Understanding Corporate Tax in the UAE: What Your Business Needs to Prepare

The UAE has introduced a Federal Corporate Tax effective from June 2023, marking a significant change in the region’s business landscape. Although the tax rate is competitive, the introduction of corporate tax creates new compliance obligations for many companies operating in the UAE.

Understanding these new regulations and preparing your business properly is critical to avoid penalties, ensure smooth operations, and optimize your tax liabilities.

What is UAE Corporate Tax?

The UAE Corporate Tax is levied at a standard rate of 9% on taxable profits exceeding AED 375,000. Businesses with profits below this threshold benefit from a 0% rate, supporting small and medium-sized enterprises.

Certain sectors, like oil and gas, and foreign banks, remain subject to separate Emirate-level taxation.

Who is Affected?

Most UAE-based businesses, including Mainland companies, Free Zone entities (if they do business with Mainland or generate income outside the Free Zone), and Offshore companies are subject to corporate tax.

However, businesses wholly operating within specific Free Zones and meeting certain criteria may qualify for exemptions.

Key Compliance Requirements

• Registration: Businesses must register for corporate tax with the Federal Tax Authority (FTA).
• Record-Keeping: Maintain detailed, accurate accounting records for tax purposes.
• Tax Returns: Submit annual corporate tax returns, disclosing income, expenses, and deductions.
• Payment: Pay any corporate tax due within deadlines set by the FTA.

Non-compliance can lead to financial penalties, interest charges, and legal consequences.

Preparing Your Business for Corporate Tax

• Review Financial Systems: Ensure your accounting software can support corporate tax calculations and reporting.
• Organize Documentation: Keep all financial records, contracts, and agreements ready for tax filings.
• Plan Tax Strategy: Identify potential deductions, credits, or tax-efficient structuring with expert advice.
• Engage Professionals: Corporate tax is complex. Consulting with experienced tax advisors helps you navigate new rules and optimize outcomes.

Why Professional Help Matters

Corporate tax implementation involves understanding evolving regulations, deadlines, and opportunities for tax planning. Working with experts like Tang Accounting & Consulting ensures your business remains compliant, avoids penalties, and benefits from strategic tax management.

Ready to navigate UAE corporate tax with confidence? Contact Tang Accounting & Consulting for expert corporate tax advice and support tailored to your business. For more information or to get started, visit our Contact Page or reach out directly at info@tangaccounting.com / +971 55 406 0153.