Corporation tax in the UAE: what businesses need to know
Corporate tax in the United Arab Emirates (UAE) represents a major change in the country’s tax landscape. Traditionally known as a tax-friendly destination with minimal direct taxes, the UAE introduced a comprehensive federal corporate tax regime to align with global standards, ensure transparency and sustain economic growth.
What is the corporate tax in the UAE?
Corporation tax (also known as corporation tax) is a direct tax levied on the profits of companies operating within the UAE. This scheme was introduced through Federal Legislative Resolution No. 47 of 2022, and came into effect for fiscal years beginning on or after June 1, 2023.
Under this new arrangement:
0% corporation tax applies on taxable income up to AED375,000.
For most businesses, a 9% corporation tax applies on taxable profits above AED375,000.
This structure is designed to encourage small businesses and start-ups while maintaining competitiveness on the global platform.
Who must pay corporation tax?
Business tax applies to:
All companies and commercial entities incorporated or operating in the UAE.
Both resident and non-resident entities that have a permanent establishment or have income from the UAE.
Certain entities, such as UAE authorities, qualified investment funds and approved non-profit entities, may receive exemptions under specific conditions.
Global minimum tax (OECD pillar two)
From 1 January 2025, the UAE will impose a 15% domestic minimum top tax (DMTT) on large multinational enterprises with annual global revenues of more than €750 million. This is in line with the OECD’s global minimum tax framework, which aims to reduce tax evasion and ensure that large companies pay the effective minimum rate.