Federal Decree-Law No. 47 of 2022 – Mainland & Free Zones
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The UAE Is No Longer a Zero-Tax Jurisdiction
For decades, the pitch for setting up in Dubai was simple: no corporate tax. That ended with Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, which introduced a federal corporate tax applying to financial years beginning on or after 1 June 2023.
A company with a calendar financial year entered its first tax period on 1 January 2024. A company with a June year-end entered it a full seven months earlier.
The law is not punitive by international standards – the headline rate of 9% remains one of the lowest anywhere – but it is administratively demanding. Every taxable person in Dubai must register with the Federal Tax Authority, maintain accounting records to a standard that supports a tax computation, determine taxable income under statutory adjustment rules, assess whether related-party dealings meet the arm’s length principle, and file a return within nine months of the end of the tax period.
Missing any of those steps carries a penalty, and the penalties apply whether or not any tax is actually due. This is where most businesses discover the gap between having an accountant and having a corporate tax consultant in Dubai.
The Rates: 0%, 9% and 15% Explained
The UAE operates a tiered structure, and understanding which tier applies is the single most common source of confusion we resolve for businesses in Dubai.
0% Tax Rate
Applies to taxable income up to AED 375,000. Also applies to Qualifying Income of a Qualifying Free Zone Person (QFZP).
9% Standard Rate
Applies to taxable income exceeding AED 375,000 for mainland companies and non-qualifying free zone income in Dubai.
15% MNE Minimum Tax
Applies to multinational enterprise groups with consolidated global revenues of EUR 750 million or more under OECD Pillar Two.
Free Zone Companies: The QFZP Conditions Most Businesses Fail
Free zone companies in Dubai can retain a 0% corporate tax rate, but only on Qualifying Income and only while they satisfy the conditions for Qualifying Free Zone Person status.
To be treated as a Qualifying Free Zone Person under Article 18 of the Decree-Law, an entity must satisfy all conditions:
- Maintain Adequate Substance: Core income-generating activities conducted in a free zone with adequate assets, employees, and operating expenditure.
- Derive Qualifying Income: Income from transactions with other free zone persons or qualifying activities (manufacturing, treasury, investment holding, distribution).
- Avoid Excluded Activities: Natural person transactions, banking, insurance, or mainland commercial real estate.
- Comply with Transfer Pricing: Arm’s length principle for Related Parties & Connected Persons.
- De Minimis Requirement: Non-qualifying revenue must not exceed lower of 5% of total revenue or AED 5 million.
- Audited Financial Statements: Mandatory preparation of annual audited accounts.
Transfer Pricing and the Master File Requirement
Article 34 requires transactions with Related Parties and Connected Persons to satisfy the arm’s length standard. Under Ministerial Decision No. 97 of 2023, a taxable person in Dubai must maintain both a Master File and a Local File if revenue is AED 200 million or more, or if part of an MNE group with AED 3.15 billion revenue.
Both files must be submitted to the FTA within 30 days of request. Connected Person remuneration (owners/directors) must be benchmarked to market value.
What Our Corporate Tax Consultants in Dubai Deliver
- Corporate Tax Registration: Submission via EmaraTax & confirmation of Corporate Tax Registration Number.
- Tax Computation & Return Filing: Converting accounts into compliant taxable income computations before the 9-month deadline.
- Free Zone QFZP Assessment: Written position paper testing revenue streams & de minimis headroom.
- Transfer Pricing: Related-party mapping, benchmarking studies, Master File & Local File preparation.
- Tax Group Formation: 95% ownership consolidation reviews.
- Health Checks & Second Opinions: Independent audit of existing computations & filed returns.
Corporate Tax in Dubai – Frequently Asked Questions
❓ What is Federal Decree-Law No. 47 of 2022?
It is the UAE’s federal corporate tax law introducing a 9% tax on business profits for financial years beginning on or after 1 June 2023.
❓ Do I need to register if my profit is below AED 375,000?
Yes. The AED 375,000 threshold determines the tax rate, not the registration requirement. Every taxable person must register with the FTA and file an annual return.
❓ What penalties apply for late corporate tax registration in Dubai?
Late corporate tax registration attracts a fixed administrative penalty of AED 10,000 imposed by the Federal Tax Authority.
❓ When is the corporate tax return due?
A corporate tax return and tax payment are due within nine months of the end of the relevant tax period (e.g. 30 September 2026 for December 2025 year end).
Book a Consultation with Our Corporate Tax Consultants in Dubai
NUFCA Dubai Headquarters • Dubai, United Arab Emirates
Call 055-9831923 or request a free review online.
