Introduction to Corporate Tax in the UAE

The UAE has long been known as a tax-friendly destination for businesses and investors. However, with the introduction of corporate tax, companies operating in the UAE must stay informed about the new regulations and compliance requirements. This guide will provide a comprehensive overview of corporate tax in the UAE, including rates, exemptions, filing procedures, and compliance strategies.

What is Corporate Tax in the UAE?

Corporate tax is a direct tax levied on business profits, ensuring that companies contribute to the country’s economy. The UAE introduced corporate tax to align with international tax standards while maintaining its investor-friendly reputation.

Key Features of Corporate Tax in the UAE:

• Standard corporate tax rate: 9% on taxable income exceeding AED 375,000.
• 0% tax rate: For taxable income up to AED 375,000, supporting small businesses and startups.
• Free Zone Exemptions: Qualifying Free Zone entities may continue to enjoy tax benefits.
• No tax on personal income: Individuals and employees are not subject to corporate tax on salaries or investments.

Who is Subject to Corporate Tax in the UAE?

Businesses Liable for Corporate Tax:

• Companies incorporated in the UAE mainland.
• Foreign companies with a permanent establishment in the UAE.
• Free Zone entities that conduct business with the mainland (exceptions apply).

Exemptions from Corporate Tax:

Certain entities are not subject to corporate tax, including:

• Government-owned companies.
• Businesses engaged in the extraction of natural resources (subject to Emirate-level taxation).
• Charities, pension funds, and other non-profit organizations (meeting eligibility criteria).

How to Calculate Corporate Tax in the UAE

The corporate tax is applied to net profit, determined based on financial statements prepared under International Financial Reporting Standards (IFRS). The taxable amount is calculated after deducting allowable expenses and exemptions.

Example Calculation:

• Annual revenue: AED 1,000,000
• Deductible expenses: AED 400,000
• Net taxable income: AED 600,000
• Taxable portion (above AED 375,000): AED 225,000
• Corporate tax (9% of AED 225,000): AED 20,250

Corporate Tax Compliance & Filing in the UAE

Businesses subject to corporate tax must adhere to compliance requirements, including annual tax returns and record-keeping.

Filing Process:

1. Register for Corporate Tax – Businesses must register with the Federal Tax Authority (FTA).
2. Prepare Financial Statements – Ensure accurate reporting of revenue, expenses, and deductions.
3. File Tax Returns – Submit corporate tax returns annually before the deadline.
4. Maintain Compliance Records – Keep financial documents and tax records for at least five years.

Corporate Tax Strategies to Minimize Liabilities

Businesses can optimize their tax obligations using various strategies:

• Leverage Free Zone Benefits: Free Zone entities should ensure they meet qualifying criteria to continue enjoying tax incentives.
• Expense Deductions: Maximize allowable deductions, such as business expenses, salaries, and operational costs.
• Tax Planning & Structuring: Work with tax consultants to develop an efficient tax strategy.

Why Work with Servix for Corporate Tax Compliance?

At Servix, we provide expert corporate tax consulting services to ensure businesses remain compliant while optimizing their tax strategies. Our services include:

• Corporate Tax Registration – Assisting with registration and documentation.
• Tax Filing & Compliance – Ensuring timely submission of tax returns.
• Strategic Tax Planning – Helping businesses legally minimize tax liabilities.
• Financial Advisory Services – Supporting businesses with financial structuring and optimization.

Stay Compliant & Optimize Your Corporate Tax with Servix

With corporate tax now in place, businesses in the UAE must ensure compliance while adopting smart tax strategies. At Servix, we help businesses navigate tax regulations smoothly and efficiently, allowing them to focus on growth and profitability.

Let Servix be your trusted partner in managing corporate tax compliance and optimization in the UAE!