Guide
Basics
Dec 11, 2025
Corporate Tax in the United Arab Emirates: understanding the business tax introduced in 2023
What is Corporate Tax in the United Arab Emirates?
Corporate Tax is a corporate income tax that applies to businesses operating in the United Arab Emirates, whether they generate their revenue domestically or internationally.
Its objective is to align local taxation with international standards while maintaining a competitive regime for investors.
It is not a tax on turnover, but rather a tax calculated on net taxable profit.
How is Corporate Tax calculated?
The taxation structure is straightforward:
Step 1: determine turnover (revenue)
The revenue taken into account includes the company’s entire turnover, whether generated in the United Arab Emirates or abroad.
Step 2: deduct allowable expenses
Business expenses that are necessary for the activity are deductible:
operating costs, salaries, rent, overheads, depreciation, etc.
Step 3: determine the taxable profit
Once expenses are deducted, the company arrives at a result that, in principle, is a profit.
Step 4: apply the exemption and the tax rate
The tax rules provide for an exemption on the first tranche of profit.
The profit is not taxed up to AED 375,000, which is approximately:
USD 100,000
EUR 90,000
Beyond this threshold, the remaining profit is taxed at the standard rate of 9%.
Who is subject to Corporate Tax?
Most companies registered in the UAE are subject to Corporate Tax, whether they are established in a Free Zone or on the Mainland. Some Free Zones benefit from special regimes, but only under strict conditions, particularly those related to Qualifying Income.
In most cases, companies must therefore factor this tax into their annual financial planning.
When must Corporate Tax be declared?
The return is filed annually.
It must be filed within nine months following the end of the financial year.
For example, if the financial year ends on December 31, the return must be submitted by September 30 of the following year.
Meeting these deadlines is essential to avoid administrative penalties.
Conclusion
Although its introduction raised many questions, Corporate Tax is in fact based on a clear mechanism: net profit taxed at 9% above a threshold of AED 375,000, with an annual return filed within nine months of the financial year-end.
Understanding how this system works allows entrepreneurs to anticipate their tax obligations, structure their expenses more effectively, and integrate this tax into their financial strategy. For any company established in the UAE, mastering this mechanism is now essential.
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