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What you need to know now
UAE federal Corporate Tax is in force for financial years beginning on or after 1 June 2023. This 2022 announcement records the introduction; use the current rules when assessing an existing business.
The original article is preserved below as a historical record. Earlier deadlines, rates, offers and approval statements should not be used as current guidance.
- Ordinary taxable persons generally use 0% up to AED 375,000 of taxable income and 9% on the excess.
- The threshold concerns taxable income, not turnover.
- A natural person has a separate business-turnover scope test.
The announcement and the regime now in force
The January 2022 announcement marked a major change in the UAE tax framework. It is retained as a dated record, while current decisions should use the law and guidance applicable to the business’s Tax Period. Corporate Tax is now an operating compliance regime rather than a proposal. The practical starting point is to identify the person, its activities and financial year, then determine what registration, computation and filing responsibilities apply to that person.
Separate the business from its owners
A company’s tax position should not be confused with the personal position of its shareholders or employees. Natural persons have a separate business-activity scope test, with specified personal income categories treated differently. Review who earns each amount and in what capacity before drawing a conclusion from the income description. For a group, keep each entity identifiable and assess any available group treatment under its own conditions rather than combining everything because ownership or management overlaps.
Build a repeatable annual computation
Prepare reliable accounts and retain a bridge from accounting income to taxable income. Review the material adjustments, reliefs and related-party dealings relevant to the period. The ordinary rate illustration is only one stage of that process; it does not replace the classification of income or verification of deductions. Keep a record of decisions carried forward from earlier periods and revisit them when the facts or legislation change, particularly where a new activity changes an earlier assumption.
Maintain the compliance evidence
Set a calendar that distinguishes registration requirements from annual filing and payment. Keep the approved calculation, submitted return and payment evidence together with the records supporting significant positions. Assign responsibility for monitoring FTA correspondence and changes in the business. The historical announcement can explain when the regime was introduced, but it cannot answer every current exemption, Free Zone or multinational question. Use the specific official sources linked above and a fact-based review for those issues rather than relying on a launch-era summary alone.
YOUR NEXT STEPS
A practical way forward
- 01
Identify the person
Separate a company from its individual owners and branches.
- 02
Establish the period
Use the accounting year applicable to the taxable person.
- 03
Review the position
Check the applicable regime before using a rate illustration.
CLEAR ANSWERS
Frequently asked questions
Is Corporate Tax still a proposal?
No. It applies to financial years starting on or after 1 June 2023.
Is an employee’s salary subject to this business tax?
Wages are excluded from a natural person’s business-activity scope test.
Read the original article First published 31 January 2022 · retained for context
This earlier article is preserved for context. Its rates, deadlines, approvals and announcements may have been superseded. Use the current guidance and official references on this page for your next step.
UAE Corporate Tax : The Ministry of Finance to introduce federal corporate tax on business profits that will be effective for financial years starting on or after June 1, 2023.
TAX RATES:
9% headline corporate tax rate for taxable income exceeding AED 375,000.
0% Tax rate for taxable income up to AED 375,000 to support small businesses and startups.
Key features: UAE Corporate Tax
- Individuals will not be subject to corporate tax on income from employment, real estate, investment in shares or other personal income related to a UAE trade or businesses.
- No corporate tax will apply on foreign investors who dont carry on business in the UAE.
- Corporate tax will apply on the adjusted accounting net profit of the business.
- Free Zone business that meet all the necessary requirements, can continue to benefit from corporate tax incentives.
- The extraction of natural resources will remain subject to Emirates level corporate taxation.
- No withholding tax will apply on domestic and cross border payments.
- No corporate tax will apply on capital gains and dividends received by a UAE business from its qualifying shareholdings.
- No corporate tax will apply on qualifying intragroup transactions and restructurings.
- Foreign tax will be allowed to be credited against UAE corporate tax payable.
Objectives
- Cementing the UAE’s position as a world leading hub for business and investment
- Meeting international standards for tax transparency and preventing harmful tax practices
- Accelerating the UAE’s development and transformation to achieve its strategic objectives
VERIFY THE DETAIL
Official sources & further reading
- MoF — Corporate Tax in the UAE
- FTA — Corporate Tax General Guide CTGGCT1
- FTA — Basis of Taxation: Natural Person
Source checks support this general guide. Your treatment depends on the facts, tax period and applicable legislation.
