The UAE’s corporate tax landscape continues to evolve rapidly. With the implementation of Federal Decree-Law No. 47 of 2022, the introduction of Corporate Tax (CT) marked a major shift in the country’s fiscal framework.
But staying compliant doesn’t end with registration — businesses must keep up with the latest updates and amendments issued by the Ministry of Finance (MoF) and the Federal Tax Authority (FTA).
Here’s what UAE-based businesses need to know about the most recent changes in the corporate tax regime.
1. Cabinet and Ministerial Decisions Clarify Law Implementation
Since the law was enacted, a series of Cabinet and Ministerial Decisions have been released to clarify provisions, exemptions, and procedural rules. Notable updates include:
- Cabinet Decision No. 116 of 2023: Outlines the conditions for Qualifying Free Zone Persons (QFZP)
- Ministerial Decision No. 114 of 2023: Defines small business relief and clarifies the AED 3 million revenue threshold
- Ministerial Decision No. 97 of 2023: Provides guidance on transfer pricing documentation, including Master File and Local File thresholds
These updates are critical to determining if your business qualifies for reliefs or incentives under the new CT regime.
2. Mandatory Corporate Tax Registration
All taxable persons and exempt entities must register for corporate tax, regardless of whether they expect to have taxable income.
Failing to register by the FTA-prescribed deadline can result in administrative penalties.
The FTA continues to roll out registration windows based on license issuance date, so it’s crucial to stay updated and avoid delays.
3. Emphasis on Transfer Pricing Compliance
The UAE’s Corporate Tax regime includes robust transfer pricing (TP) regulations, especially for:
- Multinational groups
- Related party transactions
- Free zone companies transacting with mainland entities
Recent clarifications have emphasized the importance of arm’s length pricing, TP policy documentation, and annual reporting requirements.
Businesses exceeding certain revenue thresholds must maintain Master File and Local File documentation.
4. Relief for Small Businesses
Startups and SMEs benefit from Small Business Relief, which allows them to be treated as if they had no taxable income if:
- Revenue is below AED 3 million for the relevant and previous tax periods
- The business is not a part of a multinational group
This provision is especially beneficial for new businesses and freelancers operating under commercial licenses. This relief is available for Tax Periods that end on or before 31 December 2026.
5. Adjustments in Exemptions and Qualifying Activities
The FTA continues to refine the list of:
- Exempt persons (e.g., government entities, qualifying investment funds)
- Qualifying activities for Free Zone companies to retain 0% tax status
The definition of “qualifying income” is narrow, and if a free zone company earns non-qualifying income, it may forfeit its tax exemption altogether subject to certain conditions.
Conclusion
Understanding the latest corporate tax updates in UAE is essential to staying compliant, avoiding penalties, and optimizing tax planning.
From small business relief to complex transfer pricing rules, navigating these changes requires expert support.
Stay Compliant with Expert Corporate Tax Services
AVS Lewis & Pecker Auditing offers end-to-end corporate tax services in UAE, including registration, advisory, transfer pricing, tax return filing, and FTA audit support.
We stay ahead of the regulatory curve so your business doesn’t fall behind.
📞 Contact us today to learn how we can help you comply confidently and efficiently.