detailed guidance on Qualifying Free Zone Persons (QFZP), and companies must carefully assess their compliance.


What Income Is Taxable?


Taxable income includes revenue minus deductible expenses, based on accounting profits prepared under International Financial Reporting Standards (IFRS).


Common taxable income sources:

  • Sales and services within or outside the UAE

  • Consultancy, professional fees, commissions

  • Royalties, licensing revenue

  • Rental income (for commercial properties)

  • Gains from disposal of assets or investments


Corporate Tax Registration & Compliance (2025)


1. Tax Registration


All businesses must register for corporate tax via the EmaraTax portal of the FTA—even if they expect to remain under the AED 375,000 threshold.


2. Tax Filing Requirements

  • File one tax return per financial year

  • No advance or provisional tax payments required

  • Returns must be filed within 9 months of the end of the financial year


3. Financial record keeping


Businesses are required to:

  • Maintain audited financial statements (mandatory for some entities)

  • Keep records for at least 7 years

  • Prepare and submit transfer pricing documentation (for related-party transactions)


Small Business Relief


To support entrepreneurship, the UAE offers Small Business Relief for entities with revenue under AED 3 million annually (available until 2026).


Qualifying small businesses are treated as having 0% taxable income, provided they meet all conditions set by the FTA.


Implications for Freelancers and Self-Employed Professionals


As of 2025, freelancers with UAE residence visas and trade licenses must assess whether their net business income exceeds the AED 375,000 threshold.


If it does, they must:

  • Register for corporate tax

  • Maintain records and submit annual tax returns

  • Pay 9% on taxable profits above AED 375,000


Freelancers operating via freelance permits or sole establishments are treated as individuals running a business, not salaried employees.


Final Thoughts


The introduction of corporate tax marks a new era in the UAE’s economic landscape, bringing the country in line with global fiscal practices. Fortunately, the rate remains competitive, and the system is designed to protect small businesses and startups while promoting transparency and compliance.


By understanding your business classification, keeping accurate records, and working with qualified tax advisors, you can stay compliant and continue to grow confidently in the UAE.

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