Corporate tax registration and the AED 375,000 band

The basic rules in plain terms

Corporate tax was introduced by Federal Decree-Law No. 47 of 2022 and applies to financial years starting on or after 1 June 2023. A company with a calendar financial year therefore first filed for 2024. The standard rate is 9 % on taxable income above AED 375,000, and 0 % on taxable income up to that figure.

Taxable income starts from the accounting profit shown in the financial statements and is then adjusted: some expenses are limited, some income is exempt, and transactions between related parties must be priced at arm's length. Personal salary income is not taxed, but a person who runs a business in their own name may fall in scope when their turnover is high enough, so individuals should read the guidance.

A company decides its financial year when it is set up, usually the calendar year, and the filing deadline follows that year: a company ending its year on 31 March has a different deadline from one ending on 31 December. Confirm the year in the portal and keep it aligned with your VAT periods where possible.

The authority publishes guides, public clarifications and decisions that refine the rules, and they have been updated since 2023, so rely on the current versions.

Registering and keeping the registration alive

Registration is done online through EmaraTax by the company, using the trade licence, details of the owners and managers and the financial year. The authority issues a corporate tax registration number, which is separate from the VAT TRN, although the portal links the two accounts for the same taxpayer.

After registration, the filing calendar follows the financial year. Keep the registration details updated when the company changes address, name, legal form or ownership, and tell the authority if the company stops trading. A dormant company that ignores these steps can build up penalties even without any income.

Keep the portal login details in a shared, access-controlled place and name a second person who can act if the first is away. Missing a notice from the authority because the only login holder left the company is an avoidable error.

Free zone companies and the 0 % possibility

A free zone company that qualifies under the law can pay 0 % on qualifying income, for example income from certain transactions with other free zone persons or from qualifying activities. To qualify it must have adequate substance, meet requirements on transfer pricing and records, and not choose to be taxed under the regular regime.

Income outside the qualifying category is taxed at 9 %, and a company that fails a condition can lose the 0 % treatment. Because the test is applied to the whole entity, many groups keep trading activities and investment activities in separate companies. 4invoices.net can keep one archive per company so each entity's sales are easy to extract; it does not apply the qualifying income test.

Ask your adviser to document, once a year, why the company does or does not meet each condition for the 0 % rate, and keep that memo with the accounts.

The records that support your return

The return is built from financial statements, so the quality of the underlying books decides how smooth the process is. Keep sales invoices, supplier bills, bank statements, payroll records and contracts for seven years after the end of the relevant tax period, which is the retention period stated in the law.

Group transactions need extra attention. If you buy or sell services between related companies, document the price and the reason, and keep the agreement. 4mycontracts.net stores service agreements with approval and signature history, which gives your adviser something concrete to examine when the arm's length price is questioned.

Do not treat retention as a storage problem only. Records are useful if you can find them: name files by date and counterparty, and keep invoices and contracts in systems where a search takes seconds. Seven years is a long time to rely on one person's laptop.

If the company is audited, the auditor will ask for the trial balance, fixed asset register, bank confirmations and a list of related parties. Prepare these annually, not on the day the auditor arrives.

Planning during the year rather than at year-end

A tax bill calculated only after year-end is a bill you cannot influence. Ask your accountant for a profit estimate at the end of every quarter, and compare it with the AED 375,000 band so you know whether you are paying 0 % or 9 % on the margin.

Use project tracking to see which activities earn money. 4myprojects.net holds tasks and milestones, and comparing them with the invoices in your archive shows which projects were profitable before the accountant closes the books. The module does not compute tax; it helps you ask better questions earlier.

Keep a short file of the decisions your adviser makes each year about elections, loss carry-forward and relief claims, with the reasons written down. When a question arises two years later, you will not have to reconstruct the logic from memory.

Common mistakes in the first filing years

The first mistake is assuming that a free zone location means no registration or no return. Qualifying free zone persons still register, file and keep records; the benefit is the rate on qualifying income, not an exemption from procedure. The second is mixing personal and company expenses, which weakens the deduction case for both.

The third is leaving related-party arrangements undocumented. If a shareholder lends money to the company, or one group company charges another for management services, put the terms in writing at the start and keep the payments consistent with them. A late explanation is always weaker than a contemporaneous document.

Companies and other juridical persons that carry on business in the UAE generally have to register, including free zone companies, even if they expect a 0 % rate. Some persons, such as certain government entities and extractive businesses, are treated differently. Check the Federal Tax Authority guidance for your category and register through EmaraTax.

Taxable income up to AED 375,000 is taxed at 0 %, and the part above it at 9 %. The band is applied to taxable income after the adjustments set by the law, not to turnover. Your adviser calculates taxable income from your accounting profit, so keep your books complete and consistent.

It is a free zone company that meets the conditions in the corporate tax law, including adequate substance in the zone and income that counts as qualifying. It can pay 0 % on qualifying income while other income is taxed at 9 %. The rules are detailed, so check the current conditions with a tax adviser before relying on the 0 % rate.

The return is generally due within nine months after the end of the tax period. For a company with a 31 December year-end that means by the end of September of the following year. Payment is due by the same date. Confirm your deadline in the portal because it follows your own financial year.

Information page

This page is informational. Confirm requirements with the competent UAE authority or your adviser; 4b2b tools cover general invoicing, communication and records only.