UAE Corporate Tax - What Changed and What Businesses Need to Know Now
UAE REGULATORY UPDATES
7/16/20262 min read
UAE Corporate Tax came into effect for financial years beginning on or after 1 June 2023. The framework has been in place long enough to generate compliance obligations across most of the UAE's business community - and long enough for the Federal Tax Authority to begin examining how those obligations are being met.
The current rate structure.
Taxable income up to AED 375,000 is subject to 0% corporate tax. Income above that threshold is taxed at 9%. Qualifying Free Zone Persons who meet the prescribed conditions may benefit from a 0% rate on qualifying income. Large multinational groups meeting the Pillar Two thresholds - global revenue exceeding EUR 750 million - are subject to a 15% minimum effective tax rate under the UAE's domestic minimum top-up tax.
Small Business Relief.
Businesses with revenue below AED 3 million may elect for Small Business Relief, treating their taxable income as zero for that period. This election is available for tax periods ending before 31 December 2026 and must be claimed - it is not applied automatically.
Registration and filing obligations.
All UAE businesses - mainland and free zone - are required to register for corporate tax regardless of whether they expect to owe tax. Failure to register on time carries administrative penalties. Filing deadlines are set at nine months from the end of the relevant tax period.
Transfer pricing.
Transactions between related parties must be conducted at arm's length. Businesses meeting certain thresholds are required to prepare a disclosure form and, in larger cases, a local file and master file aligned to OECD guidelines. This applies to transactions with related UAE entities, foreign group companies, and connected persons.
What to watch?
The FTA continues to issue guidance on areas where the legislation requires further clarification - including investment holding structures, real estate income, and the treatment of specific free zone activities. Businesses should treat their current filing position as a starting point, not a settled conclusion.
The practical priority.
Review your registration status, your first filing, and your transfer pricing position. If any of these have been handled without qualified tax advice, commission a review before your next filing deadline.
KAMMS provides UAE corporate tax advisory for businesses across all structures and sectors. Speak to a partner about your current position.