FAQ on Corporate Tax for UAE-Incorporated Businesses

Yes, most UAE-incorporated businesses are subject to Corporate Tax, except those engaged in the extraction of natural resources (already taxed at the Emirate level), government entities and government controlled entities (exempt if they only perform activities within their official mandate), and qualifying public benefit entities.

Exemptions are available for government-owned entities, qualifying public benefit organizations, and entities operating in qualifying Free Zones, provided they meet specific criteria.

Qualifying Businesses must:

• Register for Corporate Tax with the Federal Tax Authority (FTA).
• File an annual Corporate Tax return.
• Maintain accurate financial records (records must be kept for 7 years) and prepare financial statements according to applicable accounting standards.

Each subsidiary or branch is assessed separately for Corporate Tax unless they qualify for group taxation, allowing the consolidation of financial results.

Yes, expenses incurred wholly and exclusively for business purposes are generally deductible, including salaries, rent, utilities, and other operational costs.

Yes, businesses can carry forward losses to offset against future taxable income, subject to specific conditions.

Global income earned by UAE-incorporated businesses is subject to Corporate Tax, but foreign tax credits can be claimed to avoid double taxation.

Yes. Holding companies are subject to Corporate Tax but may benefit from exemptions on dividends and capital gains from qualifying shareholdings. They must also comply with transfer pricing rules, and Economic Substance Regulations may apply depending on the type of income earned.

Small businesses and startups benefit from the 0% tax rate on taxable income up to AED 375,000 and simplified compliance requirements.

Corporate Tax is applied at the federal level, and businesses must ensure compliance regardless of the Emirate in which they operate. There is no separate Emirate-level corporate tax, and income is taxed based on the total taxable profits, regardless of where in the UAE it was generated.

Non-compliance results in penalties, which may include fines for late filing, underreporting income, or failure to pay tax due.

Yes, UAE-incorporated businesses can form a tax group to consolidate financial results and file a single tax return, provided specific criteria are met.

• Maintain detailed financial records, supporting documents and transfer pricing documentation
• Ensure accurate and timely tax filings.
• Regularly review compliance with tax regulations.

Yes. Family businesses can benefit from general Corporate Tax rules, including group relief, qualifying group transfers, and business restructuring relief. If structured as holding companies or groups, they may also access dividend and capital gains exemptions, provided conditions are met.