United Arab Emirates Corporate Tax - Guide for international expansion

Are you considering expanding your business into the United Arab Emirates? Understanding the corporate tax landscape is a crucial step for successful international operations. This guide will provide an overview of the UAE's corporate tax system, helping you navigate the essentials from compliance to key regulations.

Preparing your business for the financial requirements of a new country is vital for smooth sailing. And if you're looking for efficient ways to manage international transactions and payments, Wise Business can help simplify cross-border finances.

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This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited, its subsidiaries or affiliates, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

United Arab Emirates corporate tax rate in 2025

The United Arab Emirates introduced a federal Corporate Tax on the net profits of businesses, applicable for financial years starting on or after June 1, 2023¹. The standard corporate tax rate is 9% for taxable income exceeding AED 375,000, while a 0% rate applies for taxable income up to this threshold. This tiered system aims to support small businesses and startups².

The corporate tax applies across all emirates and is governed by Federal Decree-Law No. 60 of 2023¹. The Federal Tax Authority (FTA) is responsible for the administration, collection, and enforcement of the corporate tax³. Businesses operating in Free Zones may benefit from corporate tax incentives if they comply with regulatory requirements and do not conduct business in the UAE mainland⁴.

How to pay corporate tax in United Arab Emirates

Businesses subject to corporate tax in the UAE are required to file an annual Corporate Tax Return within nine months from the end of their tax period⁴. The FTA provides online services for taxpayers to register, submit returns, and make payments³.

Corporate taxes in the UAE are paid in UAE Dirhams (AED). If your company's functional currency is not AED, it will need to be converted for tax payments.

Let's consider a company with an annual turnover of AED 1.5 million and a profit margin of 10%, resulting in a taxable profit of AED 150,000.

Based on the UAE's corporate tax rates³:

• Taxable income up to AED 375,000 is taxed at 0%.
• Taxable income above AED 375,000 is taxed at 9%.

In this case, the company's taxable profit of AED 150,000 falls below the AED 375,000 threshold. Therefore, the corporate tax due would be:

AED 150,000 × 0% = AED 0

If the company had a taxable profit of, say, AED 500,000, the tax would be calculated as follows:

• AED 375,000 at 0% = AED 0
• AED 125,000 (AED 500,000 - AED 375,000) at 9% = AED 11,250
  Total tax due = AED 11,250

The FTA monitors compliance with tax laws and addresses non-compliance through audits and inspections. It is essential for businesses to maintain accurate financial records and adhere to the filing deadlines to avoid potential penalties.

For international businesses expanding to the UAE, managing finances and tax payments in local currency can be made easier with the right financial tools. A platform like Wise Business makes it easy for international businesses to manage their finances with a multi-currency account, simplifying the process of paying corporate tax and other local expenses without incurring high fees.

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Tax Compliance in the UAE

Some practical steps to keep your company compliant with UAE tax regulations are:

• Determine your obligations: After incorporation, confirm if your business falls under the corporate tax rate in the UAE of 9% for income above AED 375,000 and 0% below. Check if VAT registration applies. Entities in a UAE corporate tax-free zone may qualify for exemptions but must still comply with regulations.

• Register with the Federal Tax Authority (FTA): Apply via theFTA e-services portal to obtain your Tax Registration Number.

• Maintain proper records: Follow FTA retention rules and use approved accounting software.

• File on time

  • Corporate Tax: Submit the UAE corporate tax filing within nine months of your financial year-end.
  • VAT: File returns and pay within 28 days of your tax period end.

• Stay updated: Monitor legal changes or work with a licensed advisor to avoid penalties.

International Expansion to the UAE

The UAE has established itself as a commercial hub that attracts businesses from across the globe.

The country holds a GDP per capita of around $ 49500 for 2025, and its economy grows at about 4%⁵. This places it at 12^th rank among the wealthiest nations⁶. Meanwhile, the non-oil sectors contribute over 75% of GDP⁷. This diversification has strengthened its economic stability and fostered a resilient, business-friendly environment.

Besides all this, the country’s strategic location at the crossroads of Asia and Africa gives businesses direct access to high-growth markets. It also signed Comprehensive Economic Partnership Agreements (CEPA) with countries such as India, Israel, Indonesia, and Turkey. This pact has helped boost non-oil trade with CEPA partners by 42.3% in 2024⁷.

We’ve repeatedly observed how the UAE invests heavily in world-class infrastructure, free-trade zones, and logistics to enhance global connectivity. Low taxation, political stability, a strong banking sector, and attractive incentives place it among the most business-friendly countries. More than 40 free zones across all seven emirates offer 0% corporate tax⁸, 100% foreign ownership, and full profit repatriation⁹.

On the mainland, the UAE corporate tax percentage remains competitive. It’s 0% for profits up to AED 375,000 and 9% above this threshold⁶. Businesses can use professional corporate tax services to simplify compliance and maximize efficiency.

Here’s a quick round-up of steps to set up a company in the UAE:

• Conduct market research to identify opportunities and understand the business environment.
• Choose your sector, assess competitors, and understand regulations.
• Define your target market and adapt to cultural nuances.
• Select a legal structure and jurisdiction (mainland or free zone).
• Create and submit a business plan.
• Reserve your business name and obtain approvals.
• Draft a Memorandum of Association.
• Open a bank account (see Opening a Business Bank Account in Dubai for guidance).
• Maintain robust record-keeping systems.

Incorporation of Business in the UAE

To incorporate a business in the UAE, you must register through the Basher platform, which connects federal and local government services. This portal lets you complete licensing and UAE corporate tax registration in one place.

Steps to set up an entity in the UAE¹¹:

• Choose your business activity. Industrial, commercial, professional, tourism, agricultural, or occupational. Your activity determines your license type and corporate tax percentage.
• Select your legal form. Is it a Limited Liability Company (LLC), Public Joint Stock Company (PJSC), Private Joint Stock Company (PrJSC), Limited Partnership, Sole Establishment, or Free Zone Company?
• Register your trade name online.
• Get initial approval from authorities; foreign investors also need clearance from the General Directorate of Residency and Foreigners’ Affairs.
• Prepare your MOA or LSA agreement (required for LLCs, partnerships, and joint stock companies).
• Provide a registered UAE address.
• Pay the license fees to complete incorporation.

Choosing the correct type of business in the UAE is more than a legal formality. It directly shapes your long-term operational efficiency and financial results. The recent introduction of UAE Corporate Tax and tighter compliance requirements have made selecting the proper structure more critical than ever¹².

Types of businesses in the UAE are:

• LLC: Mainland operations, 1-50 shareholders, liability limited to contributions, and a 9% corporate tax rate on profits above AED 375,000 (one of the lowest corporate tax rates worldwide).
• Free Zone Company: 100% foreign ownership, full profit repatriation, simplified corporate tax registration process, but limited mainland trading rights.
• Sole Establishment: Single owner, unlimited liability, no capital requirement; foreign owners need an LSA.
• Partnership Company: Includes General Partnerships (UAE nationals only) and Limited Partnerships (allows foreign investment).

Many companies work with UAE tax advisors to meet deadlines, handle registration, review rates by state, and calculate their liabilities accurately. In an era of rising taxes elsewhere, the UAE’s competitive and predictable system continues to attract global investors.

International corporate tax best practices

Navigating corporate tax in multiple jurisdictions requires careful planning and adherence to best practices. For international businesses operating in countries like the UAE, here are some strategies to consider:

• Ensure compliance with local and international tax laws: Register your business legally in every country of operation and stay informed about local tax regulations.
• Leverage double taxation treaties (DTTs): Understand the DTTs between the countries where your business operates. These treaties are designed to prevent the same income from being taxed twice and can potentially relieve your tax burden. The UAE has an extensive network of DTTs.
• Maintain up-to-date and transparent financial records: Keeping clear and organized financial records is fundamental for preparing accurate tax returns and reducing the risk of errors. Transparent records also simplify the process during financial audits.
• Professional Tax Advice: It is highly recommended for international businesses to seek advice from tax experts familiar with the specific regulations of the UAE and other relevant countries. This ensures full compliance and helps optimize tax strategies.

Take the complexity out of international expansion with Wise Business

Researching corporate tax is a crucial step when expanding your business into a new country. The next step is setting up the financial infrastructure to handle the complexities of operating across borders, from managing multi-currency cash flow to mitigating FX risk.

The Wise Business account provides the financial tools to make your international expansion to United Arab Emirates efficient and simple. It's the one account for managing your money globally.

With a Wise Business account, you can:

• Pay suppliers and initial fees: Pay suppliers, global payroll, and one-off incorporation costs in the local currency.
• Get paid like a local: Use local account details for 8+ major currencies to easily receive payments from customers or investors.
• Manage your money across borders: Hold and exchange 40+ currencies in one account, always with the mid-market exchange rate and low, transparent fees.
• Streamline your accounting: Integrate with tools like Xero or QuickBooks to simplify tracking your company's international finances.
• Empower your team: Provide multi-user access for your finance team and issue expense cards for international spending.

Wise is designed to support every step of your journey, from paying your first registration fee to receiving international payments and managing your global treasury.

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FAQs - Corporate tax in UAE

Who is subject to corporate tax in the UAE?

Corporate tax applies to all UAE businesses and commercial activities, with the exception of businesses involved in the extraction of natural resources, which remain subject to Emirate-level corporate taxation. Foreign entities and individuals are subject to corporate tax if they conduct a trade or business in the UAE on an ongoing or regular basis¹³.

Are Free Zone companies subject to UAE corporate tax?

Yes, Free Zone companies must register and comply with Corporate Tax regulations. Qualifying Free Zone Persons may benefit from a 0% tax rate on qualifying income if they meet specific conditions and do not conduct business in the UAE mainland.

What are the penalties for non-compliance with corporate tax regulations in the UAE?

Penalties for non-compliance vary depending on the violation. Examples include fines for not maintaining necessary information and records, failure to timely file a tax return, and not paying payable taxes, which can incur an annual monthly penalty on the outstanding amount¹⁴.

What is the process for registering for corporate tax in the United Arab Emirates?

Businesses subject to corporate tax in the UAE are required to register with the Federal Tax Authority (FTA). The FTA provides online services that facilitate the registration process for taxpayers. After registration, businesses can use these online platforms to submit their annual Corporate Tax Returns and make payments.

What are the common pitfalls to avoid regarding corporate tax in the United Arab Emirates?

A common pitfall to avoid is non-compliance with tax regulations, which can lead to penalties. It is crucial for businesses to maintain accurate financial records and adhere to filing deadlines to prevent issues during audits and inspections by the FTA. Additionally, for international businesses, failing to understand and leverage double taxation treaties can result in unnecessary tax burdens.

Sources used in this article:

1. UAE Government Portal — Corporate Tax
2. UAE Corporate Tax Guide
3. Federal Tax Authority
4. FTA Guide — Free Zone Persons
5. IMF — United Arab Emirates Data
6. GDP per Capita
7. Reuters — Middle East News
8. DMCC — Corporate Tax Support
9. Ministry of Economy — Free Zones
10. Khaleej Times — New Corporate Tax Announcement
11. UAE Government Portal — Starting a Mainland Business
12. UAE Business Structures Explained
13. UAE Corporate Tax FAQ (PDF)
14. CorporateTaxUAE — FAQs

Sources last checked 19/08/2025