UAE Tax Law: A Comprehensive Guide to Understanding Corporate Tax Law in the UAE (2025 Update)

UAE Tax Law: A Comprehensive Guide to the Corporate Tax Law in the UAE (2025 Update)

Estimated reading time: 10 minutes

Key Takeaways

• Introduction of a modern, robust corporate tax regime in the UAE from June 1, 2023 (source).
• Federal Decree-Law No. 47 of 2022 establishes the unified CT framework (Ministry of Finance – Corporate Tax).
• Domestic Minimum Top-Up Tax (DMTT) effective January 1, 2025, aligns with OECD Pillar Two.
• Tax rates: 0% for profits up to AED 375,000; 9% thereafter; 15% for qualifying MNEs under DMTT.
• Exemptions & special regimes: Free Zone Persons, government entities, public benefit bodies; Audited financial statements are required for financial years commencing on or after 1 January 2025 for the following categories: (i) Taxable Persons whose annual revenue exceeds AED 50 million, (ii) all Qualifying Free Zone Persons, and (iii) Tax Groups (for which aggregated special-purpose financial statements must be prepared), pursuant to Ministerial Decision No. 84 of 2025 (FTA Legislation Portal).

Introduction: The Evolution of UAE Tax Law & the Dawn of Corporate Tax in the UAE

The long-standing promise of tax efficiency in the UAE has radically transformed with the introduction of a modern, robust corporate tax regime. After decades of a near tax-free environment, the UAE now embraces transparency, compliance, and alignment with international standards.

In this guide, we examine everything from foundational statutes to recent amendments, Pillar Two compliance, and practical steps for businesses navigating the evolving landscape.

Sources: Ministry of Finance – Corporate Tax, Federal Tax Authority Legislation Portal

The Pillars of the UAE Corporate Tax Regime: Foundational Statutes and Official Guidance

The UAE’s corporate tax system rests on a clear legislative framework, continuously refined to meet economic ambitions and global compliance obligations.

Federal Decree-Law No. 47 of 2022

This decree introduced a unified corporate tax structure covering definitions, scope, rates, exemptions, and compliance obligations for all businesses. Ministry of Finance – Corporate Tax.

Federal Decree-Law No. 60 of 2023: Key Amendments and DMTT

Amended core CT rules to introduce the Domestic Minimum Top-Up Tax, aligning the UAE with the OECD Pillar Two global minimum tax initiative.

Ministerial Decision No. 84 of 2025

Governs the requirement for audited financial statements under the CT law, reinforcing transparency and standardized reporting. FTA Legislation Portal.

Cabinet Decision No. 100 of 2023 (on the Determination of Qualifying Income for Qualifying Free Zone Persons) and Ministerial Decision No. 229 of 2025 (on Qualifying Activities and Excluded Activities for Qualifying Free Zone Persons) govern the Free Zone regime and repeal the earlier Cabinet Decision No. 55 of 2023 and Ministerial Decision No. 139 of 2023.

All provisions are current and enforceable as of October 2025.

Applicability and Critical Effective Dates

Understanding enforcement timelines is essential for businesses and legal practitioners:

• Start Date: Financial years commencing on or after June 1, 2023 became subject to Corporate Tax. Corporate tax returns must be filed within nine months after the end of the relevant tax period; for calendar-year taxpayers, the first return (covering the 2024 financial year) is due on 30 September 2025.
• DMTT Effective: January 1, 2025 brings multinational enterprises into compliance with OECD’s minimum tax standards.

Key Features of the UAE Corporate Tax Law

The CT law’s architecture is progressive, transparent, and adaptable to SMEs and MNEs alike.

Tax Rates and Thresholds

• Up to AED 375,000: 0% corporate tax.
• Above AED 375,000: 9% standard rate.
• Multinational Groups (DMTT): 15% minimum where applicable.

A 0 % corporate tax rate applies to taxable profits of up to AED 375,000. A standard rate of 9 % applies to taxable profits above AED 375,000. For multinational enterprise groups that meet the thresholds for the Domestic Minimum Top-Up Tax (as introduced under Federal Decree-Law No. 60 of 2023), an effective minimum rate of 15 % applies from 1 January 2025.

Exemptions and Special Regimes

Exempt Entities

• Government entities
• Public benefit organizations
• Qualifying investment funds
• Extractive/natural resource enterprises

Registration protocols apply per Ministry of Finance.

Qualifying Free Zone Persons (QFZPs)

0% on qualifying income if substance requirements are met; breach of de minimis brings 9% rate.

For Qualifying Free Zone Persons, non-qualifying income must not exceed the lower of (a) 5 % of total revenue or (b) AED 5 million in order to maintain the 0 % tax treatment. These provisions are set out in Ministerial Decision No. 229 of 2025, applying in conjunction with Cabinet Decision No. 100 of 2023. Earlier instruments, namely Cabinet Decision No. 55 of 2023 and Ministerial Decision No. 139 of 2023, no longer apply.

Individual and Freelancer Taxation

Natural persons carrying on business or business activities are subject to corporate tax only where their turnover from such activities exceeds AED 1,000,000 in a calendar year, pursuant to Cabinet Decision No. 49 of 2023 and the guidance issued by the Federal Tax Authority.

The DMTT and Pillar Two: UAE’s Entry into Global Tax Coordination

The UAE adopted the OECD’s Pillar Two regime with a Domestic Minimum Top-Up Tax to ensure MNEs pay a minimum 15% effective rate.

• Applicability: Consolidated revenues > EUR 750 million in at least two of preceding four years.
• Purpose: Guards against profit shifting, securing fair taxation.

Filing, Audit, and Compliance: Navigating the Shifting Sands

Filing Requirements

All taxable entities must file CT returns for accounting periods from June 1, 2023 onward. Initial filings in 2024, subsequent in 2025.

Returns must be filed within nine months after the end of the tax period.

Audit and Financial Statements

Audited financial statements are required from tax periods commencing on or after 1 January 2025 for (i) Taxable Persons whose annual revenue exceeds AED 50 million, (ii) all Qualifying Free Zone Persons, and (iii) Tax Groups, under Ministerial Decision No. 84 of 2025.

Transfer Pricing Compliance

All related-party transactions must follow arm’s length principle. Transfer pricing documentation must be maintained in accordance with Ministerial Decision No. 97 of 2023 (for the purposes of Federal Decree-Law No. 47 of 2022).

International Aspects and Double Taxation Agreements

The United Arab Emirates maintains one of the world’s largest networks of double taxation agreements, thereby reducing withholding taxes and double taxation risks for cross-border business activities (see Ministry of Finance treaty-network listing).

Special Provisions and Ongoing Compliance

Qualifying Free Zone Income

Strict reviews to ensure non-qualifying income remains below AED 5 million or 5% of revenue.

Documentation, Substance, and Timeliness

Robust documentation, substance requirements, and strict deadlines are crucial. Penalties for non-compliance can be significant.

Practice Recommendations: Navigating the New Corporate Tax Landscape

1. Continuous review of entity structures, Free Zone benefits, and DMTT impacts.
2. Meticulous compliance with filing and audit deadlines.
3. Robust transfer pricing documentation.
4. Early preparation for DMTT restructuring and documentation.
5. Seek professional guidance for complex planning and dispute handling.

Conclusion: Corporate Tax Law in the UAE—A Dynamic, Global-Ready Framework

The UAE’s CT regime marks its evolution into a compliant, competitive jurisdiction. Mastering its intricacies offers businesses a competitive edge while supporting the UAE’s international ambitions.

For the latest legislative updates, consult:

• UAE Government Portal
• Ministry of Finance – Corporate Tax
• Federal Tax Authority Legislation Portal

FAQs

• Q: When did UAE corporate tax become effective?
  A: For financial years starting on or after June 1, 2023, with first filings due in 2024.
• Q: What entities are subject to the DMTT?
  A: Multinational groups with consolidated revenues over EUR 750 million in two of the prior four years.
• Q: What rate applies to profits up to AED 375,000?
  A: A 0% corporate tax rate applies to profits up to AED 375,000.
• Q: Do Free Zone Persons still enjoy 0%?
  A: Yes, on qualifying income if substance and de minimis requirements are met; otherwise, 9% applies.