Maintain your tax compliance through Filings.ae platform at an affordable price. Get support from Experienced Accountants for bookkeeping, financial statement preparation, VAT and Corporate Tax filing.
Maintain your tax compliance through Filings.ae platform at an affordable price. Get support from Experienced Accountants for bookkeeping, financial statement preparation, VAT and Corporate Tax filing.
Maintain your tax compliance through Filings.ae platform at an affordable price. Get support from Experienced Accountants for bookkeeping, financial statement preparation, VAT and Corporate Tax filing.
Manage your business and track services |
Manage your business and track services |
Manage your business and track services |
The UAE introduced a federal corporate tax in June 2023. This tax aims to diversify the country's revenue streams and solidify its position as a global business hub. Corporate tax filing is necessary for compliance with FTA's regulations, and the corporate tax rate is an essential part. The Corporate tax rate applies to both businesses and individuals at a 0% rate for taxable income up to AED 375,000 and a 9% rate for exceeding income, with some exceptions for Qualifying Free Zone Persons. This article gives a detailed answer for the question of what is corporate tax in UAE.
Filings.ae streamlines VAT return filing process for your company with expert assistance!!
The United Arab Emirates implemented a federal Corporate Tax (CT) regime in June 2023. This tax applies to the net profits of most businesses operating within the country. The CT structure features a tiered system: profits up to AED 375,000 are subject to a 0% tax rate, promoting small business growth. For profits exceeding this threshold, a standard rate of 9% applies. There's also a yet-to-be-determined rate for large multinationals meeting specific criteria aligned with international tax guidelines.
Here's the table summarizing the corporate tax rates in UAE in the following table,
Taxable Person | Applicable Corporate Tax rate |
Natural persons and juridical persons | Up to AED 375,000: 0% Over AED 375,000: 9% |
Qualifying Free Zone Persons | Qualifying Income: 0% Non-Qualifying Income: 9% (as per Cabinet Decision No. 55 of 2023) |
Note:
Also read: How to file the Corporate tax returns in UAE?
The UAE operates a tiered corporate tax system. Natural and juridical persons, including companies and partnerships, benefit from a 0% tax rate on profits up to AED 375,000. However, a standard rate of 9% corporate tax applies for income exceeding this threshold.
Qualifying Free Zone Persons (QFZPs) in the UAE enjoy a special tax treatment. Unlike standard businesses, QFZPs can achieve a 0% corporate tax rate on their Qualifying Income. This income typically refers to activities like consultancy or logistics conducted within the free zone. However, it's crucial to maintain compliance with the free zone authority's specific requirements and ensure expenses are incurred within the zone. If a QFZP generates income outside the qualifying category or chooses to opt into the standard corporate tax system, a 9% tax rate applies to that income.
Calculating UAE corporate tax involves a two-step process: determining your taxable income and applying the tax rate. Here's a breakdown:
Example:
If your company's net profit after deductions is AED 500,000:
As per this example, the UAE corporate tax liability for your business is AED 11,250.
In summary, the UAE's federal corporate tax, introduced in June 2023, features a system to enhance revenue diversity and maintain its global business appeal. The tax imposes a 0% rate on taxable income up to AED 375,000 and a 9% rate on income above this threshold. Qualifying Free Zone Persons enjoy a 0% rate on specific qualifying income, provided they meet certain criteria. This approach facilitates corporate tax compliance while promoting small business growth and maintaining favourable conditions for businesses operating within free zones.
File your VAT returns in UAE regularly with Filings.ae experts!!
We are backed by reputed investors like ICICI Bank Limited, BeeNext & Udtara.
We have over 700 employees across UAE & India to support our global client-base.
We place our customers interest and have a refund policy. If a service is not delivered, refund is provided.
We are committed to providing affordable and reliable services to our clients. At Filings.AE, our team of 700 employees across India serve over 1 lakh paid customers globally. We help businesses with incorporation, trademark, tax filing, compliance and payroll services.