UAE Corporate Tax 2025: Key Business Insights
The new corporate tax laws in the UAE have greatly changed the country’s tax system for this financial year. In recent years, the UAE has achieved remarkable advancements in the global business landscape. This is because of the flexibility of the tax laws, the country’s resilience, and the strategic location.
However, the world’s financial systems are changing, and policymakers are implementing new policies. Businesses operating in the UAE must stay informed about corporate tax regulations and services.
Analysts expect 2025 to bring major changes in the UAE’s tax criteria. In this blog, we will discuss the main features of the corporate tax system in the UAE. We will discuss how to register for corporate tax. We will also discuss upcoming changes. Finally, we will look at how these changes might affect local companies in the UAE.
Key Features of the Corporate Tax System in the UAE in 2025
Corporate tax is a tax imposed on the profit of corporations doing business in a jurisdiction. The UAE used to have one of the best tax-exempt corporate tax systems in the world. Most companies, especially those in free zones, benefited from significant tax exemptions.
The world is changing, and the UAE has committed to following international tax laws. As a result, corporate taxes now apply in many areas.
The UAE introduced a federal corporate tax on business profits starting in June 2023. Additionally, effective January 1, 2025, a 15% Domestic Minimum Top-up Tax will apply to multinational corporations with consolidated global revenues of at least €750 million. The goal is to align the UAE with global standards. Because of this, businesses must now adapt to these changes to ensure they remain compliant and competitive.
Tax Rate Structure
In 2023, the UAE introduced a progressive corporate tax structure to support business growth and maintain competitiveness. A standard corporate tax rate of 9% applies to taxable income exceeding AED 375,000, while income below this threshold is taxed at 0%, providing significant relief for small and medium-sized enterprises (SMEs) and startups. Additionally, a 15% tax rate is applicable only to multinational enterprises (MNEs) with consolidated global revenues of at least €750 million in at least two of the four preceding financial years, ensuring that smaller businesses remain exempt from this higher tax rate.
Impact on Free Zones
The introduction of corporate tax will also impact business operations in free zones. In the past, free zone enterprises attracted foreign investors because of their tax-free status. The latest tax law does not eliminate free zone business tax exemptions. However, their tax-free status comes with certain requirements. Companies in free zones must follow specific rules to retain their tax benefits, such as earning income within the free zone or conducting business outside the UAE.
Deductible Expenses
According to the UAE tax system, businesses can deduct certain costs from their taxable income. These include operating expenses such as salaries, rent, and raw materials. These deductions will offer relief to businesses, especially those operating in high-cost industries.
Transfer Pricing Rules
In compliance with international tax requirements, transfer pricing rules will be introduced in the UAE in 2025. Transfer pricing refers to the pricing of goods, services, and intellectual property among affiliates, especially when the affiliates operate across borders. These rules will ensure that businesses do not manipulate prices to reduce their taxable profits.
The Process of Corporate Tax Registration in the UAE
Check Eligibility
It is important to confirm your business’s eligibility before starting the process. Corporate taxes apply to UAE companies with taxable profits exceeding AED 375,000.
Prepare Documents
Prepare the required documents, such as
- Trade license
- Certificate of incorporation
- Emirates ID of owner(s)/authorized signatories
- Articles of Association (AOA) or Memorandum of Association (MOA)
- Contact details and address
- Details of branches/subsidiaries
Access the FTA Portal
Visit the Federal Tax Authority (FTA) website to register. Sign up by providing the company name and trade license details.
Complete the Registration Form
Complete the registration with business information (license, activity, fiscal year, ownership), and upload the required attachments. After verifying the information, submit the form online. Once approved, you will receive your Tax Registration Number (TRN).
Why You Need Expert Guidance
Corporate tax is a complex area, and 2025 is likely to bring even more challenges. Businesses should use corporate tax services from experts like BSA to stay compliant and reduce their tax burden. Below are the main reasons why corporate tax services are essential:
Compliance with New Tax Regulations
With the new corporate tax laws in the UAE, businesses need to stay informed. Keeping up with changes and developments is crucial. Tax service providers can help businesses understand the new system and guide them through tax filings and submissions before the deadline.
Tax Planning and Optimization
Tax planning is crucial for running a successful business. Corporate tax service providers assist businesses in optimizing their tax situation by identifying available deductions, exemptions, and credits. This planning reduces the overall tax burden, allowing companies to retain more of their profits.
Navigating International Tax Considerations
International tax issues, such as those related to transfer pricing and VAT, can be challenging for businesses operating across borders. Corporate tax services help companies understand these rules and guide them in organizing their operations to comply with local and international tax laws.
Free Zone Advisory
Businesses in free zones must adhere to tax rules to maintain their exemptions. Corporate tax service providers help ensure compliance with these conditions, keeping companies eligible for tax benefits.
Audit and Reporting Assistance
Tax audits are a normal part of doing business in the UAE. Companies must maintain organized and accurate financial records. Corporate tax service providers assist in record-keeping, tax preparation, and audit documentation.
Why You Need Expert Guidance
Corporate tax in the UAE will impact various sectors differently. Below is an overview of its effects:
Real Estate and Construction
The real estate and construction industries will face significant changes under the new tax regime. Residential property sales are not taxed, but commercial real estate transactions may be subject to corporate tax. Construction companies must carefully manage their costs and tax liabilities.
Technology and Startups
Startups and tech businesses earning less than AED 375,000 will benefit from a 0% tax rate, fostering an entrepreneurial environment. As these companies grow, they must prepare for the 9% tax on higher income tiers. Corporate tax services can help them navigate this growth and minimize tax liabilities.
Financial Services
inancial service providers, such as banks and insurance companies, will be taxed based on their profits. This could impact their earnings, necessitating improved tax strategies and management practices.
Hospitality and Tourism
The hospitality and tourism sectors are vital to the UAE economy but may face increased costs due to the new tax rules. Accurate record-keeping and compliance with tax regulations will be essential for these businesses.
Conclusion: Navigating the Corporate Tax Landscape in 2025
Corporate tax in the UAE for 2025 marks a significant shift from its long-standing tax-free status. Businesses must stay updated on new tax laws, ensure compliance, and leverage corporate tax services to improve their tax positions. With guidance from experts like BSA, companies can thrive under the new tax system and reduce their tax burden.
Whether you operate a local business or a large corporation in the UAE, working with experts is essential. They can help you navigate the complexities of the UAE’s corporate tax system. By adopting a proactive and informed approach, your business can continue to flourish in the evolving UAE economy.
