The UAE introduced 9% corporate tax on profits above AED 375,000 for fiscal years starting on or after 1 June 2023. This is one of the lowest rates in the G20, but most businesses still need to register, file and keep audit-ready books.
Who pays
All UAE-incorporated entities — mainland and free zone — must register for corporate tax with the FTA, even if they expect to pay zero. Sole establishments above AED 1 million in annual revenue are also in scope. Personal salary, investment income from shares and dividends are out of scope.
Qualifying Free Zone Person (QFZP)
Free zone companies can pay 0% on "qualifying income" if they meet all of these:
- Maintain adequate substance in the free zone
- Derive qualifying income (excluded activities include UAE mainland sales)
- Comply with transfer pricing rules
- Have audited financials
Registration deadline
FTA requires you to register within 3 months of your first tax period. Penalty for late registration: AED 10,000. We track every client's deadline and file ahead of time.
Bookkeeping setup that survives audit
Three habits prevent 90% of corporate tax pain:
- Use cloud accounting software from day one — Xero, Zoho Books or QuickBooks. Manual Excel does not pass FTA review.
- Reconcile monthly. Bank statement matches sales and purchase invoices. By the 10th of next month, your previous month is closed.
- Keep digital copies of every invoice for 5 years. FTA can audit retroactively. Receipts in a shoebox lose value when the box ages.
If your books are clean, the annual corporate tax filing takes a single afternoon. If they are messy, it takes weeks and you risk penalties up to AED 50,000 plus interest.
What to do this month
Register if you have not already. Set up cloud accounting. If you operate in a free zone, ask your accountant if you qualify as a QFZP and what to change if you do not. We do this assessment for every new accounting client.
