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Corporate tax in UAE

Get Expert Assistance in UAE for Corporate Tax Filling.

Corporate tax

Corporate Tax is a form of Direct Tax that is to be levied on all Companies operating in the UAE. For companies with a net profit of AED 375,000 and above the rate of Corporate Tax in UAE is 9%. It is one of the lowest Corporate Tax rates in the world and the Corporate Tax collected from the companies operating in the UAE will be used for the development aspects of the Country.

Companies operating in the Free Zones can avail of the preferential Corporate Tax Treatment of Zero percent. It is by meeting certain requirements of earning a ‘Qualifying Income’ from ‘Qualifying Activities’ and not from any ‘Excluded Activities’ that entrepreneurs must seek assistance from expert Tax Consultants such as AURION for determining the Corporate Tax Applicability for their company.

All companies in the UAE must Register for Corporate Tax, connect with our expert team to know more about Corporate Tax Registration in the UAE. Also, here is a Corporate Tax Guide that will be helpful to learn more about Corporate Tax and its applicability in your company.

Corporate Tax

Corporate Tax Guide

Corporate Tax Applicability in Free Zones

In the Free Zones, companies that are qualified to get a Zero rating of Corporate Tax have to meet certain criteria as follows. If a Free Zone person earns “qualifying income” they can be called a “Qualifying Free Zone Person” (QFZP) and get the zero-rated Corporate Tax Treatment.

Conditions to become a Qualifying Free zone person (QFZP)

For a Free Zone person to be a ‘Qualifying Free Zone Person’ they must meet the below criteria.
  1. Maintain adequate substance. (office, full-time employees, etc)
  2. Comply with Arm’s length principle and transfer pricing documentation and
  3. Has not elected to be subject to corporate tax by choice.
  4. Its non-qualifying revenue does not exceed the de minimis limit.
  5. Prepare audited financial statements.

Criteria for ‘Qualifying Income’ of a ‘Qualifying Free Zone person (QFZP)’

For a ‘Qualifying Free Zone’ person to earn ‘Qualifying Income’; the income must be generated in any of the following ways. 

  1. Derived from transactions with a Free Zone Person, except for income derived from Excluded Activities.
  2. Income derived from transactions with a Non-Free Zone Person, but only in respect of Qualifying Activities that are not Excluded Activities.
  3. Income derived from the ownership or exploitation of Qualifying Intellectual Property.
  4. Any other income provided that the Qualifying Free Zone Person satisfies the deminimis requirements. [De-minimis: Non-qualifying income can be lower than 5% or AED 5 million of total income.]


List of Activities that can be conducted with a Non-free zone person ( Mainland or Foreign)

Following is the list of activities that can be conducted with a Non-free zone person. 

  1. Manufacturing of goods or materials.
  2. Processing of goods or materials.
  3. Trading of Qualifying Commodities.
  4. Holding of shares and other securities for investment purposes.
  5. Ownership, management and operation of Ships.
  6. Reinsurance services.
  7. Fund management services.
  8. Wealth and investment management services.
  9. Headquarters services to Related Parties.
  10. Treasury and financing services to Related Parties.
  11. Financing and leasing of aircraft.
  12. Distribution of goods or materials in or from a Designated Zone
  13. Logistics services.

Excluded Activities:

  1. Any transactions with natural persons, except transactions about the Qualifying Activities
  2. Banking activities.
  3. Insurance activities,
  4. Finance and leasing activities without prejudice to the Qualifying Activities.
  5. Income from property outside the free zone

Registration for Corporate Tax Purposes:

Corporate Tax Registration is mandatory for all licensees including those who have zero turnover or no activity. Even if the turnover is 100% outside UAE (even in case of high sea sales) registration is required as the UAE resident person is taxed on worldwide income.

Also, Branches are not treated as separate legal entities and do not require separate Corporate Tax Registration. Branches of foreign companies are also to be registered for Corporate Tax in UAE. Exemptions can be availed under Article 24 of the Decree-law to exclude the income.

Deadline for Corporate Tax Registration

For all new companies registered in UAE, there is a 3-month time from the date of License issuance to submit the Corporate Tax Registration Application. Existing companies in UAE, based on their license issue date (irrespective of year of issuance) must follow the below table and start their Corporate Tax Registration Application process.

Date of License issuance irrespective of year of issuance

Deadline for submitting a Tax Registration application

1 January – 31 January

31 May 2024

1 February – 28/29 February

31 May 2024

1 March – 31 March

30 June 2024

1 April – 30 April

30 June 2024

1 May – 31 May

31 July 2024

1 June – 30 June

31 August 2024

1 July – 31 July

30 September 2024

1 August – 31 August

31 October 2024

1 September – 30 September

31 October 2024

1 October – 31 October

30 November 2024

1 November – 30 November

30 November 2024

1 December – 31 December

31 December 2024

Documents Required for Corporate Tax Registration

Following are the documents required for the Corporate Tax Registration. AURION will assist in the process of preparing the required documents and registering your company for Corporate Tax. It is highly advised that companies begin the process as early as possible to ensure timely submission of the required documents.

  • Trade License copy
  • MOA and Addendum to MOA (if any)
  • Passport, Visa, and EID of Partners
  • Authorized signatory details
  • Tenancy Contract Copy/ Shared Desk Agreement
  • Company Email ID (to receive notifications and OTP)
  • Company Contact Mobile number (to receive notifications and OTP)
  • FTA Login details (if already registered for VAT)

Frequently Asked Questions (FAQ)

A Designated Zone (E.g., JAFZA, DAFZA, etc.,) is a free zone but a free zone need not be a Designated Zone (E.g., DMCC, IFZA, DSO) 

Only Income generated from “Qualifying activities” (Qualifying income) by a free zone person (Qualifying free zone person) is zero-rated for UAE CT 

Income earned from these 13 activities that are listed under Article 2 Ministerial Decision 139 of 2023, are considered as “Qualifying Activities”. 

Activities that are not listed under Qualifying Activities either fall under excluded activities or Non-qualifying activities. Income from such activities is subject to ‘De minimis’ requirements. That is, such income should be lower than 5% of the total revenue or AED 5 million to remain as a Qualifying free zone person. Refer Article 4

Excluded activities are listed under Article 3 of Ministerial Decision 139. Excluded activities are part of Non-qualifying income. Non-qualifying activities are the activities where the other party to the transaction is a Non-qualifying free zone person. (For example, the distribution of goods is a qualifying activity but if done to a Non-qualifying free zone person, it becomes a Non-qualifying activity)

The activity of distributing goods or materials must be undertaken “IN” or “From” a Designated Zone and the goods or materials entering the “State” “must be imported through the Designated Zone “ Therefore, only the following trading activities are treated as qualified activities. 

  • Sold to a DZ person, 
  • imported by a mainland person 
  • Exports from Dz 

Refer to Article 2 (1) (k) and Article 2 (3) of Ministerial Decision 139

No. Only trading activity done “IN” and “FROM” a Designated zone are zero rated from CT. Refer to Article 2 (1) (k) and Article 2 (3) of Ministerial Decision 139 

As per Article 3 (1) (a) of Cabinet Decision) income derived “from a free zone person” falls under zero-rated activities. Hence, services provided to a free zone person by a free zone person will be zero rated, provided income derived from services provided to a Non-free zone person falls under the De-minimis limit mentioned under Question no 3. 

No. As per Article 3 (1) (a) of Cabinet Decision) income derived “from a free zone person” only falls under zero-rated activities. (De-minimis limit can be considered for services provided to a Non-free zone person). Therefore services provided to a foreign person will be subject to UAE CT. 

Not zero-rated. As per Article 1 of Cabinet Decision 55 (definitions), a place of the presence of a qualified free zone person outside the free zone is treated as Domestic Permanent Establishment as per Article 4 (4) and subject to the provisions of Article 14 of Decree-law (Treated as a permanent establishment of a Non-resident person).

As per Article 3 (1) of the Cabinet Decision, income attributable to a Domestic Permanent Establishment (can be a branch or a related party) shall not be included in qualifying income. Article 3 (5) of Cabinet Decision 55 further clarifies this point. Hence income from a branch in the mainland is allowed only subject to the limit of De minimis explained under Question 3 above. 

The free zone entity is treated as a juridical person for UAE CT purposes. Therefore, will be eligible for a zero rate of tax on “Qualifying income” earned by the branch and also subject to the De Minimis limit under Article 4 of the Cabinet Decision. 

Apart from meeting the conditions set out in Cabinet Decision No 55 and Ministerial Decision no 139, a qualifying free zone must, 

  1. Maintain adequate substance. 
  2. Comply with Arm’s length principle and transfer pricing documentation and
  3. Has not elected to be subject to corporate tax by choice. 
  4. Its non-qualifying revenue does not exceed de minims limit. 
  5. Prepare audited financial statements. 

(Refer to Article 18(1) of decree law and Article 5 (1) of Ministerial decision 139 of 2023.

  1. A Qualifying Free Zone Person shall undertake its core income-generating activities in a Free Zone and, having regard to the level of the activities carried out, have adequate assets, an adequate number of qualified employees, and incur an adequate amount of operating expenditures.
  2. Activities can be outsourced to a Related Party in a Free Zone or a third party. In a Free Zone, provided the Qualifying Free Zone Person has adequate supervision of the outsourced activity.

Refer to Article 7 of Cabinet Decision 55 of 2023. 

The qualifying free zone person shall cease to be a qualifying free zone person 

  1. From the beginning of the relevant tax period and 
  2. For the subsequent 4 tax periods. 

Refer to Article 5 (2) of Ministerial Decision 139 of 2023.

For any inquiry regarding Corporate Tax Applicability in UAE, connect with our expert Tax Consultants right away!

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