A Complete Guide to Corporate Tax in Dubai: What You Need to Know for 2025

What is Corporate Tax?

UAE Corporate Tax (CT) is a direct tax on net income (profits) realized by businesses and other commercial entities. It is established in Federal Decree‑Law No. 47 of 2022 on the Taxation of Corporations and Businesses. The intent of the law is to align UAE tax law with international practices, increase transparency, diversify its revenue sources and strengthen its position as a commercial hub.

Current Tax Rates

• 0% on taxable income up to AED 375,000 per tax period.

• 9% on taxable income above AED 375,000.

So effectively, you will not be taxed on profit ≤ AED 375,000; anything above that is taxed at 9%.

In addition:

• Free Zones may still have 0% tax on their qualifying income, if they meet further criteria (become a Qualifying Free Zone Person).

• Some large multinationals may be affected by minimum top-up or OECD-Pillar Two rules in the future; these rules are being phased in.

Who Is Subject to Corporate Tax?

The law provides definitions for Taxable Person, Resident vs Non-Resident and more. Many businesses partner with an experienced accounting firm in Dubai to ensure compliance with UAE corporate tax regulations and to manage their financial reporting obligations efficiently. The key categories are: 

UAE Companies & other Juridical Persons:

• Criteria: These comprise companies formed in the UAE (mainland or in Free Zones) or companies formed under UAE law. 

• Foreign judiciary: Foreign juridical persons (companies) that are effectively managed & controlled in the UAE may be resident and subject to tax on worldwide income.

• Business Individuals: Natural persons (individuals) that carry on a business or business-activity from locations under a commercial license in the UAE. They are considered “business individuals” if they carry on a commercial activity and will be subject to taxation under the CT Law. 

• Foreign Companies: Non-resident juridical persons (foreign companies) with a Permanent Establishment (PE) in the UAE and cases of non-resident juristical persons deriving UAE resourced derived income.  

Free Zone persons fall into the scope. But many free zone entities will qualify for incentives if they meet certain conditions. There are instances of exemption so being a business or having a license does not automatically mean tax will be due.

Important Dates 

• Law issued/Published: Federal Decree‑Law No. 47 of 2022 was issued on 9 December 2022. 

• Effective Date: Corporate Tax applies to financial years starting on or after 1 June 2023. 

• First CT year for Businesses: Depending on their accounting period; if the business’s financial year begins on or after 1 June 2023, that becomes its first CT period. Otherwise, earlier years may not be taxed under CT. 

Important Filing & Registration Deadlines

• Registration: All taxable persons must register with the Federal Tax Authority (FTA) and obtain a Corporate Tax Registration Number. Free Zone persons are included as well. 

• Filing of Corporate Tax Return: The return must be filed within 9 months after the end of the relevant tax period. 

• Payment of Tax: Any tax due is usually payable at the same time as the filing (ie. 9 months after the end of the period). 

Transitional Deadlines

For businesses whose first tax period is less than 12 months (where for example, they were incorporated just before or just after 1st June 2023, or where they have a year‑end a few months later), there have been transitional/discretionary deadlines for filing and payment. For certain ‘short tax periods’, some deadlines have been extended (to December 31st, 2024) for any periods ending on or before 29th February 2024. 

Natural persons (individuals) conducting business activity under a commercial licence; there is a turnover threshold (turnover exceeding AED 1,000,000 in a calendar year) above which they must register and are subject to corporate tax.

Navigating the UAE’s new corporate tax framework requires clarity, timely compliance, and a deep understanding of evolving regulations. While the law provides clear guidelines, each business’s situation is unique from free zone entities to multinational corporations. To avoid penalties and optimize tax positions, seeking professional advice is essential. Working with a trusted corporate tax consultant in Dubai ensures that your business remains compliant while strategically planning for growth in a changing regulatory landscape.