UAE Corporate Tax Guide

Introduction

The UAE introduced Corporate Tax to align with international tax standards while maintaining a competitive business environment. Corporate Tax generally applies from financial years beginning on or after 1 June 2023.

What is UAE Corporate Tax?

Corporate Tax is a direct tax imposed on the taxable income of businesses.

Corporate Tax Rates

Certain multinational groups may be subject to additional rules.

Who Must Register?

Corporate Tax registration is mandatory for:

• Mainland companies
• Free Zone companies
• Foreign entities with UAE nexus
• Certain individuals conducting business activities

Taxable Income

Corporate Tax is based on accounting profit adjusted for tax purposes.

Adjustments may include:

• Non-deductible expenses
• Related-party transactions
• Exempt income
• Tax relief provisions

Deductible Expenses

Generally deductible

• Salaries
• Rent
• Utilities
• Professional fees
• Business travel

Potentially restricted

• Entertainment expenses
• Certain interest expenses
• Non-business expenses

Small Business Relief

Businesses with qualifying revenue may elect Small Business Relief, subject to conditions. This is often relevant for SMEs and start-ups.

Free Zone Corporate Tax

Free Zone entities may qualify for the 0% Corporate Tax rate on qualifying income if they meet specific requirements (substance, qualifying activities, audited financials, transfer pricing, de minimis).

Transfer Pricing

Businesses must ensure related-party transactions are conducted at arm's length. Transfer Pricing documentation (disclosure form, Local File, Master File) may be required depending on group and revenue thresholds.

Corporate Tax Returns

Businesses must:

• Register with the FTA
• Maintain proper accounting records
• Prepare financial statements
• File Corporate Tax returns on time

Common Corporate Tax Mistakes

• Missing registration deadlines
• Ignoring transfer pricing obligations
• Incorrect expense treatment
• Poor bookkeeping
• Assuming free zones are automatically exempt

Penalties

Penalties may apply for:

• Failure to register
• Failure to file
• Incorrect disclosures
• Record-keeping failures

How WPAA Can Help

Corporate Tax compliance begins with proper accounting records. Early planning helps businesses minimise risk and stay compliant with UAE regulations.

WPAA provides Corporate Tax registration, computation, filing and advisory services, including Qualifying Free Zone Person assessments and transfer pricing support.