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Corporate Tax in UAE: Comprehensive Guide by Atharidca

Understanding UAE Corporate Tax

In January 2022, the UAE Ministry of Finance announced the introduction of Federal Corporate Tax (CT), effective from June 1, 2023. This tax is imposed on the net profit of businesses, with the aim of aligning with global tax standards while reinforcing the UAE’s economic sustainability and transparency.

Key Highlights:
  • 0% tax on net profits up to AED 375,000
  • 9% tax on profits exceeding AED 375,000
  • Higher rates may apply to large multinational corporations per OECD Pillar Two regulations

Why UAE Remains a Tax-Efficient Destination

Despite introducing corporate tax, the UAE maintains one of the most competitive tax regimes globally. Compared to countries like:

  • France (26.5%)
  • USA (21%)
  • India (25–30%)

The UAE’s 9% corporate tax rate continues to offer a compelling advantage for foreign investors and entrepreneurs.

Who is Subject to Corporate Tax?

Corporate tax in the UAE applies to:

  • Businesses licensed to operate in the UAE
  • Free zone companies (with special provisions for Qualifying Free Zone Persons)
  • Foreign entities with Permanent Establishment (PE) or a regular business presence
  • Companies involved in banking, real estate, brokerage, construction, and development

Exemptions from Corporate Tax

Certain entities and income streams are exempt from UAE Corporate Tax, including:

  • Natural resource businesses (taxed at the emirate level)
  • Dividends and capital gains from qualifying shareholdings
  • Intra-group transactions (if conditions are met)
  • Individual income, such as salaries and bank interest
  • Foreign investors' passive income (e.g., dividends, royalties)
  • Personal real estate investments

Corporate Tax Services by Atharidca

At Atharidca, we specialize in providing tailored Corporate Tax advisory services for businesses across the UAE. Our experts assist clients in understanding UAE CT regulations, ensuring compliance, and identifying tax optimization opportunities.

Services Include:
  • Corporate tax registration and filing
  • Tax impact assessment and planning
  • Free zone tax structuring
  • Transfer pricing compliance and documentation
  • Advisory on cross-border tax implications
  • Tax loss planning and carryforward strategies

Free Zone Businesses & Corporate Tax

The Corporate Tax Law introduces the concept of a Qualifying Free Zone Person (QFZP), eligible for a 0% tax rate on qualifying income. To benefit:

  • The entity must maintain adequate substance in the UAE
  • Earn qualifying income as per ministerial guidance
  • Comply with transfer pricing documentation

Atharidca helps free zone entities determine QFZP eligibility and implement tax-efficient structures while remaining compliant.

Tax Losses: Strategic Utilization

Businesses can carry forward tax losses to offset future taxable income, subject to specific conditions. These provisions ensure fair tax treatment during economic downturns.
Atharidca assists clients in:

  • Analyzing and documenting tax losses
  • Planning acquisitions with loss utilization in mind
  • Navigating anti-abuse and group relief provisions

UAE-Sourced Income & Taxable Income Rules

Under UAE CT law:

  • Residents are taxed on worldwide income
  • Non-residents are taxed on UAE-sourced income or income attributable to a Permanent Establishment

Examples of UAE-sourced income include:

  • Income from contracts, services, or assets located in the UAE
  • Interest derived from UAE-based security or property
  • Insurance premiums tied to UAE-based risk

Atharidca provides clarity on what constitutes UAE-sourced income and how to manage the related tax obligations efficiently.

Transfer Pricing & Compliance

The UAE Corporate Tax Law adopts the OECD Transfer Pricing Guidelines, applying the arm's length principle to transactions between related and connected parties.
Businesses must:

  • Maintain transfer pricing documentation (Local & Master Files)
  • Justify intercompany transactions with commercial substance

Atharidca’s tax advisors ensure full compliance with the transfer pricing regulations, helping clients document and support their intercompany pricing strategies.

Why Partner with Atharidca?

  • Expertise in UAE tax regulations and international compliance
  • Tailored solutions for SMEs, multinationals, and free zone entities
  • Proactive approach to tax optimization and risk management
  • Support with ZATCA, OECD alignment, and FATCA/CRS compliance where applicable

Stay ahead in the UAE’s evolving tax landscape with Atharidca.
Whether you’re establishing a new entity, restructuring for tax efficiency, or preparing for your first CT filing, our team is here to help.
Get in touch with Atharidca today to schedule a corporate tax consultation.

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