Frequently asked questions

What is Corporate Tax?

A corporate tax is a tax on the profits of a corporation. The taxes are paid on a company's taxable
income, which includes revenue minus cost of goods sold (COGS), general and administrative (G&A)
expenses, selling and marketing, research and development, depreciation, and other operating costs.

When will Corporate Tax regime become effective in UAE?

The Law provides the implementation of a Federal Corporate Tax (“Corporate Tax”) in the UAE and all
businesses will become subject to it from the beginning of their first financial year that starts on or
after 1 June 2023. 

What are the Corporate Tax Registration Timelines in the UAE?


Timeline for Registration

Resident Juridical Persons:
 - Must register based on their license issuance date.
 - For licenses issued before 1 March 2024, registration deadlines are specified in FTA Decision No. 3 of 2024.

Non-Resident Juridical Persons:
 - If they have a permanent establishment in the UAE, they must register within nine months from its establishment date.
 - If they have a nexus in the UAE, they must register within three months from the effective date of FTA Decision No. 3 of 2024.

Natural Persons:
 - Resident natural persons must register if their business turnover exceeds AED 1 million within a calendar year, with a registration deadline by 31 March of the following year.
 - Non-resident natural persons with a permanent establishment must register within three months of meeting the threshold.

What are the registration deadlines for Resident Juridical Persons with licenses issued before 1 March 2024?

Juridical persons that are Resident Persons must submit a Tax Registration application for Corporate Tax based on their date of incorporation, establishment, or recognition under UAE legislation includes Free Zone and Offshore Companies.

For Entities Established Before 1 March 2024: Entities must register based on the month of their license issuance:

How Does Corporate Tax Work?

Corporate tax, UAE is calculated based on your taxable income, which is your accounting income adjusted for tax purposes.
Here's how it generally breaks down:
 - 0% on the first AED 375,000 of taxable income.
 - 9% on taxable income exceeding AED 375,000.

What is Taxable Income?

For Corporate Tax purposes, the tax base is known as a Taxable Person's Taxable Income.

Here's how it's determined:
 - Resident Persons: These entities are subject to Corporate Tax on their income from both within and outside the UAE. This means their global income is considered when calculating taxable income.
 - Non-Resident Persons: If they have a Permanent Establishment or a nexus in the UAE, they are taxed on the income attributable to that establishment or nexus. If they don't have a Permanent Establishment or a nexus but still derive income from the UAE, that income is subject to a withholding tax rate of 0%.
 - Natural Persons: Individuals are subject to Corporate Tax only on the taxable income from their business or business activities within the UAE. If their business activities outside the UAE are connected to those in the UAE, this income is also included.

What are Exempt Persons under Corporate Tax law?

Exempt Persons are entities that don’t have to pay corporate tax because there are strong public interest and policy reasons for their exemption. These exemptions can make a big difference for certain types of organizations.

Categories of Exempt Persons
Exempt Persons fall into four main categories:
 1. Automatically Exempt Persons: Government Entities.
 2. Exempt with Notification: Extractive Businesses and Non-Extractive Natural Resource Businesses.
 3. Exempt with Cabinet Decision: Government Controlled Entities and Qualifying Public Benefit Entities.
 4. Exempt with FTA Approval: Public and private pension funds, Qualifying Investment Funds, certain juridical persons, and others as determined by the Cabinet.

How do Free Zone Persons benefit from Corporate Tax rules?

Free Zone Persons (FZPs) are entities incorporated, established, or registered in one of the UAE’s Free Zones. These include Free Zone companies and branches that meet specific conditions set by the UAE Corporate Tax rule.

To support the significance of Free Zones, the UAE Corporate Tax rules allow Free Zone companies and branches that meet specific conditions to enjoy a 0% Corporate Tax rate on certain qualifying activities and transactions.

What conditions must Free Zone Persons (FZPs) meet to qualify for the 0% Corporate Tax rate?

A Qualifying Free Zone Person (QFZP) is a Free Zone company or branch in the UAE that meets specific conditions set by the UAE Corporate Tax rules. These rules are designed to recognize and support the significance of Free Zones by allowing eligible entities to benefit from a 0% Corporate Tax rate on certain qualifying activities. 


But what exactly does that mean, and what do you need to qualify?

Condition 1: You need to be a Free Zone Person
This means you're a juridical person (fancy term for a legal entity) incorporated, established, or registered in a Free Zone. This could include a branch of a Non-Resident Person or a UAE juridical person that’s registered in a Free Zone.

Condition 2: Substance in the Free Zone
Next, you need to maintain adequate substance in the Free Zone. In plain English, this means your core income-generating activities need to be based in the Free Zone. You should have enough assets, full-time employees, and spend enough on operations within the Free Zone to support these activities.

Condition 3: Deriving Qualifying Income
You must earn what’s called Qualifying Income.

This can come from:
 - Transactions with other Free Zone Persons (as long as they benefit from the transactions and these don't relate to Excluded Activities).
 - Transactions related to Qualifying Activities that aren’t Excluded Activities.
 - Income from owning or exploiting Qualifying Intellectual Property.
 - Other income, as long as it meets certain de minimis requirements.
 - Some types of income, like from foreign or domestic permanent establishments or certain types of property, won’t qualify for the 0% rate.

Condition 4: No Election for Standard Corporate Tax
You shouldn’t have elected to be subject to the standard Corporate Tax rules and rates. Basically, you can't opt out of the Free Zone benefits and then change your mind.

Condition 5: Arm’s Length Principle
You must comply with the arm’s length principle. This means that transactions with related parties should be conducted as if they were between independent parties, ensuring fair pricing.

Condition 6: Audited Financial Statements
You need to prepare and maintain audited financial statements, regardless of how much revenue you earn. This keeps everything transparent and above board.

Condition 7: De Minimis Requirements
Finally, your non-qualifying revenue must meet de minimis requirements. This means it shouldn’t exceed the lower of AED 5,000,000 or 5% of your total revenue.

What are the reporting timeframe and deadlines for Corporate Tax?

Taxable Persons are required to file a Corporate Tax return for each Tax Period within 9 months from the end of
the relevant period. The same deadline would apply for the payment of any Corporate Tax due in respect of the
Tax Period for which a return is led.

How Fastlane Can Help? 


 - Comprehensive Tax Planning: Fastlane ensures all entities, from corporations to individuals, comply with UAE Corporate tax laws, minimizing liabilities through expert tax planning and strategic advice.

 - Accurate Tax Return Filing: Fastlane handles the annual tax return preparation and filing process, ensuring timely and accurate submissions within the nine-month deadline to avoid penalties.

 - Expert Compliance Support: Fastlane provides ongoing support to maintain compliance with UAE Corporate Tax regulations, including managing documentation and meeting specific conditions for exemptions.

Connect With Our Experts Now!

Write your awesome label here.
Created with