For Indian businesses and entrepreneurs, UAE Corporate Tax is the direct tax imposed on the net profit of your business or business activities conducted in the UAE.
The Corporate Tax in the UAE was implemented from 1st June 2023. The guiding legislation that Indian investors should be aware of is the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, published on 9th December 2022.
This tax is imposed on the taxable profit generated from your business activities in the UAE. Below are the Corporate Tax rates applicable to Indian-owned businesses in the UAE.
General Tax Rates per UAE Corporate Tax
Details of Income
Tax Rate
Taxable Profit up to AED 375,000/- in a tax year
0%
Taxable Profit above AED 375,000/- in a tax year
9% applicable on the excess profit of AED 375,000/-
Tax Rate for Free Zone person
Details of Income
Tax Rate
Qualifying Income
0%
Non-Qualifying Income
9%
Applicability of Corporate Tax
For Indian businesses in the UAE, the UAE Corporate Tax will be applicable to your company based on its designated financial year.
Example:
a) If your UAE company’s financial year is from June to May, Corporate Tax will be applicable from 1st June 2023.
b) If your UAE company’s financial year is from January to December, Corporate Tax will be applicable from 1st January 2024.
c) If your UAE company follows the April to March financial year, common for Indian businesses, Corporate Tax will be applicable from 1st April 2024.
Exempt person from UAE Corporate Tax
Below are exempted from UAE Corporate Tax
Automatic Exemption
(Corporate Tax registration not required)
Exemption against application
(Corporate Tax Registration required)
Government entities
Public Pension or Social Security fund
Government Controlled entities
Private Pension or Social Security fund
Extractive and Non-extractive natural resource businesses
Qualifying Investment fund
Exempt Income
For Indian businesses calculating their UAE Corporate Tax, the following incomes are exempted:
Dividend or profit received by your UAE business from another UAE-based taxable entity.
Participation Exemption, subject to fulfilling specific conditions.
Income from a foreign permanent establishment, subject to an election.
Income from international transportation, under certain conditions.
Deadline for Corporate Tax returns and payment
All taxable persons, including Indian-owned companies in the UAE, must file their Corporate Tax return and pay any Corporate Tax due within 9 months from the end of their relevant tax year.
Small Business Relief
Small Business Relief is a provision from the UAE authorities designed to support start-ups and other small or micro businesses, including those established by Indian entrepreneurs. This relief helps to reduce both the Corporate Tax burden and compliance costs.
This relief is applicable for tax years ending on or before 31st December 2026. A resident taxable person whose annual gross turnover is less than AED 3 million in all relevant tax years will be eligible for Small Business Relief. Indian-owned businesses that are eligible for this relief can file a simplified Corporate Tax return.
Record Keeping
All taxable persons must maintain all the relevant records related to their Corporate Tax return for a period of 7 years following the end of the respective taxable year.
Accounting Standard
For Corporate Tax purposes, all companies in the UAE must follow the Accrual basis of accounting. Below are the accounting or reporting standards that can be opted for as per the UAE Corporate Tax Law:
Cash Basis of Accounting: Can be used if your annual turnover is less than AED 3 Million.
IFRS for SMEs: Can be used if your annual turnover is less than AED 50 Million.
IFRS: For taxable persons whose annual turnover is more than AED 50 Million. This standard is familiar to many Indian corporations.
Requirement to maintain Audited Financial Statement
The following taxable persons shall maintain an audited financial statement for UAE Corporate Tax purposes:
A taxable person whose annual turnover is more than AED 50 Million.
A Qualifying Free Zone Person.
Currency
Your company must compute its tax in AED (United Arab Emirates Dirham). If your functional currency is a foreign currency, such as the Indian Rupee (INR), the transactions need to be converted to AED at the exchange rate approved by the UAE Central Bank.
Withholding Tax
The Withholding Tax rate as per the UAE Corporate Tax law is 0%.
Related Party Transactions and Transfer Pricing Document
For Indian businesses with a presence in the UAE, all Related Party Transactions (e.g., between your UAE entity and its parent company in India) must adhere to the Arm’s Length Principle. Maintaining formal Transfer Pricing documentation is mandatory if:
Your UAE entity’s turnover is more than AED 200 Million in a taxable year.
Your UAE entity is part of a Multinational Enterprise (MNE) group and the group's global turnover exceeds AED 3.15 Billion in a taxable year.
Projecting the UAE's position as a global hub for business & investment
Frequently Asked Questions
Yes, all companies registered in the UAE must comply with the UAE Corporate Tax Law, regardless of profit, loss or turnover.
Yes, a company can submit an application to the Federal Tax Authority (FTA) to change its Corporate Tax period, but this must be justified by commercial reasons.
0% on taxable profit up to AED 375,000 and 9% on the excess. For AED 500,000 taxable profit, the excess is AED 125,000. The tax calculation will be: AED 125,000 × 9% = AED 11,250.
Yes. A UAE company is considered a resident of the UAE, so its worldwide income is subject to UAE Corporate Tax, including income from India or other countries.
According to Article 50 of the UAE Corporate Tax Law (General Anti-Avoidance Rule), companies cannot make structural changes for tax evasion purposes.
For our Indian clients, Flyingcolour® Tax Consultant and J N J Auditing LLC provide essential accounting and bookkeeping services in the UAE, tax-related services, auditing, Economic Substance Regulation (ESR) services, anti-money laundering compliance services, tax residency certificate assistance, payroll services, excise tax services, other compliance, and CFO services, etc., through our team of experienced professionals. We offer Indian businesses comprehensive and customized packages tailored to their specific requirements in the UAE.
