1. INTRODUCTION
1 UAE Ministry of Finance, ‘The Ministry of Finance announces the introduction of a Corporate Tax in the UAE’
The United Arab Emirates (UAE) has undergone a landmark shift in its fiscal framework with
the introduction of a federal Corporate Tax regime, effective for financial years starting on or
after 1 June 2023.1 This represents a major change for businesses accustomed to zero
corporate tax, aligning the UAE with global standards while providing clarity, exemptions,
and transitional measures.
2. LEGAL FOUNDATIONS
2.1 Federal Decree-Law No. 47 of 2022
On 9 December 2022, the UAE issued Federal Decree-Law No. 47 of 2022 on the Taxation
of Corporations and Businesses (“CT Law”). This legislation establishes the federal
framework for corporate taxation, defining taxable persons, the tax base, applicable rates,
exemptions, and procedural obligations.
Key Provisions include:
a) Tax Rates:
- 0% on taxable income up to AED 375,000, to support small and start-up businesses.
- 9% on taxable income above this threshold, positioning the UAE among the most
competitive jurisdictions globally.
b) Exempt Persons: Articles 4–9 of the CT Law provide for exemptions, including:
- Government entities engaged in sovereign activities.
- Government-controlled entities carrying out mandated functions.
- Extractive and non-extractive natural resource businesses, provided they meet
specified licensing and payment obligations. - Qualifying public benefit entities, registered by Cabinet Decision.
- Qualified investment funds, subject to regulatory recognition.
- Pension and social security funds.
- Wholly owned subsidiaries of exempt persons, provided their activities are ancillary
to the exempt person’s business.
These exemptions demonstrate the UAE’s balance between maintaining tax neutrality for
strategic sectors while broadening the taxable base.
1 UAE Ministry of Finance, ‘The Ministry of Finance announces the introduction of a Corporate Tax in the UAE’
(31 January 2022) <https://mof.gov.ae/the-ministry-of-finance-announces-the-introduction-of-a-corporate-tax-in-
the-uae/> accessed 21 August 2025.2 ‘Federal Decree-Law No 47 of 2022 on the Taxation of Corporations and Businesses’ (issued 9 December
2022) <https://mof.gov.ae/wp-content/uploads/2022/12/Federal-Decree-Law-No.-47-of-2022-EN.pdf> accessed
21 August 2025.3 ibid, art 3(2).4 ibid, arts 4-9.
2.2 Cabinet and Ministerial Decisions
Since the CT Law came into force, the UAE government has issued several Cabinet and
Ministerial Decisions to clarify scope, exemptions, compliance, and administrative
requirements. These secondary legislations ensure uniform application and prevent
ambiguity.
Ministerial Decisions to clarify scope, exemptions, compliance, and administrative
requirements. These secondary legislations ensure uniform application and prevent
ambiguity.
a) Cabinet Decision No. 63 of 2023 on Unincorporated Partnerships provides that
unincorporated partnerships may be treated as transparent entities for tax purposes
unless an election is made for corporate tax treatment. This prevents double taxation
while offering flexibility to joint ventures and professional partnerships.5
unincorporated partnerships may be treated as transparent entities for tax purposes
unless an election is made for corporate tax treatment. This prevents double taxation
while offering flexibility to joint ventures and professional partnerships.5
b) Cabinet Decision No. 55 of 2023 on Exempt Persons specifies categories of entities
that can claim exemption from Corporate Tax, including qualifying public benefit
entities, investment funds, and pension funds. Businesses must apply to the Federal
Tax Authority (FTA) for recognition and maintain compliance with ongoing reporting
obligations.6
that can claim exemption from Corporate Tax, including qualifying public benefit
entities, investment funds, and pension funds. Businesses must apply to the Federal
Tax Authority (FTA) for recognition and maintain compliance with ongoing reporting
obligations.6
c) Ministerial Decision No. 114 of 2023 on Audited Financial Statements establishes
requirements for businesses meeting revenue thresholds to prepare audited financial
statements. This enhances transparency and ensures taxable profits are determined
under international accounting standards.7
requirements for businesses meeting revenue thresholds to prepare audited financial
statements. This enhances transparency and ensures taxable profits are determined
under international accounting standards.7
d) Additional decisions address technical matters such as:
- Nexus rules for non-residents earning UAE-sourced income.
- Participation exemption regime, exempting dividends and capital gains from
qualifying shareholdings. - Tax grouping rules, allowing UAE resident companies to form a tax group and file a
single consolidated return, subject to ownership thresholds.
Collectively, these enactments complement the CT Law by setting detailed rules on record-
keeping, transfer pricing, reporting standards, and audit requirements, thereby aligning the
UAE with international tax best practices while safeguarding its investment-friendly
reputation.
3. COMPLIANCE REQUIREMENTS FOR BUSINESSES
3.1 Registration & Tax Returns
Every Taxable Person under the Corporate Tax (CT) regime must register with the Federal
Tax Authority (FTA) and obtain a Tax Registration Number (TRN). Registration obligations
apply to both Resident Persons (incorporated in the UAE or managed/controlled in the UAE)
Tax Authority (FTA) and obtain a Tax Registration Number (TRN). Registration obligations
apply to both Resident Persons (incorporated in the UAE or managed/controlled in the UAE)
5 Cabinet Decision No 63 of 2023 on the Treatment of Unincorporated Partnerships, art 2 (UAE Ministry of
Finance) <https://mof.gov.ae/tax-legislation/> Accessed 22 August 2025.6 UAE Ministry of Finance, Cabinet Decision No 55 of 2023 on Determination of Exempt Persons, art 1
<https://mof.gov.ae/tax-legislation/> Accessed 22 August 2025.7 UAE Ministry of Finance,Ministerial Decision No 114 of 2023 on the Requirement to Prepare and Maintain
Audited Financial Statements, arts 1–2 <https://mof.gov.ae/tax-legislation/> Accessed 25 August 2025.8 UAE Ministry of Finance, Corporate Tax Legislation and Guidance (2023) <https://mof.gov.ae/tax-legislation/>
Accessed 22 August 2025.
and Non-Resident Persons with a permanent establishment or deriving state-sourced income in the UAE.
Taxable Persons are required to file a Corporate Tax Return electronically within nine months
from the end of the relevant Tax Period.10 This aligns with Article 53 of Federal Decree-Law
No 47 of 2022. For example, a company with a calendar year ending 31 December 2024 must
file its CT return by 30 September 2025.11
The return must disclose the taxable income, allowable deductions, tax credits, and any
adjustments. Failure to register or file within the statutory period can lead to administrative
penalties under the Tax Procedures Law.12
adjustments. Failure to register or file within the statutory period can lead to administrative
penalties under the Tax Procedures Law.12
3.2 Audits, Financial Statements & Transfer Pricing
Businesses meeting the thresholds set by Ministerial Decision No 82 of 2023 and Ministerial
Decision No 84 of 2023 must prepare and maintain audited financial statements in
accordance with international accounting standards.13 The obligation extends to Qualifying
Free Zone Persons seeking preferential rates (0% on qualifying income) since they must
demonstrate adequate substance through audited accounts.
Decision No 84 of 2023 must prepare and maintain audited financial statements in
accordance with international accounting standards.13 The obligation extends to Qualifying
Free Zone Persons seeking preferential rates (0% on qualifying income) since they must
demonstrate adequate substance through audited accounts.
In addition, businesses engaging in related-party transactions or connected-person
transactions are required to comply with transfer pricing provisions under Articles 34–36 of
the CT Law. This requires maintaining a Local File and a Master File, documenting
compliance with the arm’s length principle. The FTA may re-characterise transactions if they
lack commercial substance or confer a tax advantage contrary to the law.
transactions are required to comply with transfer pricing provisions under Articles 34–36 of
the CT Law. This requires maintaining a Local File and a Master File, documenting
compliance with the arm’s length principle. The FTA may re-characterise transactions if they
lack commercial substance or confer a tax advantage contrary to the law.
3.3 Tax Credits and Relief
The CT Law provides mechanisms to prevent double taxation and support loss management:
a)If withholding tax is levied at source (for example, on UAE-sourced dividends or
royalties), the taxpayer may credit the tax against its CT liability. Where credits
exceed tax payable, refunds may be granted under MoF guidance.16
royalties), the taxpayer may credit the tax against its CT liability. Where credits
exceed tax payable, refunds may be granted under MoF guidance.16
b)Taxable Persons may claim a credit for foreign taxes paid on income sourced abroad.
However, the credit cannot exceed the UAE CT payable on the same income and
cannot be carried forward or back.
However, the credit cannot exceed the UAE CT payable on the same income and
cannot be carried forward or back.
9 Federal Decree-Law No 47 of 2022 on the Taxation of Corporations and Businesses, arts 11–13.10 ibid art 53.11 PwC Middle East, ‘Corporate Tax in the UAE’ (PwC, 2023)
<https://www.pwc.com/m1/en/services/tax/corporate-income-tax.html> Accessed 23 August 2025.12 Federal Law No 7 of 2017 on Tax Procedures, arts 25–26.13 UAE Ministry of Finance, ‘Ministerial Decision No 82 of 2023 on Taxable Persons Required to Prepare and
Maintain Audited Financial Statements’ (2023) <https://mof.gov.ae/tax-legislation/> Accessed 23 August 2025.14 UAE Ministry of Finance, ‘Cabinet Decision No 55 of 2023 on Determination of Qualifying Income for Free
Zone Persons’ (2023) <https://mof.gov.ae/tax-legislation/> Accessed 23 August 2025.15 Federal Decree-Law No 47 of 2022, arts 34–36.16 ibid art 47.17 ibid art 48.
c)Businesses may offset tax losses (arising after CT implementation) against future
taxable income. Losses may be carried forward indefinitely, subject to shareholding
continuity rules (≥50% continuity). Group companies may transfer losses to each
other if they meet ≥75% ownership requirements.18 However, losses from exempt
income, free zone qualifying income, or pre-implementation periods are excluded.19
continuity rules (≥50% continuity). Group companies may transfer losses to each
other if they meet ≥75% ownership requirements.18 However, losses from exempt
income, free zone qualifying income, or pre-implementation periods are excluded.19
3.4 Penalties & Anti-Abuse Measures
The CT regime is underpinned by a strong compliance enforcement framework:
a)Non-compliance with registration, filing, record-keeping, or payment obligations can
trigger penalties under Federal Law No. 7 of 2017 on Tax Procedures and its
amendments.20
trigger penalties under Federal Law No. 7 of 2017 on Tax Procedures and its
amendments.20
b)Article 50 of the CT Law empowers the FTA to recharacterise or disregard
arrangements lacking a genuine commercial purpose if their main objective is to
obtain a tax advantage. This aligns the UAE with international best practices (notably
OECD BEPS recommendations).21
arrangements lacking a genuine commercial purpose if their main objective is to
obtain a tax advantage. This aligns the UAE with international best practices (notably
OECD BEPS recommendations).21
c)The FTA has the authority to review tax returns, financial statements, and transfer
pricing documentation. Businesses must retain supporting records for seven years
from the end of the relevant Tax Period.22
pricing documentation. Businesses must retain supporting records for seven years
from the end of the relevant Tax Period.22
This framework reflects the UAE’s intent to ensure that businesses do not exploit loopholes,
reinforcing substance over form in corporate tax compliance.
reinforcing substance over form in corporate tax compliance.
4. EXEMPTIONS AND INCENTIVES
4.1 Free Zone Relief
One of the most significant exemptions under the UAE’s Corporate Tax regime is the
preferential treatment available to Qualifying Free Zone Persons (QFZPs). Article 18 of the
CT Law permits QFZPs to benefit from a 0% Corporate Tax rate on “Qualifying Income”,
while non-qualifying income is taxed at the standard 9% rate.23
preferential treatment available to Qualifying Free Zone Persons (QFZPs). Article 18 of the
CT Law permits QFZPs to benefit from a 0% Corporate Tax rate on “Qualifying Income”,
while non-qualifying income is taxed at the standard 9% rate.23
The definition of “Qualifying Income” is set out in Cabinet Decision No. 55 of 2023, which
clarifies that it generally covers income derived from transactions with businesses located
outside the UAE, income from transactions with businesses in other UAE Free Zones, certain
passive income, such as dividends, capital gains, and royalties, and qualifying activities as
prescribed by the Cabinet and Ministerial guidance (eg, manufacturing, processing, holding,
distribution).24
clarifies that it generally covers income derived from transactions with businesses located
outside the UAE, income from transactions with businesses in other UAE Free Zones, certain
passive income, such as dividends, capital gains, and royalties, and qualifying activities as
prescribed by the Cabinet and Ministerial guidance (eg, manufacturing, processing, holding,
distribution).24
18 ibid arts 37–39.19 ibid art 37(4).20 Federal Law No 7 of 2017 on Tax Procedures, as amended by Federal Decree-Law No 28 of 2021, arts 24–26.21 Federal Decree-Law No 47 of 2022, art 50.22 ibid art 54.23 Federal Decree-Law No 47 of 2022 on the Taxation of Corporations and Businesses, art 18.24 UAE Cabinet Decision No 55 of 2023 on Determination of Qualifying Income for Free Zone Persons
<https://mof.gov.ae/tax-legislation/> Accessed 24 August 2025.
To access these benefits, a QFZP must maintain adequate substance in the UAE (e.g., core
income-generating activities, staff, premises), comply with audited financial statement
requirements, not elect to be taxed under the normal Corporate Tax regime, and meet the
arm’s length principle for transactions with mainland entities.25
requirements, not elect to be taxed under the normal Corporate Tax regime, and meet the
arm’s length principle for transactions with mainland entities.25
Failure to meet the conditions in a tax period can result in loss of QFZP status for that period
and five subsequent tax periods.26
and five subsequent tax periods.26
4.2 Special Exempt Persons
The CT Law identifies several categories of persons who are wholly or partially exempt from
Corporate Tax, subject to Cabinet confirmation:27
Corporate Tax, subject to Cabinet confirmation:27
a)Government Entities (Art 4), provided they carry on activities within their sovereign
capacity;
capacity;
b)Government-Controlled Entities (Art 5), where activities are mandated for public
benefit;
benefit;
c)Extractive Businesses and Non-Extractive Natural Resource Businesses (Arts 7–8),
provided they are already subject to Emirate-level taxation;
provided they are already subject to Emirate-level taxation;
d)Qualifying Public Benefit Entities (Art 9), including charities, cultural institutions,
and community service organisations, subject to Cabinet recognition;
and community service organisations, subject to Cabinet recognition;
e)Qualifying Investment Funds (Art 10), including real estate investment trusts (REITs)
and other funds meeting diversification and regulatory criteria;
and other funds meeting diversification and regulatory criteria;
f)Pension and Social Security Funds, if recognised by Cabinet Decision.
Subsidiaries wholly owned by exempt persons may also qualify for exemption if their
activities are ancillary or incidental to the exempt entity’s main purpose.28
activities are ancillary or incidental to the exempt entity’s main purpose.28
4.3 Domestic Minimum Top-Up Tax (DMTT)
In December 2023, the UAE introduced a Domestic Minimum Top-Up Tax (DMTT) to align
with the OECD’s Pillar Two framework, which imposes a global minimum effective tax rate
(ETR) of 15% for large multinational enterprises (MNEs).29
with the OECD’s Pillar Two framework, which imposes a global minimum effective tax rate
(ETR) of 15% for large multinational enterprises (MNEs).29
The DMTT, effective for tax periods starting on or after 1 January 2025, applies to MNE
groups with consolidated annual revenues of at least EUR 750 million in two of the four
groups with consolidated annual revenues of at least EUR 750 million in two of the four
25 UAE Ministry of Finance, Ministerial Decision No 139 of 2023 on Qualifying Activities and Excluded Activities
<https://mof.gov.ae/tax-legislation/> Accessed 25 August 2025.26 Federal Decree-Law No 47 of 2022, art 18(3).27 ibid arts 4–10.28 ibid art 11.29 UAE Cabinet Decision No 116 of 2023 on the Domestic Minimum Top-Up Tax <https://mof.gov.ae/tax-
legislation/> Accessed 24 August 2025.
preceding fiscal years. Where the ETR in the UAE is below 15%, the difference (the “top-
up”) must be paid as additional UAE tax.30
This ensures that tax revenues are collected in the UAE rather than in other jurisdictions
where the parent company may be located. Businesses that currently benefit from low-tax
incentives (eg, Free Zone preferential rates) but fall within the Pillar Two threshold will need
to calculate whether they face additional top-up liabilities under the DMTT.31
where the parent company may be located. Businesses that currently benefit from low-tax
incentives (eg, Free Zone preferential rates) but fall within the Pillar Two threshold will need
to calculate whether they face additional top-up liabilities under the DMTT.31
4.4 Potential Incentives: R&D and High-Value Activities
Although not yet legislated, the UAE has signalled the potential introduction of targeted
incentives such as Research and Development (R&D) credits to encourage innovation,
Employment incentives to attract and retain highly skilled professionals in key industries, and
Enhanced deductions or credits for businesses investing in sustainability and digital
transformation.32
incentives such as Research and Development (R&D) credits to encourage innovation,
Employment incentives to attract and retain highly skilled professionals in key industries, and
Enhanced deductions or credits for businesses investing in sustainability and digital
transformation.32
These measures are expected to complement the UAE’s broader economic diversification
strategy under UAE Vision 2031 and its ambition to remain a regional hub for foreign
investment while adapting to international tax standards.
strategy under UAE Vision 2031 and its ambition to remain a regional hub for foreign
investment while adapting to international tax standards.
5. BUSINESS PREPARATIONS: KEY STEPS AHEAD
The introduction of corporate taxation in the UAE requires businesses to undertake proactive
compliance and planning measures. While the statutory framework provides for registration,
exemptions, and incentives, entities must internally implement robust systems to ensure
alignment with federal law, Cabinet and Ministerial decisions, and guidance from the Federal
Tax Authority (“FTA”).
compliance and planning measures. While the statutory framework provides for registration,
exemptions, and incentives, entities must internally implement robust systems to ensure
alignment with federal law, Cabinet and Ministerial decisions, and guidance from the Federal
Tax Authority (“FTA”).
5.1 Review Legal Studies & Entity Type
The first step for businesses is to determine their classification under the Corporate Tax Law
(CT Law). The law distinguishes between Resident Persons and Non-Resident Persons:
(CT Law). The law distinguishes between Resident Persons and Non-Resident Persons:
a)Resident Persons include entities incorporated in the UAE (mainland and free zones),
foreign entities managed and controlled in the UAE, and natural persons conducting
business activities in the UAE.33
foreign entities managed and controlled in the UAE, and natural persons conducting
business activities in the UAE.33
30 EY, ‘UAE issues domestic minimum top-up tax legislation’ (EY Global, 2024)
<https://www.ey.com/en_gl/technical/tax-alerts/uae-issues-domestic-minimum-top-up-tax-legislation> Accessed
24 August 2025.31 PwC, ‘Corporate Tax in the UAE – Global Minimum Tax Developments’ (PwC Middle East, 2024)
<https://taxsummaries.pwc.com/united-arab-emirates/corporate/taxes-on-corporate-income> Accessed 24
August 2025.32 Reuters, ‘UAE to impose 15% minimum top-up tax on large multinationals from January 2025’ (9 December
2024) <https://www.reuters.com/markets/uae-impose-15-domestic-minimum-top-up-tax-large-multinationals-
jan-1-2024-12-09/>accessed 25 August 2025.33 Federal Decree-Law No 47 of 2022 on the Taxation of Corporations and Businesses, arts 11–12
<https://mof.gov.ae/wp-content/uploads/2022/12/Federal-Decree-Law-No.-47-of-2022-EN.pdf> Accessed 25
August 2025.
b)Non-Resident Persons are taxed only on their UAE-sourced income or where they
have a Permanent Establishment (PE) in the UAE.34
Additionally, entity type matters: companies, partnerships, foundations, and trusts may be
treated differently under Cabinet Decision No. 63 of 2023 on Unincorporated Partnerships.35
Exempt categories (e.g. government entities, qualifying investment funds, and pension funds)
should also be verified to avoid unnecessary filings.
treated differently under Cabinet Decision No. 63 of 2023 on Unincorporated Partnerships.35
Exempt categories (e.g. government entities, qualifying investment funds, and pension funds)
should also be verified to avoid unnecessary filings.
5.2 Register and Maintain Proper Records
All Taxable Persons must register with the Federal Tax Authority (FTA) and obtain a Tax
Registration Number (TRN).36 Timely registration is essential to avoid administrative
penalties under the Tax Procedures Law (Federal Law No. 7 of 2017).
Registration Number (TRN).36 Timely registration is essential to avoid administrative
penalties under the Tax Procedures Law (Federal Law No. 7 of 2017).
Businesses are required to maintain accounting records and commercial books for seven
years from the end of the relevant tax period.37 These include audited financial statements
(where applicable), transfer pricing documentation for related-party transactions, and
supporting evidence for exemptions (e.g. free zone election, qualifying public benefit status).
Proper record-keeping is critical, as FTA audits may retrospectively review past years.
years from the end of the relevant tax period.37 These include audited financial statements
(where applicable), transfer pricing documentation for related-party transactions, and
supporting evidence for exemptions (e.g. free zone election, qualifying public benefit status).
Proper record-keeping is critical, as FTA audits may retrospectively review past years.
5.3 Audit Readiness and Transfer Pricing Compliance
Ministerial Decision No. 97 of 2023 introduced transfer pricing rules requiring businesses to
demonstrate that related-party transactions are conducted at arm’s length in line with OECD
standards.38 Large businesses must maintain a Local File and a Master File if thresholds are
met.
demonstrate that related-party transactions are conducted at arm’s length in line with OECD
standards.38 Large businesses must maintain a Local File and a Master File if thresholds are
met.
Additionally, Ministerial Decision No. 82 of 2023 requires certain taxpayers (based on
revenue/asset thresholds) to prepare audited financial statements.39 Audit readiness is
therefore not only a best practice but also a legal requirement for compliance.
revenue/asset thresholds) to prepare audited financial statements.39 Audit readiness is
therefore not only a best practice but also a legal requirement for compliance.
Failure to comply with transfer pricing obligations may result in penalties, and the FTA is
empowered to make adjustments if transactions are not priced correctly.
empowered to make adjustments if transactions are not priced correctly.
5.4 Evaluate Free Zone Status and Election Options
Businesses established in free zones may qualify as Qualifying Free Zone Persons (QFZPs),
benefiting from a 0% rate on qualifying income and a 9% rate on non-qualifying income.
benefiting from a 0% rate on qualifying income and a 9% rate on non-qualifying income.
34 ibid arts 13–14.35 Cabinet Decision No 63 of 2023 on Treatment of Unincorporated Partnerships <https://mof.gov.ae/tax-
legislation/> Accessed 25 August 2025.36 Federal Decree-Law No 47 of 2022, art 51.37 Federal Law No. 7 of 2017 on Tax Procedures, art 78.38 Ministerial Decision No 97 of 2023 on Transfer Pricing Documentation <https://mof.gov.ae/tax-legislation/>
Accessed 25 August 2025.39 Ministerial Decision No 82 of 2023 on Taxable Persons Required to Prepare Audited Financial Statements
<https://mof.gov.ae/tax-legislation/> Accessed 25 August 2025.40 Federal Decree-Law No 47 of 2022, arts 18–19; Cabinet Decision No 55 of 2023 on Qualifying Income.
maintain this status, QFZPs must meet substance requirements (adequate staff, premises, and
core income-generating activities in the UAE), compliance with transfer pricing, and non-
electing into the mainland CT regime.
electing into the mainland CT regime.
Under Article 19 CT Law, a free zone person may elect to be treated as subject to regular CT,
which may be beneficial in cases of group consolidation or when most income does not
qualify for the 0% incentive. Strategic assessment is essential, as non-compliance can
disqualify free zone incentives permanently.
which may be beneficial in cases of group consolidation or when most income does not
qualify for the 0% incentive. Strategic assessment is essential, as non-compliance can
disqualify free zone incentives permanently.
5.5 Plan for DMTT if Applicable
The UAE implemented a Domestic Minimum Top-Up Tax (DMTT) effective 1 January 2025
to comply with the OECD’s Pillar Two framework. This applies to Multinational Enterprise
(MNE) groups with consolidated revenue of at least EUR 750 million in at least two of the
previous four fiscal years.41
to comply with the OECD’s Pillar Two framework. This applies to Multinational Enterprise
(MNE) groups with consolidated revenue of at least EUR 750 million in at least two of the
previous four fiscal years.41
If an entity’s effective tax rate (ETR) in the UAE falls below 15%, a top-up tax will be levied
to bridge the gap. Businesses must therefore model their global effective tax rate, assess intra-group arrangements and exemptions, and prepare reporting structures for top-up tax
compliance
to bridge the gap. Businesses must therefore model their global effective tax rate, assess intra-group arrangements and exemptions, and prepare reporting structures for top-up tax
compliance
This is particularly important for large MNEs headquartered in the UAE or operating regional
hubs from Dubai or Abu Dhabi.
hubs from Dubai or Abu Dhabi.
5.6 Monitor Pending Incentives
While the CT framework currently provides limited deductions and reliefs, the UAE
government is actively considering incentives to enhance competitiveness. Reports indicate
potential R&D credits, employment incentives, and sector-specific reliefs to attract high-tech
and knowledge-based industries.42
government is actively considering incentives to enhance competitiveness. Reports indicate
potential R&D credits, employment incentives, and sector-specific reliefs to attract high-tech
and knowledge-based industries.42
Businesses should monitor Ministerial announcements and Cabinet Decisions closely to
position themselves to benefit from such reliefs once enacted. This could significantly reduce
taxable income for innovation-driven firms.
position themselves to benefit from such reliefs once enacted. This could significantly reduce
taxable income for innovation-driven firms.
6. CONCLUSION
The UAE’s introduction of Corporate Tax represents a historic shift from a zero-tax
environment to a structured regime aligned with international standards. For businesses, it is
both a challenge and an opportunity: compliance now includes registration, reporting, transfer pricing, audited financial statements, and anti-abuse rules, while exemptions exist for
government entities, free zone persons, public benefit organisations, and investment funds.
environment to a structured regime aligned with international standards. For businesses, it is
both a challenge and an opportunity: compliance now includes registration, reporting, transfer pricing, audited financial statements, and anti-abuse rules, while exemptions exist for
government entities, free zone persons, public benefit organisations, and investment funds.
41 Federal Decree-Law No 60 of 2023 Introducing the Domestic Minimum Top-Up Tax <https://mof.gov.ae/tax-
legislation/> accessed 25 August 2025.42 Reuters, ‘UAE to Impose 15% Minimum Top-Up Tax on Large Multinationals from January’ (9 December 2024)
<https://www.reuters.com/markets/uae-impose-15-domestic-minimum-top-up-tax-large-multinationals-jan-1-
2024-12-09/> Accessed 24 August 2025.
The Domestic Minimum Top-Up Tax ensures multinational enterprises meet the OECD Pillar
Two global minimum, while potential incentives, such as R&D credits and sector-specific
relief, highlight the UAE’s focus on innovation and economic diversification.
relief, highlight the UAE’s focus on innovation and economic diversification.
Readers should infer that proactive preparation is essential. Businesses that assess their status, maintain robust accounting and transfer pricing systems, and plan for top-up liabilities can optimise compliance, safeguard exemptions, and leverage incentives, turning the Corporate tax regime into a tool for transparency, competitiveness, and long-term resilience.
