The UAE has implemented a 9% Corporate Tax (CT) on business profits exceeding AED 375,000, effective from June 1, 2023. As we move into 2025, businesses must ensure full tax compliance to avoid penalties and optimize tax planning.
In this article, we’ll cover who is subject to corporate tax, exemptions, tax rates, compliance requirements, and how businesses can prepare for tax filing in 2025.
What is Corporate Tax in UAE?
Corporate Tax (CT) is a direct tax imposed on the net income or profit of businesses operating in the UAE. The UAE previously had no federal corporate tax except for oil & gas companies and foreign banks, but as part of its economic transformation, the 9% corporate tax regime was introduced.
Who is Subject to UAE Corporate Tax?
Corporate tax applies to:
✅ Mainland businesses licensed by the Department of Economic Development (DED)
✅ Free Zone businesses (only on non-qualifying income)
✅ Foreign companies with permanent establishment in UAE
✅ Freelancers & self-employed professionals earning over AED 375,000
Exempted Entities
The following entities are exempt from corporate tax:
❌ Qualifying Free Zone businesses with income meeting specific criteria
❌ Government-owned entities and sovereign wealth funds
❌ Companies engaged in natural resource extraction (subject to Emirate-level taxation)
❌ Charities & public benefit organizations (approved by the UAE government)
UAE Corporate Tax Rates (2025)
| Taxable Income | Corporate Tax Rate |
|---|---|
| Up to AED 375,000 | 0% (Tax-Free) |
| Above AED 375,000 | 9% Corporate Tax |
| Large Multinational Companies (Global Income > EUR 750M) | 15% (as per OECD Pillar 2 Rules) |
Note: Personal income, real estate investments, and employment salaries remain tax-free.
How to Calculate Corporate Tax in UAE
Corporate Tax is calculated on a business’s net taxable income after deducting allowable expenses, depreciation, and tax credits.
Formula:
📌 Net Taxable Income = Total Revenue – Allowable Deductions
📌 Corporate Tax = Net Taxable Income x 9%
Example:
If a UAE business earns AED 500,000 annually:
- Tax-Free Threshold: AED 375,000
- Taxable Income: AED 125,000
- Corporate Tax (9% of AED 125,000): AED 11,250
Corporate Tax Compliance & Filing Requirements
To comply with UAE tax laws in 2025, businesses must:
✅ Register for Corporate Tax with the Federal Tax Authority (FTA)
✅ Maintain proper financial records & audited reports
✅ File Corporate Tax Returns annually through the FTA portal
✅ Pay Corporate Tax within the deadline to avoid penalties
Corporate Tax Exemptions & Reliefs
The UAE offers tax exemptions and reliefs for certain businesses:
✅ Small Business Relief: Businesses earning below AED 3M annually (valid until 2026) can claim 0% corporate tax
✅ Participation Exemption: Income from qualifying shareholdings (at least 5% in another entity) is tax-free
✅ Group Taxation: Companies within a tax group can file a single tax return, reducing compliance costs
Penalties for Non-Compliance with UAE Corporate Tax
Failing to comply with corporate tax regulations can result in:
❌ Failure to Register for Tax: AED 10,000 – AED 20,000 fine
❌ Late Filing of Tax Returns: AED 1,000 per month (up to AED 10,000)
❌ Failure to Maintain Proper Records: AED 10,000 – AED 50,000 fine
❌ Tax Evasion or False Reporting: Hefty fines and legal consequences
How to Prepare for Corporate Tax Filing in 2025
To ensure smooth tax compliance in 2025, businesses should:
✅ Register with the Federal Tax Authority (FTA) before the deadline
✅ Maintain clear financial records & bookkeeping
✅ Seek professional tax advisory for tax optimization
✅ File corporate tax returns on time to avoid penalties
How NAM Accountants Can Help with Corporate Tax Compliance
At NAM Accountants, we provide expert corporate tax advisory and compliance services to help businesses meet UAE tax regulations.
✅ Corporate Tax Registration & Filing – Hassle-free tax filing with FTA
✅ Tax Planning & Optimization – Reduce tax liabilities legally
✅ Accounting & Financial Reporting – Maintain accurate records for tax audits
✅ Penalty Avoidance Strategies – Ensure full compliance to avoid fines
📞 Need Corporate Tax Assistance? Contact NAM Accountants Today!
📧 Email: [email protected]
📞 Call/WhatsApp: +971 52 642 7554
🌐 Website: www.namaccountants.com
