UAE Corporate Tax 2025: What Every Business Needs to Know
The UAE, long celebrated for its tax-free status, has entered a new chapter in business regulation with the implementation of Corporate Tax. Starting from June 1, 2023, this reform marked a significant shift, and now, as we approach 2025, businesses must ensure they are not only aware of the tax implications but also fully compliant with the law.
In this detailed guide, we break down everything companies need to know about UAE Corporate Tax in 2025—from registration and rates to exemptions and penalties. Whether you’re a startup or among the top accounting firms in Dubai, this article is your roadmap to staying ahead.
Corporate Tax in UAE: Key Highlights for 2025
- Tax Rate: 0% on taxable income up to AED 375,000; 9% on income exceeding that.
- Minimum Top-up Tax: A 15% top-up tax applies to multinationals (under OECD Pillar Two rules) with global revenues above €750 million starting January 1, 2025.
- Scope: Applies to all UAE-incorporated businesses, foreign entities with permanent establishments, and individuals conducting business with turnover over AED 1 million annually.
Who Needs to Register for Corporate Tax?
Taxable Income & Calculation
Taxable income is calculated based on accounting net profit as reported in the financial statements, with specific adjustments. Here’s a quick breakdown:
- Allowable expenses: Only those incurred wholly and exclusively for business purposes.
- Non-deductible items: Dividends, fines, bribes, personal expenses.
- Tax loss carry-forward: Allowed for up to 75% of taxable income in future years.
- Interest deduction cap: Limited to 30% of EBITDA.
This makes proper financial records crucial—a service often provided by expert auditing & accounting firms in Dubai.
Corporate Tax for Free Zone Companies
Free zone companies may be eligible for a 0% tax rate if they:
- Maintain adequate economic substance
- Earn only qualifying income
- Do not conduct business with the mainland
- Meet de minimis thresholds (non-qualifying income must not exceed 5% or AED 5 million)
Failure to meet these criteria results in full 9% taxation on all income. Companies should seek internal audit services in the UAE to review compliance status.
Corporate Tax Compliance Checklist for 2025
- Corporate Tax Registration with the FTA
- Maintain audited financial statements
- File Corporate Tax Returns within 9 months of the end of the financial year
- Keep records for 7 years
- Submit transfer pricing documentation if applicable
Penalties for Non-Compliance
The FTA has laid out strict penalties for non-compliance:
- AED 10,000 for failure to register
- AED 500 per month for late return filing
- Higher penalties for underreporting income or misrepresentation
Businesses are advised to work with trusted accounting and bookkeeping services to avoid these consequences.
Small Business Relief (SBR)
For tax periods between 2023 and 2026, businesses with revenues up to AED 3 million may opt for Small Business Relief, which means:
- 0% Corporate Tax
- No tax return filing required
- Must still maintain basic financial records
Impact of Corporate Tax on VAT-Registered Businesses
Businesses already registered for VAT must now maintain dual compliance. Here’s how the two interact:
- VAT is still applicable at 5% on goods and services
- Corporate Tax is charged on net profit, not sales
- Input VAT is not deductible against Corporate Tax
If you already use VAT services in Dubai, ensure your provider also supports Corporate Tax compliance.
Strategic Tax Planning for 2025
Now that Corporate Tax is here to stay, strategic planning is essential:
- Review corporate structure (especially if operating in free zones)
- Conduct internal audits and transfer pricing reviews
- Align financial reporting with FTA standards
- Consult with top auditing & accounting firms in Dubai
These steps will ensure smoother compliance and better financial health.
Final Thoughts
Corporate Tax in the UAE is no longer on the horizon—it is fully implemented and evolving. Whether you’re a small business, a Free Zone company, or among the Top Accounting Firms in Dubai, staying informed is no longer optional. Proper tax planning, timely registration, and accurate financial reporting are not just about avoiding penalties—they’re about building a more resilient, transparent business in line with global standards.
For expert help in navigating UAE Corporate Tax, connect with TFAB—your trusted partner in accounting, VAT services in Dubai, and internal audit solutions.