# UAE corporate tax law explained for businesses and finance teams

> UAE corporate tax law explained: rates, thresholds, exemptions, filing deadlines and penalties under Federal Decree-Law 47 of 2022. Get pricing today.

Source: https://einvoicedirect.ae/uae-corporate-tax/uae-corporate-tax-law  
Last updated: 2026-06-05  
Publisher: EInvoice Direct (Massive FZCO), UAE e-invoicing software.

## What is the UAE corporate tax law?

The UAE corporate tax law is Federal Decree-Law 47 of 2022 on the Taxation of Corporations and Businesses. It introduced a federal tax on business profits across the United Arab Emirates, effective for financial years starting on or after June 1, 2023. The law sets a 0% rate up to AED 375,000 of taxable income and 9% above that threshold.

This article explains how the [UAE Corporate Tax](https://einvoicedirect.ae/uae-corporate-tax) regime works, who it applies to, the rates and reliefs available, and the filing duties your business must meet. It is written for UAE business owners and finance teams who need a clear answer without legal jargon.

## Legal basis and scope of the law

The main statute is Federal Decree-Law 47 of 2022, supported by Cabinet Decisions and Ministerial Decisions issued by the UAE Ministry of Finance (MoF) and administered by the Federal Tax Authority (FTA). The law applies federally across all seven Emirates and to free zone entities, subject to specific conditions.

### Who the law covers

The law treats the following as taxable persons:

- UAE incorporated companies and other juridical persons.
- Foreign companies effectively managed and controlled in the UAE.
- Natural persons conducting business with annual turnover above AED 1,000,000.
- Non-residents with a Permanent Establishment or UAE-sourced income.

For a deeper look at the scope, see our guide on [who pays corporate tax in UAE](https://einvoicedirect.ae/uae-corporate-tax/who-pays-corporate-tax-in-uae).

### Who is exempt

Certain persons are exempt by law or by Cabinet Decision, including government entities, government-controlled entities carrying out mandated activities, qualifying public benefit entities, qualifying investment funds, and pension or social security funds meeting set conditions. Extractive and non-extractive natural resource businesses remain taxed at the Emirate level.

## Corporate tax rates under the law

The headline rates are simple, but the conditions around them matter. The table below sets out the rates that apply from the start of your first tax period on or after June 1, 2023.

| Taxpayer type | Taxable income or condition | Rate |
| --- | --- | --- |
| Resident juridical person | Up to AED 375,000 | 0% |
| Resident juridical person | Above AED 375,000 | 9% |
| Qualifying Free Zone Person (QFZP) | Qualifying income | 0% |
| Qualifying Free Zone Person (QFZP) | Non-qualifying income | 9% |
| Large multinational group | Global revenue EUR 750M or more, from Jan 2025 | 15% DMTT |

The 15% Domestic Minimum Top-up Tax (DMTT) aligns the UAE with the OECD Pillar Two framework. Read more on the [UAE corporate tax 15 percent Pillar 2](https://einvoicedirect.ae/uae-corporate-tax/uae-corporate-tax-15-percent-pillar-2) rules. For a full rate breakdown, see the [UAE corporate tax rates](https://einvoicedirect.ae/uae-corporate-tax/uae-corporate-tax-rates) page and the detailed [UAE corporate tax 9 percent threshold](https://einvoicedirect.ae/uae-corporate-tax/uae-corporate-tax-9-percent-threshold) guide.

### Small Business Relief

The law allows Small Business Relief for resident taxable persons with revenue up to AED 3,000,000 in the current and prior tax periods. Eligible businesses can elect to be treated as having no taxable income, which removes the 9% charge. The relief is available for tax periods ending on or before December 31, 2026.

## Key definitions in plain English

Several terms in Federal Decree-Law 47 of 2022 drive the tax outcome. Understanding them helps you apply the law correctly.

### Taxable income

Taxable income starts from accounting net profit prepared under IFRS or IFRS for SMEs. The law then requires adjustments for exempt income, non-deductible expenses, transfer pricing, interest limitation, and tax losses brought forward.

### Qualifying Free Zone Person

A Qualifying Free Zone Person (QFZP) is a free zone entity that meets all of the following conditions:

- Maintains adequate substance in the UAE.
- Earns qualifying income as defined by Cabinet Decision.
- Has not elected to be subject to the standard 9% regime.
- Complies with transfer pricing and documentation rules.
- Meets the de minimis requirements for non-qualifying revenue.

A QFZP pays 0% on qualifying income and 9% on the rest.

### Permanent Establishment

A Permanent Establishment is a fixed place of business in the UAE through which a foreign person carries on business, or a dependent agent with authority to conclude contracts. Non-residents with a Permanent Establishment are taxed on the income attributable to it.

## Filing, payment and registration duties

The law assigns three main duties to every taxable person: register with the FTA, file an annual return, and pay the tax due. Free zone entities and exempt persons must still register if required by the FTA.

### Registration

Every taxable person must register with the FTA and obtain a Corporate Tax Registration Number. Registration is done through the EmaraTax portal. Late registration is subject to administrative penalties set by Cabinet Decision.

### Filing deadline

The return is due within 9 months of the end of the financial year. For a tax period ending December 31, 2024, the return and payment are due by September 30, 2025. There are no provisional or quarterly returns under the law.

### Record keeping

Taxable persons must keep records and supporting documents for 7 years from the end of the tax period. Transfer pricing documentation, including a Master File and Local File, is required where group revenue thresholds are met.

## How the law connects to VAT and e-invoicing

Corporate tax sits alongside Value Added Tax (VAT) at 5% under Federal Decree-Law 8 of 2017, and the new e-invoicing regime under Federal Decree-Law 16 of 2024 and 17 of 2024. The UAE has adopted a Peppol 5-corner Decentralized Continuous Transaction Control and Exchange (DCTCE) model using the PINT AE format.

From January 1, 2027, businesses with revenue of AED 50,000,000 or more must issue and receive e-invoices through an Accredited Service Provider (ASP) appointed by October 30, 2026. Small and medium businesses follow on July 1, 2027, and government entities on October 1, 2027. See the [UAE corporate tax effective date](https://einvoicedirect.ae/uae-corporate-tax/uae-corporate-tax-effective-date) page for how these timelines line up with corporate tax periods.

### Why this matters for corporate tax

Structured e-invoices feed clean, auditable data into your accounting system. That data is the starting point for both VAT returns and the corporate tax computation. Aligning your invoicing, VAT, and corporate tax processes reduces reconciliation work and lowers the risk of penalties under Cabinet Decision 106 of 2025, which sets fines from AED 2,500 to AED 50,000 per e-invoicing violation.

## Penalties under the corporate tax law

The FTA can impose administrative penalties for missed registration, late filing, late payment, and incorrect returns. Penalties are issued under Cabinet decisions and Federal Decree-Law 17 of 2024 on tax procedures. Common areas of exposure include:

- Failure to register or deregister on time.
- Late submission of the annual corporate tax return.
- Late payment of corporate tax due.
- Failure to keep required records.
- Incorrect or incomplete transfer pricing documentation.

Voluntary disclosure before an FTA audit can reduce penalties. Always confirm current penalty values on the [UAE Federal Tax Authority](https://tax.gov.ae) website.

## Practical compliance checklist

Use this checklist to confirm your business is aligned with the UAE corporate tax law.

- Confirm your financial year and first tax period.
- Register with the FTA through EmaraTax.
- Review your free zone status and QFZP conditions, if relevant.
- Map related-party transactions for transfer pricing.
- Decide whether to elect Small Business Relief.
- Set up books under IFRS or IFRS for SMEs.
- Plan the filing date 9 months after year end.
- Align VAT, e-invoicing, and corporate tax data flows.

For background on the underlying regime, our explainer on [what is UAE corporate tax](https://einvoicedirect.ae/uae-corporate-tax/what-is-uae-corporate-tax) covers the policy goals and history of the law. You can also read the official text and updates on the [UAE Ministry of Finance](https://mof.gov.ae) portal.

Ready to align your invoicing and tax data with the new rules? [Get UAE e-invoicing pricing](https://einvoicedirect.ae/for-businesses#contact) from EInvoice Direct and see how an accredited service provider, included at no extra charge, fits into your corporate tax workflow.

## Frequently asked questions

### When did the UAE corporate tax law come into effect?

The UAE corporate tax law, Federal Decree-Law 47 of 2022, came into effect for financial years starting on or after June 1, 2023. A business with a calendar year had its first tax period from January 1, 2024 to December 31, 2024, with the first return due by September 30, 2025. The exact start date depends on each entity's financial year.

### What is the corporate tax rate in the UAE?

The standard rate is 0% on taxable income up to AED 375,000 and 9% above that threshold. A Qualifying Free Zone Person pays 0% on qualifying income and 9% on non-qualifying income. Large multinational groups with global revenue of EUR 750,000,000 or more pay a 15% Domestic Minimum Top-up Tax from January 2025 under the OECD Pillar Two rules.

### Who must register for UAE corporate tax?

All taxable persons must register with the Federal Tax Authority and obtain a Corporate Tax Registration Number. This includes UAE companies, free zone entities, foreign companies with a Permanent Establishment, and natural persons running a business with turnover above AED 1,000,000. Some exempt persons, such as qualifying public benefit entities, must also register if instructed by the FTA.

### How is taxable income calculated under the law?

Taxable income starts from the accounting net profit prepared under IFRS or IFRS for SMEs. The law then applies adjustments for exempt income, non-deductible expenses, interest limitation, transfer pricing, and tax losses carried forward. Specific reliefs, such as Small Business Relief and the QFZP regime, can change the final tax due.

### What is Small Business Relief under UAE corporate tax?

Small Business Relief lets resident taxable persons with revenue up to AED 3,000,000 in the current and prior tax periods elect to be treated as having no taxable income. The election removes the 9% charge but the business must still register and file. The relief applies for tax periods ending on or before December 31, 2026.

### When are UAE corporate tax returns due?

The annual corporate tax return and any tax due must be filed and paid within 9 months of the end of the financial year. For a year ending December 31, 2024, the deadline is September 30, 2025. There are no quarterly or provisional returns. Late filing and late payment attract administrative penalties set by Cabinet Decision.

### Do free zone companies pay corporate tax in the UAE?

Yes, free zone companies are within the scope of the corporate tax law. A Qualifying Free Zone Person pays 0% on qualifying income and 9% on non-qualifying income, provided it meets substance, transfer pricing, and de minimis conditions. Free zone entities that do not qualify are taxed at the standard 0% and 9% rates and must register and file in the same way as mainland companies.


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This content is informational and is not tax, legal, or financial advice.
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