Who Is Going to Pay UAE Corporate Tax?

All firms operating in the United Arab Emirates are obligated to pay corporation tax, even those that are located in free zones. A few, highly particular exceptions exist; they are described in more detail below.

• More precisely, the following people or businesses, in accordance with the UAE Ministry of Finance (MOF), will be required to pay corporate tax in the UAE:
• Companies and other legal organisations with their main administration and operations in the United Arab Emirates, or with their headquarters located there.
• People who are conducting business in the United Arab Emirates.
• foreign legal entities listed in Section 8 of the Corporate Tax Law that keep a permanent establishment in the United Arab Emirates.

What Is the UAE Corporate Tax Rate?

The three taxation tiers of the tax policy developed by MOF, the organisation that oversees the company tax in the United Arab Emirates, are as follows:

• Companies with net annual profits up to AED 375,000 are exempt from paying taxes at all.
• Companies with net annual profits more than AED 375,000: With a 9% tax rate applicable
• Large multinational corporations: a greater than 15% corporate tax will be paid by businesses whose total worldwide sales exceed EUR 750 million, or AED 3.15 billion. 

Corporate Tax for Individuals in Free Zones

Under certain circumstances, Freezone Persons—entities created in a UAE Free Zone may be eligible for a zero percent tax rate. 

To qualify for the 0% CT rate and become a Qualifying Free Zone Person (QFZP), an entity has to:

• Calculate “Qualifying Income.”
• Keep the Free Zone’s economy sufficiently robust.
• Refuse to accept the regular CT charges.
• Respect the rules on transfer pricing.

Qualifying Income are: 

Profit from dealings with other Free Zone participants. Profit from both domestic and international sources from any of the “qualifying activities” listed in Ministerial Decision No. 139 of 2023. 

Ministerial Decision No. 265 of 2023 specifies a wide range of businesses that fall within the criteria of qualifying activities, including manufacturing, processing, money management, logistics, and more.

Corporate Tax Groups

If two or more taxable organizations satisfy certain requirements (described below), they may apply to form a “Tax Group” and be treated as a single company for corporate taxation.

Corporate tax with Vytal

To address the particular requirements of companies doing business in the United Arab Emirates, Vytal provides complete corporate tax services. Our team of experts successfully negotiates the complicated world of tax laws, guaranteeing adherence and optimising tax benefits for your business. Our customised solutions aim to reduce your tax obligations while maximising your financial outcomes, from careful tax planning to precise filing and compliance. When Vytal is on your team, you can be sure that your corporate tax issues are handled with accuracy and knowledge, freeing you up to concentrate on confidently growing your company.