How to Register Corporate Tax in the UAE
Are you planning to register for corporate tax in the UAE?
The advent of UAE's corporate tax law was an alarm for companies, causing them to take action to stay ahead. The complete registration process is straightforward yet very important for securing your company's financial future. When businesses register for corporate tax, they unlock their potential access to tax benefits. Moreover, they maintain good standing and contribute to the nation’s growing economy.
Stay proactive and set your business for success by registering for corporate tax. Also, they must ensure that they meet deadlines and avoid penalties down the road.
Wondering how to register for corporate tax in UAE? In this article, we will discuss corporate tax in detail in the UAE, focusing mainly on how to register for it and other mandatory requirements. Let’s take a dive into it;
What is Corporate Tax in UAE?
Corporate tax is defined as a form of direct tax imposed on the net income or profit of business corporations and other taxable entities. It is also popularly known as “Business Profits Tax” or “Corporate Income Tax”.
On 31 January 2022, the Ministry of Finance of the United Arab Emirates made a landmark announcement, revealing that a new federal corporate tax system is soon to be introduced across the nation. The department has announced that it will be applicable to financial years starting on or after 1 June 2023. So, the federal corporate income tax was finally introduced in June 2023. With a standard rate of 9%, the UAE will have the second-lowest corporate income tax rate in the GCC region, except for Bahrain.
The main reason behind the UAE CT law was to incorporate best practices across the nation and to reduce the burden of compliance on businesses.
What is the corporate tax rate in the UAE?
A total of 9% ETR – effective tax rate is imposed or taxed on the income or profits of the businesses or taxable entities. If the 9% effective tax rate (ETR) does not apply under the tax rules of a particular jurisdiction, it can be recalculated to align with the UAE Corporate Tax Law. This showcases that the 9% ETR is achieved according to the provisions set out in the UAE tax regulations.
When the annual taxable profits fall under AED 375,000, it will be subjected to a 0% rate. On the other hand, annual taxable profits that go above AED 375,000 will be subjected to a 9% rate.
Recent Developments in UAE Corporate Taxation
UAE has recently announced some changes in its corporate tax law. This is mainly for large companies like MNCs in the country. The country has brought a major change in its CT law by asking large multinational enterprises to pay a minimum of 15 % tax on the income or profit generated in the nation. It is a huge spike from the current corporate tax rate of 9%. The changes have come into effect in the financial year from 1st January 2025.
This DMTT- domestic minimum top-up tax is implemented on multinational enterprises that hold consolidated global revenues of a total €750 million or more in 2 of the 4 financial years immediately prior to the financial year in which the tax is enforced.
This strategic change in the corporate tax law demonstrates the UAE's dedication to adopting the Organisation for Economic Co-operation and Development's (OECD) two-pillar approach. It is designed to create a transparent taxation system that aligns with international standards.
New Incentives Added
New Research and Development (R&D) Tax Incentive
The Ministry of Finance has taken some new incentives this year to strengthen its economic competitiveness. Moreover, the incentives are going to improve the ease of operating business. The ministry has announced that there will be a new research and development (R&D) tax incentive in order to promote and encourage R&D activities. This incentive is all set to support innovation. The tax incentive will be based on expenditure, with a potential value ranging from 30% to 50%. According to the ministry, it will be refundable depending on the business's revenue and employee count in the UAE. Moreover, the qualifying scope for R&D activities is to be aligned with the Frascati Manual guidelines of OECD. And it has to be conducted within the country. The proposed incentive is anticipated to be implemented for tax periods beginning on or after January 1, 2026.
Refundable Tax Credit on High-Value Employment
Refundable Tax Credit is another incentive implemented by the ministry for high-value employment activities. According to the ministry, this incentive will be provided as a percentage of qualifying salary costs for employees involved in high-value roles. This includes C-suite executives and senior staff handling major business functions that contribute significantly to the UAE economy. This incentive came into effect on January 1, next year. The goal of this incentive is to encourage business organisations to engage in activities that contribute to economic benefits, drive innovation, and enhance global competitiveness in the UAE.
Eligibility and Requirements for Corporate Tax Registration
| Documents | Eligibility/Requirements | |
|---|---|---|
| Natural Persons (Freelancers and sole proprietors) |
Valid Trade License (if applicable) Emirates ID / Passport |
The license should be current and valid during the registration process. The applicant has to submit a valid identification document. |
|
Legal Persons (These are Corporations or Entities). It includes; Mainland Companies Free Zone Entities Foreign Entities |
Valid Trade License Emirates ID / Passport of the Authorized Signatory Proof of Authorisation |
The trade license must be updated. Submission of identity proof of the authorised representative. Submission of documents like Power of Attorney, if applicable. |
When to Register for Corporate Tax in the UAE?
Thinking about when to register for corporate tax in UAE? As per the UAE Corporate Tax Law, CT registration is mandatory for eligible businesses even if their annual profit doesn’t exceed AED 375,000.
On 28 January 2025, the Federal Tax Authority (FTA) of the UAE issued a reminder to all individuals who are liable for Corporate Tax to submit their Tax Registration applications by 31 March 2025 without failure.
Apart from legal entities and natural persons, the law is also implemented to qualify public benefit entities.
Entities specified in Cabinet Decision No. 37 of 2023, relating to public benefit organisations, are also required to register. This includes charitable foundations and other organisations that serve the public interest and work for the betterment of society.
How to Register for Corporate Tax?
Create an account on the EmaraTax portal using your email and phone number, or log in with your credentials.
Create a new taxable entity or choose the appropriate taxable person from the list of existing entities.
Prepare necessary documents such as copies of Trade License, Memorandum of Association, Emirates ID, and passport copies of authorised signatories, as well as Share Certificates or Power of Attorney.
You will find the option to register for Corporate Tax. Select it and finish the registration process.
Finalise your registration on the EmaraTax platform. Once approved, you will receive your Corporate Tax Registration Number (CTRN).
Understand the UAE corporate tax law.
Corporate tax is regulated by Federal Decree-Law No. 60 of 2023, which modifies specific provisions of Federal Decree-Law No. 47 of 2022. .
Corporate Tax Law aims to support the UAE's development, ensuring a competitive, international-standard tax regime and strengthening its investment appeal. This is all about UAE corporate tax law.
How to Reduce Corporate Tax in UAE?
By utilizing free zones for tax advantages and hiring a reputed tax agent, you can reduce corporate tax. Moreover, Transfer pricing can help multinational companies or businesses engaged in cross-border transactions reduce their tax liabilities.
Frequently Asked Questions on Corporate Tax in UAE
How corporate tax is calculated?
The UAE Corporate Tax of 9% on net profit applies only if taxable profit exceeds AED 375,000; profits up to this amount are tax-free.
How to pay tax in EmaraTax?
Log in to your account, select the tax, and pay via GIBAN or MagnatiPay.
What are the penalties for late Corporate Tax registration?
If you fail to register on time, you will be charged with a penalty of AED 10,000.
Where should you register for Corporate Tax in UAE?
Go to the EmaraTax platform to register for CT in UAE.
Who will pay corporate tax in UAE?
All businesses, including free zone and zero-rate businesses and taxable individuals, are.
What is the difference between corporate tax and VAT?
Corporate tax is a profit-based tax, whereas VAT is a consumption-driven charge.
What is the cost of corporate tax registration in UAE?
The corporate tax registration fee is free, but if you hire professional assistance, you will have to pay additional charges.
Are there any exemptions from corporate tax in the UAE?
Small businesses which have a taxable income up to AED 375,000 are exempt from the 9% corporate tax.
How does corporate tax apply to free zone companies in the UAE?
Under the Corporate Tax Law, a Qualifying Free Zone Person can enjoy a 0% Corporate Tax rate on their Qualifying Income.
Who is required to register for corporate tax in the UAE?
All businesses and natural persons, regardless of their profitable income.
When does the UAE corporate tax regime become effective?
It came into effect during the financial year on or after 1 June 2023.
