UAE Corporate Tax Compliance Guide 2025
Complete framework covering corporate tax compliance requirements, free zone exemptions, mainland obligations, filing procedures, and penalty structures for UAE businesses.
Table of Contents
Corporate Tax Filing Deadline: September 30, 2025
The first corporate tax returns for financial year 2024 must be filed by September 30, 2025. Late filing penalties start at AED 10,000 and can reach AED 100,000.
1. Corporate Tax Framework Overview
The UAE Corporate Tax, introduced on June 1, 2023, applies a 9% tax rate on business profits exceeding AED 375,000. The framework includes specific exemptions for free zone businesses and comprehensive compliance requirements for mainland entities.
Tax Rates and Thresholds
| Taxable Income (AED) | Tax Rate | Annual Tax Amount | Effective Rate |
|---|---|---|---|
| AED 0 - 375,000 | 0% | AED 0 | 0% |
| AED 375,001 - 1,000,000 | 9% | Up to AED 56,250 | 5.6% |
| AED 1,000,001 - 5,000,000 | 9% | Up to AED 416,250 | 8.3% |
| Above AED 5,000,000 | 9% | 9% on excess | 8.9%+ |
Taxable Entities
Subject to Corporate Tax
- • UAE mainland companies
- • UAE branches of foreign companies
- • Free zone businesses with mainland income
- • Free zone businesses not meeting exemption criteria
- • Partnerships and other business entities
Exempt Entities
- • Qualifying free zone businesses
- • Government entities
- • Extractive and natural resource businesses
- • Investment funds
- • Non-resident entities (with conditions)
2. Free Zone Tax Exemptions
Free zone businesses can maintain corporate tax exemption status by meeting specific qualifying conditions. Understanding these requirements is crucial for maintaining tax-efficient structures.
Qualifying Conditions for Free Zone Exemption
Essential Requirements
Business Activities
- • Only conduct qualifying activities within the free zone
- • Maintain adequate substance in the UAE
- • Keep proper books and records in the UAE
- • Have adequate number of full-time employees
Income Sources
- • No income from UAE mainland sources
- • Transactions with related UAE mainland entities at arm's length
- • Compliance with transfer pricing rules
- • Proper documentation of all transactions
Substance Requirements
| Activity Type | Minimum Employees | Operating Expenditure | Additional Requirements |
|---|---|---|---|
| Holding Company | 2 qualified employees | AED 150,000/year | Board meetings in UAE |
| Intellectual Property | 3 qualified employees | AED 300,000/year | Development activities in UAE |
| Trading Business | 5 qualified employees | AED 500,000/year | Core income generating activities in UAE |
| Service Business | 3-10 (based on revenue) | AED 375,000/year | Adequate premises and equipment |
Critical: Annual Substance Report Required
Free zone businesses must file annual Economic Substance Reports demonstrating compliance with substance requirements. Failure to meet requirements results in automatic corporate tax liability.
3. Mainland Business Obligations
UAE mainland businesses are subject to full corporate tax compliance requirements, including registration, filing annual returns, maintaining proper records, and paying tax on profits above the threshold.
Core Compliance Requirements
Mandatory Compliance Areas
Registration & Filing
- • Register for corporate tax within 3 months of incorporation
- • File annual corporate tax returns by September 30
- • Submit audited financial statements
- • Maintain UAE-compliant accounting records
Record Keeping
- • Keep records for minimum 7 years
- • Maintain supporting documentation for all transactions
- • Document transfer pricing policies
- • Prepare detailed tax computations
Allowable Deductions
Operating Expenses
- • Employee salaries and benefits
- • Office rent and utilities
- • Professional service fees
- • Business insurance premiums
- • Marketing and advertising costs
Depreciation & Amortization
- • Plant and equipment depreciation
- • Intangible asset amortization
- • Vehicle depreciation
- • Software and technology assets
- • Leasehold improvements
Financial Costs
- • Interest on business loans
- • Bank charges and fees
- • Foreign exchange losses
- • Qualifying loan arrangement costs
- • Investment management fees
Non-Deductible Expenses
Expenses Not Allowed for Tax Purposes
Capital Expenditures
- • Land and building purchases
- • Capital improvements
- • Share acquisition costs
- • Goodwill payments
Personal & Penalty Costs
- • Personal expenses of owners
- • Tax penalties and fines
- • Entertaining and gifts
- • Charitable donations
4. Tax Registration Requirements
Corporate tax registration is mandatory for all taxable entities within three months of becoming subject to tax. The registration process is entirely digital through the Federal Tax Authority portal.
Registration Timeline
Key Registration Deadlines
New Companies
Must register within 3 months of incorporation or becoming tax resident
Existing Companies
Companies incorporated before June 1, 2023, had until August 31, 2023, to register
Status Changes
Changes in tax status must be reported within 20 business days
Required Documentation
| Document Type | UAE Mainland | Free Zone | Foreign Branch |
|---|---|---|---|
| Trade License | ✅ Required | ✅ Required | ✅ Required |
| Memorandum & Articles | ✅ Required | ✅ Required | 🔸 Parent Company Docs |
| Financial Statements | ✅ Latest Available | ✅ Latest Available | ✅ Consolidated |
| Authorized Signatory ID | ✅ Emirates ID | ✅ Emirates ID | ✅ Passport Copy |
5. Filing Procedures & Deadlines
Corporate tax returns must be filed annually within 9 months of the financial year-end. The FTA provides a comprehensive digital platform for filing returns and making payments.
Filing Calendar 2025
| Financial Year End | Filing Deadline | Payment Due | Extension Available |
|---|---|---|---|
| December 31, 2024 | September 30, 2025 | Same as filing | Up to 6 months |
| March 31, 2025 | December 31, 2025 | Same as filing | Up to 6 months |
| June 30, 2025 | March 31, 2026 | Same as filing | Up to 6 months |
| September 30, 2025 | June 30, 2026 | Same as filing | Up to 6 months |
Filing Requirements by Business Size
Large Businesses (Revenue > AED 200M)
- • Audited financial statements (mandatory)
- • Detailed tax computation worksheets
- • Transfer pricing documentation
- • Country-by-country reporting (if applicable)
- • Related party transaction details
Small/Medium Businesses
- • Reviewed or audited financial statements
- • Simplified tax computation
- • Basic supporting documentation
- • Material transaction disclosures
- • Exemption claims with justification
Digital Filing Platform Features
The FTA's digital platform supports direct upload from accounting software, automatic calculation validation, and instant confirmation of submissions. Pre-filled forms based on previous filings reduce preparation time.
6. Transfer Pricing & Documentation
UAE transfer pricing rules require all related party transactions to be conducted at arm's length prices. Comprehensive documentation requirements apply to ensure compliance and support tax positions.
Transfer Pricing Documentation Thresholds
| Transaction Type | Documentation Threshold | Required Documentation | Filing Requirement |
|---|---|---|---|
| Tangible Goods | AED 5,500,000 | Local File + Economic Analysis | With tax return |
| Services | AED 3,670,000 | Local File + Benchmarking | With tax return |
| Intangibles | AED 1,830,000 | Master File + Local File | Within 30 days of request |
| Financial Transactions | AED 1,830,000 | Economic Analysis + Comparability | Within 30 days of request |
Required Transfer Pricing Documentation
Local File Contents
- • Entity and transaction information
- • Controlled transaction details
- • Economic circumstances analysis
- • Transfer pricing method selection
- • Comparability analysis and adjustments
- • Financial information and assumptions
Master File Contents
- • Multinational group organizational structure
- • Business description and strategy
- • Intangible property information
- • Intercompany financial activities
- • Financial and tax position
- • Advanced pricing agreements
7. Penalties & Consequences
The UAE Corporate Tax Law includes significant penalties for non-compliance. Understanding the penalty structure helps businesses prioritize compliance activities and avoid costly violations.
Administrative Penalties
| Violation | Penalty Amount | Additional Consequences |
|---|---|---|
| Failure to register | AED 10,000 | Potential tax assessment from registration due date |
| Late filing of tax return | AED 10,000 + AED 1,000/month | Maximum AED 50,000 per return |
| Late payment of tax | 3% per annum on outstanding amount | Compounded daily |
| Inaccurate information | 50% of additional tax due | Up to AED 50,000 |
Tax Evasion Penalties
Serious Violations
Criminal Penalties
- • Imprisonment: 2-5 years
- • Fine: AED 50,000 - 10,000,000
- • Both imprisonment and fine may apply
- • Criminal record affects business licensing
Administrative Consequences
- • 300% of tax evaded (penalty)
- • Business license suspension/cancellation
- • Director and manager liability
- • Asset freezing and seizure
Voluntary Disclosure Relief
Businesses that voluntarily disclose errors or omissions may benefit from penalty relief. The FTA encourages voluntary compliance through reduced penalties for proactive corrections.
8. Annual Compliance Checklist
Use this comprehensive checklist to ensure full corporate tax compliance throughout the year. Regular monitoring prevents last-minute issues and reduces compliance costs.
Quarterly Compliance Tasks
Q1 & Q3 Tasks
Q2 & Q4 Tasks
Year-End Compliance Checklist
Essential Year-End Tasks
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Last Updated: October 17, 2025
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