Introduction
cis no longer an abstract concept — it is an active legal obligation for a wide range of businesses.
With the enforcement of Federal Decree-Law No. 47 of 2022, the UAE implemented a unified Corporate Tax (CT) regime,
applicable from financial years starting on or after 1 June 2023.
Understanding who is liable and who may be exempt is critical for ensuring compliance and avoiding unnecessary penalties.
Who Is Subject to UAE Corporate Tax?
1. Mainland Companies
All businesses operating in the UAE mainland are subject to 9% Corporate Tax on their
taxable income exceeding AED 375,000.
2. Free Zone Companies
Free Zone Persons can continue to benefit from a 0% tax rate only if they qualify as a
Qualifying Free Zone Person (QFZP). This depends on meeting specific conditions such as:
- Maintaining adequate substance in the free zone
- Earning qualifying income
- Not electing to be taxed at standard rates
Failure to meet the QFZP criteria results in loss of preferential treatment and full corporate tax liability.
3. Branches of Foreign Companies
Foreign companies operating through branches or permanent establishments in the UAE must pay
Corporate Tax on income sourced from the UAE.
4. Freelancers & Individual Establishments
Self-employed individuals with commercial licenses and annual turnover exceeding AED 1 million may fall under
Corporate Tax or Business Income Tax, depending on their activities.
5. Multinational Enterprises
Businesses that are part of multinational groups and meet the
OECD BEPS Pillar Two thresholds may also be subject to a
global minimum tax rate of 15%, as the UAE aligns itself with international standards.
Who Is Exempt from Corporate Tax?
The UAE CT Law provides a list of exempt persons, including:
1. Government and Government-Controlled Entities
Entities wholly owned and operated by the UAE government are generally exempt from corporate tax
unless conducting commercial activities outside their core functions.
2. Qualifying Public Benefit Entities
Charitable organizations and public benefit bodies registered and approved by the
Ministry of Finance can receive exemption status.
3. Qualifying Investment Funds
Investment funds meeting specific criteria (such as being regulated by the relevant authority and
benefiting from a diversified investor base) may apply for exemption.
4. Extractive and Non-Extractive Natural Resource Businesses
Companies engaged in oil, gas, or natural resource extraction that are subject to
Emirate-level taxation are excluded from the federal Corporate Tax regime,
provided they meet certain conditions.
🔍 Note: Exempt status is not automatic and usually requires formal
approval and registration with the Federal Tax Authority (FTA).
Why Professional Help Matters
Navigating the complexities of eligibility and exemptions under UAE Corporate Tax can be overwhelming.
Engaging a reputable accounting firm in Dubai or audit services provider ensures that:
- Your entity is correctly classified
- Exemption opportunities are identified and applied
- You stay updated on ministerial decisions and compliance updates
- You avoid penalties from late registration or incorrect filings
📞 Looking for Corporate Tax Guidance in the UAE?
AVS Lewis & Pecker Auditing, a trusted accounting and auditing firm in Dubai, offers
tailored corporate tax services to help your business remain compliant and competitive. From
tax registration and return filing to
exemption assessments and FTA audits, our team supports you at every step.
👉 Contact us today to schedule a consultation.
