The UAE's New Corporate Tax Laws

Understanding the UAE's New Corporate Tax Laws: What Businesses Need to Know

Are you entering the corporate world in the UAE, Dubai? But do you know about the UAE’s new corporate tax laws? Why worry, when Flying Colour Business Setup is always here for you. On 1st June 2023, the corporate tax law was reformed by the (MOF) Ministry of Finance for the financial year of the UAE. During this reform, they focused on lowering the corporate income tax rate within the GCC region at a rate of 9%.

It is just a quick detail but Flying Colour Business Setup will always stay two steps forward from everyone. We will help you to understand the UAE’s new corporate tax laws in detail and also tell you what businesses need to know about new corporate tax laws. 

Corporate Tax Law in the UAE

For the first time in the history of the UAE- the corporate tax on business profits. Corporate tax is known as direct tax in which the tax is imposed on the net income or profit of the corporation. It is reformed to modernize the UAE tax system and support the country's economy standards. 

Corporate tax rate- 

• The corporate tax rate depends on the profitable income. 
• Profits exceeding AED 375,000 have to pay a 9% Tax. 
• Profit up to AED 375,000 Don't have to pay any corporate tax. 

Example: If any company in UAE earns AED 4,00000 profit then they have to pay a 9% rate from the profit which means you have to pay AED  36,000. 

Affected Areas of Corporate Tax

When corporate tax was established in the UAE, the Ministry of Finance focused on some areas that are: 

• UAE Based Businesses 
• Free Zone Companies 
• Foreign Companies with UAE Branch 

If any business starts in the UAE, either owned by locals or foreigners, it comes under the new corporate tax law. All UAE-based businesses have to pay taxes on the profit they earn. 

Free Zone Companies 

Approximately 40 free zones are available in the UAE, in which some free zones are subjected to paying corporate tax. Only those free zones that are engaged in some activities are exempt. 

Foreign Companies with UAE Branch 

Those companies who are operated from foreign but have a branch in the UAE, have to pay tax on the profit generated in the company. All foreign companies have to pay corporate tax. 

Special Considerations for Corporate Tax

In UAE, under the corporate tax, some considerations are special and they don't have to pay any corporate tax. These considerations are: 

• The businesses that earn profit from natural resources including gas and oil are excluded from the corporate tax. 
• A criteria pointed out for the free zone business, is if any business meets with government free zone criteria then they are excluded from corporate tax. 
• Those companies who are earning from foreign investment are exempted from the corporate tax in the UAE. 

Extraordinary Features of Corporate Tax in UAE

Low Corporate Tax Rate 

Corporate tax in the UAE is the lowest tax rate in the world, otherwise, everywhere the corporate tax rate is very high. The government of Dubai is generally focused on only making the economy balanced not for earning profit. 

Tax Residency Certificate

Under the corporate tax law, you can get the Tax residency certificate from the MOF, if you are subjected to residence from the tax with legal requirements. With this certificate, you prove exempted from the corporate tax. 

Filing and Reporting Requirements 

The filling & reporting requirements are aligned for the corporate tax annually in the report. If you are filling out the tax annually, then you have to fill out the report so that all the records are submitted to the Ministry department. 

Transfer Pricing Rules 

In transfer pricing, the rule is placed to ensure the business is engaged in the cross- border related party transactions related to the arms-length principles. In this principle, it mandates the price transaction between two related parties should reflect market conditions. 

Role of Flying Colour Business Setup in Corporate Tax

Flying Colour Business Setup is a consultancy company in Dubai that helps people start their company and fill in all the legal formalities and documents including corporate taxation. In the taxation, we provide various legal services that are: 

Organize all the Required Documents 

Flying Colour Business Setup helps in organizing all the documents that are required by the Federal Tax Authority. E.g. Tax residence certificate, corporate tax return, financial statement, transfer pricing documentation, Economic substance report, and many more. 

Clarify any Concern 

If you have any concerns related to the management of corporate tax the Flying Colour business setup is always here for you. We will solve all your concerns related to the business setup and its regulations. 

Direct Contact with FTA 

If you are facing any problem related to the authority of Federal tax then Flying Colour Business Setup stands for you and directly communicates with FTA to solve your business setup-related problems in any way. We have the full authority to talk with any government department and banks to remove all the restrictions in any tax management. 

Why is the Flying Colour Business Setup the First Choice of Every Businessman in the UAE? 

Flying Colour Business Setup is the first choice of every businessman due to our best services. We work with government banks and Departments. We are specialized in the set up of business in UAE with all the legal and regulatory requirements. Flying Colour Business Setup manages all the tax and regulations which are used in business setups. 

We have been working for 20+ years in the industry and regularly helping people to start their businesses in the UAE. Let's discuss the reasons why Flying Colour Business Setup is the first choice of every Businessman in UAE. 

• Real-time support 
• Tax management solutions 
• Professional team
• Problem-solving approach 
• 175+ professionals 
• 3000+ Google Reviews
• Legal entity 
• Provide all the solutions for Business Setup 

Work Area of Flying Colour Business Setup 

Flying Colour Business Setup works not only in corporate tax management but also in multiple areas which we will discuss in this blog: 

• Corporate Tax & Compliance 
• Accounting & VAT 
• Immigration services 
• DIFC Company foundation 
• UAE Company Setup 
• PRO Services 
• Taxation

FAQs for Understanding the UAE's New Corporate Tax Laws

Q. Is there any corporate tax for small businesses? 

Answer: No, Corporate tax is not attempted on small businesses because it is only for the profit Exceeded from AED 375,000. Small businesses or startups have less profit than the criteria so that they will not have to pay any corporate tax. 

Q.  What if I don’t pay corporate tax? 

Answer: If you will not pay corporate taxes if you are applicable then you have to pay penalties in such conditions:  

• Late filing of tax pay 
• Failure to submit transfer pricing documentation 
• Underreporting taxable income 
• Penalties will be payable including fines, additional tax assessments, and interest on late payment. 

Q. How much time can we take to fill out the corporate tax? 

Answer: The time or deadline selected by the transfer of filling is 9 months. You can fill your corporate tax between 9 months from the financial year and also fill your corporate tax file annually for running the business in the UAE

Q. Does Flying Colour Business Setup help in filling the corporate tax? 

Answer: Yes, Flying Colour Business Setup help not only in tax filing but also in all business-related work programs. If you are also looking to file a report on corporate tax we will provide you the tax filing services. 

Therefore, to learn more about UAE's New Corporate Tax Laws, Book a free consultation with one of the Flyingcolour team advisors.

The article was published on 04/04/2025. It is important to note that the federal policies and updates mentioned may have changed since then. For the most current information, please contact our consultant!