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22/07/2025
YOUNG AND RIGHT ACCOUNTING & TAX CONSULTANCY
YOUNG AND RIGHT From corporate tax registration to audits and bookkeeping, Young & Right offers personalized solutions that keep your business compliant and stress-free. Let’s take the complexity off your plate—starting with a free consultation.
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With the implementation of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, the United Arab Emirates (UAE) has officially introduced a direct tax on business profits, known as the Corporate Tax. This marks a significant shift in the region’s tax landscape, requiring all taxable persons—including juridical persons, natural persons, Qualifying Free Zone Persons, and non-resident persons with UAE-sourced income or a permanent establishment (PE) in the UAE—to comply with corporate tax registration, assessment, and annual corporate tax return filing obligations.
The corporate tax law mandates that businesses determine their taxable income based on their financial year, aligned with their accounting period. Each tax period must be accurately reported, even if no income is earned, and returns must be filed with the Federal Tax Authority (FTA) within prescribed deadlines. The law also outlines exempt persons and previous tax periods that may not be subject to the same obligations, depending on specific criteria.
Whether you operate a mainland company, a Qualifying Free Zone Person eligible for a 0% rate under certain conditions, or a foreign entity with activities triggering corporate tax purposes in the UAE, understanding your responsibilities under the new regime is essential.
In this comprehensive guide by Young & Right, we walk you through every aspect of UAE Corporate Tax—from who it applies to and how to file, to corporate tax registration applications, transfer pricing requirements, and potential FTA penalties for non-compliance.
Corporate tax filing in the United Arab Emirates (UAE) refers to the official submission of an annual corporate income tax return to the Federal Tax Authority (FTA). This process discloses your business’s taxable income, exempt income, applicable deductions, and the resulting net corporate tax liability for a given tax period. Filing ensures compliance with the UAE’s Corporate Tax Law, which governs the newly introduced direct tax levied on business profits.
As per the UAE Corporate Tax Law, a standard corporate tax rate of 9% applies to net taxable income exceeding AED 375,000 per financial year.
Businesses with taxable income below this threshold can benefit from small business relief. However, they are still required to file their return for every tax period, even if no tax is payable.
Certain businesses operating in free zones may qualify for a 0% corporate tax rate on qualifying income, provided they meet the relevant conditions and file their corporate tax return to maintain this status.
Specific entities such as government bodies, public benefit entities, private pension or social security funds may be classified as exempt persons. While they may not be subject to tax, certain exempt persons are still required to register with the FTA and might be obligated to file under particular circumstances.
The UAE corporate tax applies to both resident and non-resident persons carrying out business activities in the UAE. It also applies retroactively based on your chosen or default financial years, meaning your first tax period could fall in a previous tax period, depending on when your financial year starts.
Under the UAE Corporate Tax Law, specific taxable persons are required to submit an annual corporate tax return to the Federal Tax Authority (FTA). Filing your return is a key part of meeting your tax obligations, regardless of whether corporate tax is ultimately payable. The regime applies to various types of resident and non-resident persons, including both natural persons and juridical persons, operating within or deriving income from the United Arab Emirates.
All resident persons conducting business onshore in the UAE—whether established as companies or other juridical persons—must calculate and declare their accounting income, adjust for tax purposes, and report their net income to determine the federal corporate tax liability. These entities must comply even if their income is below the taxable threshold, in order to stay compliant with the FTA.
Businesses established in UAE free zones are also required to file. Even when eligible for the 0% corporate tax rate on qualifying income, accurate reporting is essential. Free zone entities must distinguish between qualifying and non-qualifying income to continue benefiting from the minimum effective tax rate under the competitive corporate tax regime. Failing to file correctly may result in disqualification from this preferential treatment.
Non-resident juridical persons—such as foreign companies—must file if they have a permanent establishment in the UAE or derive UAE-sourced income. The income derived from UAE operations may subject them to corporate income tax in accordance with local regulations, even in the absence of value added tax obligations.
Individual entrepreneurs, freelancers, and sole proprietors are considered taxable persons if their annual revenue from UAE-based business activities exceeds AED 1 million. While personal income (such as from employment or investments) remains outside the scope of income tax, business-related income is now reportable and taxable under the federal tax authority's guidelines.
Certain government entities, public benefit entities, and qualifying investment funds may be exempt persons under the law. However, under specific conditions, even these entities might be required to register and file, especially when they conduct business activities or derive unrelated income subject to tax.
A comprehensive return must include the following:
→ Audited financial statements (where applicable)
→ Tax-adjusted profit or loss
→ Related party disclosures & Transfer Pricing Documentation
→ Details of exempt income, non-qualifying income, and qualifying income
→ Corporate tax registration number and relevant tax period details
Errors, omissions, or misreporting can result in audits, reassessments, or denial of exemptions.
The FTA’s EmaraTax platform facilitates seamless online tax return submissions. Here's a quick step-by-step:
Using your UAE Pass or FTA credentials.
Navigate to the relevant tax period and choose “File Return”.
Include adjusted profits, treasury and financing services, and any group tax relief provisions.
Upload financial statements, transfer pricing files, and related disclosures.
Validate all entries and submit. A receipt and tax due confirmation will be generated.
Before submitting your return, it’s wise to conduct a pre-submission tax review. Evaluate the following:
Certain government-controlled entities, public benefit entities, and qualifying investment funds may be exempt.
Controlled UAE subsidiaries and related entities may file a consolidated return if qualified.
Ensure your related party transactions are at arm’s length and well documented.
Proper classification of non-qualifying income and adherence to adequate substance requirements is crucial.
Special attention is required for extractive businesses, social security funds, and foreign banks operating in the UAE.
At Young & Right, we provide end-to-end corporate tax solutions tailored to your business—whether you're operating in the United Arab Emirates as a non-free zone person, part of a tax group, or a free zone entity. Our services are designed to ensure full compliance with the UAE corporate tax regime and the latest tax decrees issued by the Federal Tax Authority (FTA).
We prepare your financials in line with International Financial Reporting Standards (IFRS) and FTA requirements, ensuring they are audit-ready for smooth business profits tax assessment.
From corporate tax registration to filing and documentation, we manage the entire process via EmaraTax, the official FTA portal for all UAE businesses.
We help you comply with transfer pricing rules and related party disclosure requirements, critical for other businesses with cross-border or intra-group transactions.
Our team guides you through free zone tax relief conditions, adequate substance requirements, and income classification, including the benefits and obligations of forming or being part of a tax group.
Our automated, cloud-based system tracks tax deadlines, sends real-time FTA alerts, manages notices, and supports ongoing compliance for both free zone and non-free zone persons.
The UAE’s new corporate tax regime has significantly reshaped the business environment—turning corporate tax filing into both a legal obligation and a strategic imperative. Whether you're a small enterprise, a multinational with consolidated global revenues exceeding the threshold, or an entity claiming exemption, it is essential to maintain adequate substance and ensure timely, accurate filings. Doing so not only guarantees financial transparency and penalty avoidance but also positions your business to benefit from future tax efficiencies.
At Young & Right, we understand the evolving tax landscape. From corporate tax registration to advisory on economic substance requirements and ongoing compliance, we ensure your business is fully compliant, audit-ready, and strategically aligned with the UAE’s corporate tax framework.
Let Young & Right handle your UAE corporate tax compliance—accurately, on time, and fully aligned with FTA regulations.
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