In 2025, corporate tax in the UAE is becoming a key focus for businesses of all sizes. From new rates and registration steps to important exemptions, staying compliant can feel like a maze. But don’t worry; this complete guide has got you covered.
At Pemo, we believe that understanding your obligations shouldn’t be overwhelming. So, let’s break down everything you need to know about corporate tax in the UAE, step by step.
What is corporate tax?
Corporate tax is a direct tax on a company’s business profits. It’s an essential part of how governments fund public services and maintain economic stability. While the UAE was once known for its tax-free status, the introduction of corporate tax in 2023 marked a significant shift.
Now, as we look ahead to 2025, understanding how corporate tax works is crucial for every business; whether you’re a small startup or a large multinational.
To see how expense tracking and reporting can support your compliance journey, check out our expense management page.
Overview of the UAE corporate tax regime
The UAE’s corporate tax regime is designed to be straightforward and internationally competitive. Here’s a quick overview:
- Effective from: June 1, 2023
- Administered by: Federal Tax Authority (FTA)
- Applicable to: Both resident and non-resident taxable persons
- Standard rate: 9% on profits above AED 375,000
- Small businesses: 0% tax on profits up to AED 375,000
This approach ensures that small businesses remain supported while maintaining a competitive edge for the UAE as a business hub.
Understanding UAE corporate tax rates
0% rate for small businesses (≤ AED 375,000)
Good news for SMEs! If your taxable profits are AED 375,000 or less, you won’t pay any corporate tax. This 0% rate is designed to nurture small businesses and promote entrepreneurship.
Example scenario:
A small marketing consultancy based in Dubai generates an annual profit of AED 350,000. Thanks to the 0% rate, it doesn’t owe any corporate tax for 2025; allowing it to reinvest in hiring or new services.
For instance, a restaurant in Dubai earning AED 600,000 in annual profits would pay no tax on the first AED 375,000. The 9% corporate tax applies to the remaining AED 225,000, resulting in AED 20,250 in tax. Businesses can also deduct operational expenses, such as salaries and rent, to lower their taxable income.
9% standard rate on profits above AED 375,000
For businesses earning above AED 375,000, a 9% tax rate applies. This low rate keeps the UAE competitive while ensuring fair contributions to the economy.
Example scenario:
A tech startup in Abu Dhabi makes AED 500,000 in profits. The first AED 375,000 is tax-free, and the 9% rate applies to the remaining AED 125,000; resulting in a corporate tax of AED 11,250.
Curious how this affects your business? Read our guide on the role of corporate cards in modern expense management.
Domestic minimum top-up tax (DMTT) for large multinationals
The UAE is aligning with global standards to ensure fair taxation of large multinationals.
OECD Pillar Two implementation in UAE
Under OECD Pillar Two, large multinational groups (with annual revenue of at least EUR 750 million) must pay a minimum effective tax rate of 15% globally.
The UAE’s DMTT ensures that if such multinationals pay less than 15% in the UAE, the difference is “topped up” locally. This prevents tax base erosion and ensures fairness.
Scope & calculation of DMTT
The DMTT applies only to the largest players, so most UAE SMEs won’t need to worry. But for large groups:
- DMTT rate: Brings the effective rate to 15% for covered income
- Calculation: Looks at UAE profits and taxes paid; if below 15%, the difference is payable
Example scenario:
A multinational with UAE subsidiaries pays an effective tax rate of 10% locally. The DMTT ensures the remaining 5% is paid in the UAE, meeting the global standard.
Who must register for UAE corporate tax
Resident taxable persons
Businesses with a UAE commercial license are considered resident taxable persons. This includes:
- UAE-incorporated companies
- Foreign companies with a permanent establishment in the UAE
- Certain natural persons engaged in business
Even freelancers and consultants operating under a trade license need to consider registration. For example, an IT consultant with a trade license in Abu Dhabi must register and comply with corporate tax rules, even if their annual revenue is below AED 375,000.
Registration process for residents
Here’s your step-by-step registration guide:
- Sign in to the EmaraTax portal.
- Submit your trade license and Emirates ID.
- Provide details about your business activities and ownership.
- Wait for your tax registration number (TRN) to be issued.
It’s that simple! And remember, registration is mandatory; even if your income is below the AED 375,000 threshold.
Non-resident taxable persons
Non-residents may need to register if they have a permanent establishment or source-based UAE income.
Registration process for non-residents
For non-residents:
- Register through the FTA portal.
- Provide proof of your UAE presence or economic ties.
- Follow FTA guidance to complete registration.
Exemptions & reliefs under UAE corporate tax
Qualifying free zone persons
Companies operating in qualifying free zones may enjoy a 0% corporate tax rate on qualifying income. However, income from mainland transactions is typically subject to 9% tax.
Free zone businesses should review contracts carefully to ensure that their income qualifies as “free zone qualifying income.” Non-compliance could lead to tax at the standard 9% rate on all income, not just non-qualifying revenue.
Read more how Pemo can help you in the UAE tax penalty waiver.
Exempt entities & small businesses
Entities such as government bodies, public benefit entities, and some extractive businesses are exempt. Small businesses may also benefit from simplified compliance under the Small Business Relief scheme.
For public benefit entities, it’s important to maintain transparent financial records and regularly review eligibility criteria to ensure continued exemption status. Non-profit organizations should consult the FTA’s guidance to stay compliant.
Other exemptions (e.g., public benefit entities)
Charitable organizations and regulated public benefit entities can apply for exemption if they meet FTA criteria. These exemptions can ease the tax burden and support organizations that provide vital services to society.
Filing corporate tax returns in the UAE
Key deadlines & extensions
- Annual tax return: Must be filed within 9 months of the end of your financial year.
- Extensions: The FTA may grant extensions in certain cases; check their website for updates.
Missing deadlines can lead to significant penalties, so mark your calendar!
For a complete look at filing best practices, check out our compliance and record-keeping checklist.
How to file via FTA portal
Filing is done online through the FTA’s EmaraTax portal:
- Prepare accurate financial statements.
- Log in to the EmaraTax system.
- Complete the online tax return and verify your data.
- Attach any required supporting documents.
- Submit the return and pay any tax due.
Businesses should reconcile their financial data before filing. For instance, comparing your profit and loss statement with your bank statements can help spot discrepancies. Automated tools like Pemo’s expense tracking features simplify this process.
Pemo’s real-time expense tracking and digital receipt storage make this process easier, ensuring you’re always ready to file on time.
Staying compliant: penalties & best practices
Non-compliance can result in penalties, so it’s crucial to:
- Register on time to avoid late fees.
- File accurate returns and keep all records for at least 7 years.
- Consult your finance team or tax advisor if you’re unsure about anything.
- Use digital tools like Pemo’s expense management solutions to stay organized.
Another tip is to schedule quarterly internal reviews of your finances to catch errors early. Using cloud-based accounting software can help you track expenses and revenues in real-time, ensuring accuracy in your filings.
Creating a culture of compliance within your organization is also key. Train your team members to understand the importance of accurate record-keeping and timely filings.
Future incentives & credits
R&D tax credits (2026 onwards)
A new R&D tax incentive is planned for 2026, encouraging innovation across industries.
Example scenario:
A startup in Dubai investing AED 200,000 in R&D in 2026 could receive tax credits that reduce their corporate tax liability.
The R&D tax credit can apply to a range of activities, including developing new software, improving existing processes, or creating prototypes. For example, an engineering firm that invests AED 500,000 in developing new machinery in 2026 could offset part of this investment with tax credits.
Stay up to date by bookmarking our UAE finance updates blog.
High-value employment incentives
The government is expected to launch incentives for high-value job creation and skill development in strategic sectors. These initiatives will support the UAE’s ambition to become a global hub for innovation and talent.
Expert assistance & resources
Official FTA guides & FAQs
Visit the FTA’s corporate tax resources for official guides, FAQs, and updates: https://www.tax.gov.ae
When to consult tax professionals
While many businesses can handle corporate tax themselves, consider professional help if:
- You’re a large multinational or part of a complex group.
- You have cross-border operations.
- You’re unsure about exemptions or reliefs.
Tax professionals can also help you navigate complex areas like transfer pricing. For instance, if your UAE-based business buys goods from a related company overseas, you need to ensure these transactions are priced fairly and comply with global tax rules.
A qualified tax advisor can save you time and money in the long run.
Recent updates & insights
The UAE’s corporate tax landscape is evolving. Key updates for 2025 include:
- Implementation of DMTT for large multinationals.
- Enhanced compliance tools from the FTA.
- New digital resources to make filing easier.
Staying informed helps you plan better. For example, a Dubai-based logistics company reading the latest FTA updates might discover new compliance requirements for cross-border trade. Adapting early can help you stay ahead of competitors and avoid last-minute adjustments.
FAQ: Corporate tax in UAE 2025
How much is the corporate tax in the UAE?
0% on profits up to AED 375,000; 9% on profits above that. DMTT applies to multinationals.
Is the UAE tax-free for companies?
Not entirely; most businesses pay 9% on profits above AED 375,000. Exemptions apply for certain entities.
Is it mandatory to file corporate tax in the UAE?
Yes, if you’re a taxable person, you must register and file annually.
What is the qualifying income for corporate tax in the UAE?
Profits above AED 375,000 are subject to corporate tax.
Final thoughts
Navigating corporate tax in the UAE doesn’t have to be complicated. With the right information and tools; like Pemo’s smart expense management; your business can stay compliant and focused on growth.
At Pemo, we’re here to help. Our real-time expense tracking, smart corporate cards, and automated workflows make managing your finances easy; so you can focus on what matters most.
Book a demo with Pemo today to see how we can help your business thrive in the new tax era: Book a demo for UAE's best spend management solution - Pemo
