Corporate Tax Is Now a Reality

Until recently, the UAE was one of the few countries in the world with no corporate income tax for most businesses. That changed with the introduction of the UAE corporate tax regime, which now applies to a wide range of companies operating in the country. The objective is to align the UAE with global tax standards while maintaining its appeal as a business hub.

Who Needs to Register?

As of 2025, all businesses earning above the threshold of AED 375,000 in annual net profit must register with the Federal Tax Authority (FTA UAE). This includes both Mainland and Free Zone entities unless specifically exempted. Businesses earning below this threshold may still be required to register to meet compliance or banking requirements, even if they are not subject to the tax itself.

How Taxable Income Is Calculated

The corporate tax rate is set at 9% on taxable income exceeding the AED 375,000 threshold. This applies to net profits after all allowable deductions. Income from real estate, investment portfolios, and foreign branches may be treated differently based on company structure and activity. It is essential to differentiate between business and personal income to avoid misclassification under UAE tax law.

Filing and Compliance Requirements

Once registered, companies are required to submit annual tax returns to the FTA. This includes financial statements, audited reports (where applicable), and accurate declarations of income and deductions. Incorrect or late FTA filing may lead to penalties, and compliance checks will be increasingly automated in 2025. Businesses are expected to maintain proper accounting records and supporting documentation for all transactions.

Free Zones and Exemptions

Many Free Zone companies are asking if they are exempt. Certain qualifying Free Zone entities may benefit from 0% corporate tax if they meet specific substance and income criteria. However, if these companies transact with the UAE mainland, parts of their income could still be taxed. That’s why Free Zone companies must carefully assess their activities and consult with a tax advisor before assuming exemption status.

How 28Group Helps You Stay Compliant

Corporate tax isn’t just about numbers—it’s about strategy. At 28Group, we help businesses prepare for corporate tax registration, assess whether exemptions apply, and implement accounting practices that reduce exposure while staying within tax compliance UAE rules. We manage your registration, guide your reporting process, and ensure every step aligns with UAE corporate tax law in 2025.