As of January 2026, corporate tax in the UAE is part of everyday business compliance. Companies no longer deal with it only at year-end. Corporate tax now affects pricing, accounting systems, VAT reporting, audit exposure, and regulatory risk.
UAE tax authorities, led by the Federal Tax Authority, actively monitor compliance. They use digital systems and data checks to compare corporate tax filings, VAT returns, financial statements, and transfer pricing data. When figures do not match, the FTA raises questions and may impose penalties.
At Conex Accounting, we help business owners and CFOs manage corporate tax compliance, planning, and audit readiness. This guide explains corporate tax in the UAE in a clear and practical way, using current guidance from the Ministry of Finance and recent FTA enforcement practices.
What Is Corporate Tax in the UAE?
UAE Corporate Tax is a direct tax on business profits. The UAE introduced it under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. The law applies to most business activities carried out in the UAE.
Corporate tax applies to:
- Mainland companies
- Free Zone entities
- Foreign companies with a permanent establishment or UAE-sourced income
Businesses calculate taxable income from accounting profit and adjust it under UAE tax rules. This makes accurate accounting records and clear documentation essential to calculate income chargeable to tax and the final tax liability.
Corporate Tax Rates in the UAE
| Taxable Income | Corporate Tax Rate |
| Up to AED 375,000 | 0% |
| Above AED 375,000 | 9% |
| Qualifying Free Zone income | 0% (subject to conditions) |
| Non-qualifying Free Zone income | 9% |
Even businesses that fall within the 0% bracket must register, file returns, and maintain proper records.
Mainland vs Free Zone Companies
| Area | Mainland | Free Zone |
| Corporate tax applies | Yes | Yes |
| 0% tax available | No | Yes (if qualifying) |
| Filing required | Yes | Yes |
| Substance rules | No | Yes |
| IFRS accounts required | Yes | Yes |
Corporate Tax Registration and Identification
Every taxable business must register through the FTA Registration portal. After registration, the FTA issues a Corporate Tax Registration Number. This number works as the UAE equivalent of a tax identification number for corporate tax purposes.
Important Clarification on Foreign Tax Concepts
The UAE does not follow foreign tax reassessment systems. Terms such as income escaping assessment, reassessment proceedings, notice under section 148, section 147, 147 of the Income Tax Act, relevant assessment year, time limit, issue a notice, information suggesting, tax has escaped assessment, income escaping, escaping assessment, or reopen the assessment belong to India’s income tax department framework.
For example, in India:
- A TIN number in India may be issued under the Income Tax Act 1961
- The process may involve a registration form, state code, or a state’s commercial tax department
- Identifiers such as taxpayer identification numbers (TIN), individual taxpayer identification number, taxpayer identification number ITIN, employer identification number (EIN), or social security number (SSN) are used
- These relate to identification numbers in India and how to apply for a TIN
These concepts do not apply in the UAE. UAE businesses should not expect the FTA to apply foreign sections or reopen assessments under non-UAE laws. The FTA conducts all reviews strictly under UAE corporate tax legislation.
Why Corporate Tax Compliance Matters
Weak compliance exposes businesses to financial, legal, and operational risk, even when revenue is strong.
Key Risks of Non-Compliance
- Penalties for late registration
- Penalties for late or incorrect filings
- Estimated tax assessments when records are weak
- Loss of Free Zone tax benefits
- Higher chance of a tax audit
Problems often arise when businesses underestimate documentation needs or report incorrect taxable income.
Step-by-Step Corporate Tax Compliance
H3: Step 1: Register with the FTA
All taxable persons must register through the FTA Registration portal and obtain a Corporate Tax Registration Number. Late registration can trigger penalties, even if no tax is payable.
Step 2: Maintain Proper Accounting Records
Corporate tax relies on IFRS or IFRS for SMEs. Strong accounting records must clearly support:
- Revenue recognition
- Expense recording
- Related-party transactions
- Non-deductible expenses
- Loss carryforwards
Poor records are a common cause of disputes and audits.
Step 3: Calculate Taxable Income
Start with accounting profit and adjust for:
- Exempt income
- Non-deductible expenses
- Transfer pricing adjustments
- Loss relief
Each adjustment must be supported by clear working papers.
Step 4: File Corporate Tax Returns
- Filing deadline: Within 9 months of the financial year-end
- Filing required even if tax payable is zero
- Figures must match VAT data when filing VAT returns
Step 5: Pay Corporate Tax
Businesses must pay corporate tax at the time of filing. Late payment increases penalties and audit risk. Many companies seek support here our Corporate Tax Services UAE cover registration, calculation, filing, and audit defence.
Corporate Tax and VAT Interaction
The UAE does not operate a goods and services tax. Instead, it applies added tax VAT.
Key points to manage together
- VAT input tax credit claims must match accounting records
- VAT errors often highlight corporate tax risks
- Inconsistent treatment increases overall exposure
Businesses should manage VAT and corporate tax as linked compliance areas.
Mainland, Free Zone, and Designated Zones
- Mainland companies: 9% corporate tax; filing mandatory
- Free Zone companies: May qualify for 0% if all conditions are met; IFRS accounts required
- Designated Zones: Special VAT treatment; corporate tax rules still apply
Advanced Topics for CFOs
Transfer Pricing
Related-party transactions must follow the arm’s length principle. Poor transfer pricing documentation is one of the most common audit triggers.
Small Business Relief
Eligible businesses may apply for relief to reduce compliance burden, subject to Ministry of Finance conditions.
Frequently Asked Questions
Is corporate tax mandatory in the UAE?
Yes. All taxable businesses must register and file returns, even if no tax is payable.
Do Free Zone companies need to file returns?
Yes. Filing is required to keep 0% tax eligibility.
Does the UAE follow reassessment rules like section 147 or 148?
No. The UAE applies its own corporate tax laws and does not use foreign reassessment systems.
Conclusion
Corporate tax in the UAE is now a strategic business issue, not just a filing exercise. It affects cash flow, audits, VAT exposure, Free Zone planning, and investor confidence. Businesses that keep strong records and act early are better placed to manage tax costs and grow with confidence.
Disclaimer: This article is for general information only and does not provide legal, tax, or accounting advice. UAE laws and guidance may change. Businesses should seek professional advice tailored to their specific situation.