How to Navigate the Corporate Tax Cancellation Process in the UAE
10/01/2026
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The transition of the UAE from a traditional tax-free environment to a regulated tax landscape is now fully in motion. The UAE's corporate tax regime has matured, introducing stricter deadlines and advanced requirements like the Domestic Minimum Top-Up Tax (DMTT) for large enterprises and detailed transfer pricing rules.
Navigating these tax standards is no longer optional; it is a critical requirement for every company in the UAE.
Federal corporate tax is a direct tax levied on the net income of UAE business operations. For mainland entities, the tax structure is designed to be competitive yet transparent:
0% Tax Rate: Applies to taxable income in the UAE up to AED 375,000.
9% Tax Rate: Applies to the portion of taxable profit exceeding AED 375,000.
For large Multinational Enterprises (MNEs) with global revenues exceeding EUR 750 million, a minimum tax (specifically a 15% Domestic Minimum Top-Up Tax) may apply starting from January 1, 2025, to align with global OECD Pillar Two requirements.
The tax rate on qualifying income for mainland and free zone businesses is generally 9% above the threshold. While exempt from corporate tax on the first AED 375,000, all mainland and free zone companies must still register for corporate tax to remain compliant.
Under the Small Business Relief scheme, resident persons with revenue below AED 3 million in a tax period can elect to be treated as having no taxable income. This relief is available for tax periods ending on or before 31 December 2026.
Certain entities remain exempt from corporate tax, including:
Government Entities and Government-Controlled Entities.
Extractive Businesses (Oil & Gas) and Non-Extractive Natural Resource Businesses (subject to emirate-level taxation).
Public Benefit Entities (Charities/Non-profits).
Qualifying Investment Funds
All taxable persons must register for corporate tax via the Emaratax portal. For entities established before March 1, 2024, registration deadlines were based on the month of license issuance. New entities must register within three months of incorporation. Failure to register results in a AED 10,000 penalty.
The tax year usually follows the Gregorian calendar, but businesses can use a different tax period. You must file corporate tax returns and settle any tax due within nine months from the end of the relevant tax period.
Example: If your financial year ends on Dec 31, 2024, your corporate tax return and payment are due by Sept 30, 2025.
International tax standards now require all related party transactions to be at "Arm's Length." Businesses must maintain a transfer pricing disclosure form and, if they meet certain thresholds (e.g., revenue > AED 200m), maintain a Master File and Local File.
Mainland businesses are subject to corporate tax regardless of their business structure. This includes:
Limited Liability Companies (LLC)
Public Joint Stock Companies (PJSC)
Private Joint Stock Companies (PrJSC)
Each business structure is liable to the same tax rate (9%) if taxable profits exceed AED 375,000. However, businesses structured differently may have different reporting requirements.
Every mainland company must obtain a license from the Department of Economic Development (DED) to legally operate within the UAE. The DED ensures compliance with the necessary rules and regulations, including maintaining a valid trade license and adhering to the business activities for which the company was registered.
The fundamental distinction in the corporate tax system for mainland vs free zone entities lies in the application of tax rates and the specific conditions for relief. Under the UAE corporate tax law, mainland businesses operating in the UAE are subject to a standard 9% tax on taxable income exceeding AED 375,000, whereas zone companies in the UAE can benefit from a 0% rate on "Qualifying Income." However, this new tax benefit for free zones in the UAE is not automatic; entities must comply with corporate tax requirements to be classified as a Qualifying Free Zone Person (QFZP), which includes maintaining adequate economic substance and preparing audited financial statements. While value added tax (VAT) has been a staple for years, the 2025 UAE corporate tax landscape introduced further complexity with the minimum effective tax (DMTT) of 15% for large multinationals, ensuring alignment with global tax standards. Whether a company is mainland-based with full market access or a free zone entity focused on international activities in the UAE, every taxable person must now follow a strict corporate tax compliance checklist—including registration and filing—to ensure they pay corporate tax correctly as it applies to tax periods starting on or after June 1, 2023.
While the corporate tax rate is fixed at 9%, businesses can still optimize their tax liabilities through effective planning. Some tax strategies include:
Tax-efficient business structuring: Understanding how to best structure operations and transactions to minimize taxable income.
Maximizing exemptions: Taking advantage of exemptions available for small businesses or free zone companies.
Expense optimization: Ensuring all eligible business expenses are deducted from taxable income.
Compliance with tax laws involves ongoing monitoring and management of potential risks. Here are some steps businesses can take to mitigate risks:
Regular audits: Conduct internal audits to ensure financial records are accurate and complete.
Tax forecasting: Prepare for potential tax liabilities by forecasting your business's taxable profits for the upcoming year.
At Young & Right, we offer expert services to ensure your business complies with the UAE corporate tax regulations. Here's how we can assist you:
We help your business register with the Federal Tax Authority (FTA), ensuring compliance with corporate tax law and tax registration requirements. Our team handles the entire process from start to finish, ensuring all documents are in order for smooth tax filings.
We provide guidance on corporate tax for mainland businesses, with 9% tax on profits over AED 375,000, and help free zone companies understand their eligibility for exemptions under the Qualifying Free Zone Person (QFZP) status.
We assist with accurate corporate tax filing, ensuring your business meets all deadlines for tax payment. We also guide you through corporate taxation and manage the entire tax payment process.
Our team helps you minimize tax liabilities through strategic tax planning, making sure your business stays compliant with the new corporate tax and tax rules in the UAE.
We provide continuous support to ensure your business stays aligned with corporate tax compliance and corporate tax in the UAE, preparing for future updates in corporate taxation.
Navigating the UAE corporate tax landscape requires more than just understanding the 9% corporate tax rate; it demands a proactive approach to corporate tax compliance. As we move through 2025 and into 2026, the integration of UAE transfer pricing rules, the Domestic Minimum Top-Up Tax (DMTT), and stricter corporate tax obligations means that business in the UAE must prioritize financial discipline.
Whether you are a mainland and free zone entity or a large international tax group, the key to success lies in timely corporate tax filing, maintaining robust records for the tax year, and leveraging tax incentives like Small Business Relief. The UAE government has created a tax system that balances global standards with a competitive edge, but the responsibility to register for corporate tax and file corporate tax returns accurately rests with the taxpayer.
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