If you’re a UK company setting up in Dubai or elsewhere in the UAE, understanding corporate tax rules is essential for smooth operations and compliance. Corporate tax in the UAE is a direct tax on the profits of businesses and certain business activities, introduced to align with global tax standards while maintaining the country’s competitive environment for foreign investors.
Corporate Tax in the UAE came into effect on 1st June 2023 under Federal Decree Law No. 47 of 2022 on the Taxation of Corporations and Businesses. The law was published on 9th December 2022 and applies to both local and foreign companies operating in the UAE.
Tax is levied on taxable profits from business activities, including those of UK companies registered 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%
Free Zone entities can benefit from a 0% rate on qualifying income if they meet specific regulatory requirements — a key advantage for UK businesses considering Free Zone incorporation.
When Does Corporate Tax Apply?
Corporate Tax in the UAE applies based on your company’s financial year:
If your UK company’s UAE financial year runs June–May, tax applies from 1st June 2023.
If it runs January–December, tax applies from 1st January 2024.
If it runs April–March, tax applies from 1st April 2024.
Who Is Exempt from UAE Corporate Tax?
Certain entities and income types are either automatically exempt or require an application for exemption.
Automatic Exemption (No Corporate Tax Registration Required)
Government entities
Government-controlled entities
Extractive and non-extractive natural resource businesses
Exemption Upon Application (Registration Required)
Public pension or social security funds
Private pension or social security funds
Qualifying investment funds
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 Categories
Some income streams are not subject to corporate tax, including:
Dividends or profits from a UAE-taxable company to another UAE-taxable entity
Participation exemption (subject to conditions)
Foreign permanent establishment income
International transportation income
Corporate Tax Deadlines and Compliance for UK Businesses in Dubai
All taxable entities, including UK companies operating in the UAE, must file their Corporate Tax return and pay the applicable tax within 9 months from the end of their financial year.
Small Business Relief
The UAE offers Small Business Relief to support start-ups and micro businesses, reducing tax burdens and compliance costs.
Available until 31 December 2026
Applies to UAE-resident taxable entities with annual gross turnover under AED 3 million in all tax periods until the deadline.
Eligible businesses can file a simplified corporate tax return.
This relief can be highly beneficial for smaller UK firms establishing their first operations in Dubai.
Record Keeping
All taxable businesses must keep detailed corporate tax records for 7 years after the end of the relevant tax year. This is essential for both UAE compliance and UK cross-border reporting.
Accounting Standard
UK businesses in the UAE must adopt the accrual basis of accounting. Accepted UAE standards include:
Cash Basis Accounting – For annual turnover under AED 3 million.
IFRS for SMEs – For annual turnover under AED 50 million.
IFRS – For turnover above AED 50 million.
Requirement to maintain Audited Financial Statement
An audited financial statement is required if:
Your UAE entity’s annual turnover exceeds AED 50 million, or
You operate as a Qualifying Free Zone company.
Currency
Corporate tax in the UAE must be calculated in AED (United Arab Emirates Dirham). If your UAE business uses a different functional currency, it must be converted into AED using the UAE Central Bank’s approved exchange rate.
Withholding Tax
The UAE’s withholding tax rate under corporate tax law is 0% — an attractive point for UK companies with cross-border transactions.
Related Party Transactions and Transfer Pricing Document
Transactions with related parties must comply with the Arm’s Length Principle and require transfer pricing documentation if:
The UAE entity’s turnover is over AED 200 million in a tax year, or
The UAE entity is part of a Multi-National Enterprise (MNE) group with global turnover over AED 3.15 billion in a tax year.
Projecting the UAE's position as a global hub for business & investment
At Flyingcolour® Tax Consultant and J N J Auditing LLC, we help UK businesses establish and grow in Dubai with expert accounting, tax, and compliance solutions.
Our services include:
Accounting & Bookkeeping – Fully compliant with UAE regulations while aligned with UK reporting needs.
Corporate & VAT Tax Services – Including registration, planning, filing, and compliance for cross-border operations.
Economic Substance Regulation (ESR) Guidance – Ensuring your business meets UAE substance requirements.
Anti–Money Laundering (AML) Compliance – Robust frameworks to protect your business.
Tax Residency Certificates – To help UK companies access UAE–UK double tax treaty benefits.
Payroll Management – WPS-compliant payroll and employee benefits administration.
CFO & Advisory Support – Strategic insights without the cost of a full-time CFO.
With a dedicated team experienced in both UAE laws and UK business practices, we provide customised solutions to make your Dubai operations seamless and compliant.
