UAE Corporate Tax: What Every Business Needs to Know

The UAE introduced a federal Corporate Tax of 9% on business profits exceeding AED 375,000, effective for financial years starting on or after 1 June 2023. This landmark shift marks a significant transition for businesses that have long operated in a zero-tax environment. While the rate remains one of the most competitive globally, companies across all sectors — from mainland enterprises to free zone entities — are now required to register with the Federal Tax Authority, maintain compliant financial records, and file annual tax returns. Businesses earning below the AED 375,000 threshold continue to benefit from a 0% rate, offering meaningful relief for small and emerging enterprises.

For businesses operating in UAE free zones, the regime introduces an important distinction: entities that qualify as Free Zone Persons and earn only Qualifying Income may continue to benefit from a 0% Corporate Tax rate, provided they meet substance requirements and do not conduct business with mainland UAE. However, determining what constitutes Qualifying Income requires careful analysis, and non-compliance carries the risk of losing preferential status entirely. At BIFI Partners, we advise businesses to proactively assess their tax position, review their corporate structures, and ensure their accounting and reporting frameworks are fully aligned with the new requirements — before the next filing deadline arrives.