UAE corporate tax & VAT: what every Gulf business needs to know
The short version
- The UAE now has a 9% federal corporate tax on profits above the threshold.
- VAT at 5% has applied since 2018 — registration is mandatory past a turnover limit.
- Free-zone businesses can still qualify for 0% on "qualifying income" — but only if they meet the conditions.
- Registration and filing deadlines with the FTA carry real penalties.
For years "tax-free" was part of the UAE's pitch. That's changed — thoughtfully, and not as dramatically as some headlines suggested. If you run a business in the Emirates, here's what actually applies and what to do about it.
Corporate tax: the 9% headline
The UAE introduced a federal corporate tax of 9% on business profits above a set threshold, with profits below it taxed at 0%. By global standards it's low and simple — but it is real, it requires registration with the Federal Tax Authority (FTA), and it requires annual filing. "We're a small company" is not a reason to skip registering.
The free-zone question everyone asks
Free-zone businesses can still access a 0% rate on "qualifying income" — but the word qualifying is doing a lot of work. You have to meet specific conditions around the nature of your activities and substance, and income that falls outside the qualifying definition can be taxed at 9%. This is the area where confident assumptions get expensive; it's worth checking rather than guessing.
VAT: the 5% that’s been here a while
VAT at 5% has applied since 2018. If your taxable turnover crosses the mandatory registration threshold, you must register, charge VAT, file periodic returns, and keep compliant records. Voluntary registration is possible below the threshold too. Late registration and late returns both carry penalties.
What to actually do
- Confirm whether — and by when — you must register for corporate tax and VAT.
- If you're in a free zone, get a real assessment of whether your income qualifies for 0%.
- Keep IFRS-compliant books so your filings are accurate and defensible.
- Put every FTA deadline on a calendar; penalties are for lateness, not just for owing.
None of this is overwhelming with the right setup — it's mostly about registering correctly and never missing a date. That's the part we manage for Gulf businesses end to end.
Operating in the UAE? We’ll handle your corporate tax and VAT registration, filings and books — in dirhams, on time.
