UAE Corporate Tax 2025: What Every Business Owner Must Know

The United Arab Emirates introduced a federal corporate tax of 9 percent on business profits in June 2023, ending decades of zero federal corporate tax and marking a significant shift in the country's fiscal architecture. For most businesses, the practical impact depends substantially on their structure and location. Small businesses earning under 375,000 AED in taxable income annually pay zero percent — a threshold that covers a significant number of SMEs. Free zone businesses that meet the criteria for Qualifying Free Zone Person status continue to pay 0 percent on qualifying income, provided they comply with substance requirements and do not derive significant income from mainland UAE sources. The 9 percent rate applies to mainland businesses and free zone businesses that do not maintain QFZP status. Transfer pricing rules now apply, meaning related-party transactions must be conducted at arm's length and documented. The tax is administered by the Federal Tax Authority, which already managed VAT since 2018. Businesses must register for corporate tax and file returns annually. Accounting standards matter more now — accurate financial records are no longer just good practice but a legal requirement. Most businesses should work with a qualified accountant or tax advisor to review their structure and assess their exposure.