Corporate Tax in the UAE: What You Need to Know

The UAE's corporate tax regime, introduced at a rate of 9% on taxable income exceeding AED 375,000, represents a significant shift in the country's fiscal landscape. While the UAE remains one of the most tax-competitive jurisdictions globally, businesses must now ensure they have robust accounting systems, proper record-keeping, and a clear understanding of their tax obligations to remain compliant.

Not all businesses are equally affected. Free zone entities that meet the qualifying criteria can continue to benefit from a 0% corporate tax rate on qualifying income, provided they maintain adequate substance in the UAE and do not conduct business with the mainland. Understanding whether your free zone entity qualifies — and what activities constitute qualifying income — is critical to tax planning.

Small businesses with revenues below AED 3 million may elect for the Small Business Relief scheme, which effectively exempts them from corporate tax for eligible periods. This relief is designed to ease the compliance burden on startups and SMEs while they scale their operations. However, businesses must proactively elect for this relief and meet the prescribed conditions.

Transfer pricing rules now apply to transactions between related parties and connected persons. Businesses operating within corporate groups or with related-party transactions must ensure these are conducted at arm's length and properly documented. Altius Advisory's tax team provides comprehensive corporate tax advisory services, from registration and compliance to planning and dispute resolution.