UAE Corporate Tax Rate and Registration Requirements

Executive Summary

The UAE imposes Corporate Tax at a standard rate of 9% on taxable income exceeding AED 375,000, with a 0% rate applying to income up to this threshold [Federal Decree-Law No. 47 of 2022, Article 3]. Registration with the Federal Tax Authority (FTA) is mandatory for all Taxable Persons, including juridical persons, natural persons conducting business above specified thresholds, and non-resident persons with UAE-sourced income or a permanent establishment in the State.

Legal Basis

• Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (Corporate Tax Law)
• Cabinet Decision No. 116 of 2022 on the Determination of Annual Income Subject to Corporate Tax
• Cabinet Decision No. 49 of 2023 on Natural Persons Subject to Corporate Tax
• FTA Decision No. 3 of 2024 on Timeline for Registration of Taxable Persons

Analysis

Tax Rates Structure

The Corporate Tax Law establishes a tiered rate structure designed to support small businesses while ensuring larger enterprises contribute appropriately. The rates apply as follows:

• 0% on taxable income up to AED 375,000 [Article 3(1)(a)]
• 9% on taxable income exceeding AED 375,000 [Article 3(1)(b)]
• Different rate may apply to large multinationals meeting Pillar Two thresholds (consolidated global revenues of EUR 750 million or more) [Article 3(1)(c), Cabinet Decision No. 142 of 2024]

> ✓ Key Point: Qualifying Free Zone Persons (QFZPs) may benefit from a 0% rate on Qualifying Income, subject to meeting specific conditions under Cabinet Decision No. 100 of 2023.

Registration Obligation

All Taxable Persons must register for Corporate Tax regardless of whether tax is actually payable. This includes:

• Resident juridical persons (companies incorporated in the UAE or effectively managed from the UAE)
• Non-resident persons with a Permanent Establishment or UAE-sourced income
• Natural persons conducting business activities exceeding AED 1 million in annual turnover [Cabinet Decision No. 49 of 2023]

Key Requirements

• Registration deadline: Within the timeframe specified by FTA Decision No. 3 of 2024, based on licence issuance date
• Income threshold for 9% rate: AED 375,000 taxable income
• Natural person threshold: AED 1 million annual turnover from business activities
• Small Business Relief: Available for revenue up to AED 3 million [Ministerial Decision No. 73 of 2023]

Critical Considerations

> ⚠️ Important: Failure to register within the prescribed timeline results in administrative penalties under Cabinet Decision No. 75 of 2023. Registration is required even if you qualify for exemptions or the 0% rate.

• Filing requirement: Annual Corporate Tax returns must be filed within 9 months from the end of the relevant Tax Period [Federal Decree-Law No. 47 of 2022, Article 53]
• Exempt Persons (government entities, qualifying public benefit entities, pension funds) must still apply to the FTA for exempt status confirmation
• Free Zone entities must register and elect QFZP status to benefit from the 0% rate on Qualifying Income