The UAE introduced Corporate Tax (CT) as part of its broader effort to align with global tax standards and diversify government revenue streams. The tax, effective from June 1, 2023, applies to businesses operating within the UAE and aims to foster economic growth while maintaining the country’s position as a leading global business hub. Any company that adopts a fiscal year starting on 1 June 2023 and ending 31 May 2024 will be subject to CT starting 1 June 2023. The first tax return filing is likely to be due towards the end of 2024. Any company that adopts a calendar year starting 1 January 2023 and ending 31 December 2023 will be subject to CT starting 1 January 2024 and filing is likely to be due towards mid-2025. 

Key Highlights of the UAE Corporate Tax

Standard Tax Rate

• 9% on taxable income exceeding AED 375,000.
• 0% for taxable income up to AED 375,000 to support startups and small businesses.
• 15% corporate tax rate applies to all multinational corporations subject to OECD Base Erosion and Profit-Sharing laws that belong within Pillar 2 of the BEPS 2.0 framework, i.e. combined worldwide revenues in excess of AED 3.15 billion.

Scope of Application

• Applies to all UAE businesses, including those in Free Zones, provided they generate taxable income within the country or through foreign operations.

Exemptions

• Certain businesses, such as those involved in natural resource extraction (subject to emirate-level taxation) and qualifying Free Zone entities meeting specific conditions, may be exempt.

Aligning with Global Standards

• The introduction of Corporate Tax supports international tax transparency initiatives and ensures compliance with the OECD’s Base Erosion and Profit Shifting (BEPS) framework.

No Impact on Personal Income

• Individual salaries, wages, and other personal income sources remain exempt from Corporate Tax, maintaining the UAE’s appeal for residents.

Benefits of Corporate Tax Implementation

• Encourages business transparency and robust governance.
• Enhances the UAE’s reputation as a globally compliant, competitive economy.
• Provides a stable revenue base for sustainable national development.

With the introduction of Corporate Tax, businesses in the UAE must evaluate their tax positions and adopt efficient compliance strategies to meet the new regulations seamlessly.

Corporate Tax on Free Zones in UAE

A Free Zone company or a Qualifying Free Zone Person can benefit from a special Corporate Tax rate of 0% on their “Qualifying Income in UAE” exclusively. The qualifying income is based on the transactions made by the entities.

If the Free Zone businesses come under the Corporate Tax (CT) regulations for Free Zones as per the UAE CT Regime, they might be subjected to the corporate tax rate of 9%.

Corporate Tax Services in UAE

At Fab Arabia, we cover all aspects of Corporate Tax. Our highly professional and experienced corporate tax consultants will assist you in implementing corporate tax strategies in the most effective way. We offer the following Corporate Tax Services in the UAE:

• Corporate Tax Assessment
• Corporate Tax Registration
• Corporate Tax Return Filing
• Corporate Tax Accounting
• Corporate Tax Compliance
• Corporate Tax Consultancy

The introduction of Value Added Tax (VAT) was a significant change for all businesses. VAT has a wide scope and companies will need to consider the impact of VAT on all their transactions and the potential impact on prices and margins. GCC countries have decided to implement Value Added Tax in the entire region through a treaty signed by all member countries. UAE has already implemented the VAT laws and regulations with effect from January 1, 2018, along with the Kingdom of Saudi Arabia.

Key VAT Services Offered in the UAE

VAT Registration

• Assisting businesses in determining whether VAT registration is mandatory, voluntary, or exempt based on the annual turnover threshold of AED 375,000 (mandatory) or AED 187,500 (voluntary).

VAT Return Filing

• Preparing and submitting VAT returns accurately and on time to avoid penalties.

VAT Compliance & Advisory

• Ensuring that businesses adhere to the UAE VAT Law, including proper invoicing, maintaining records, and applying VAT correctly on transactions.

VAT Accounting & Bookkeeping

• Managing VAT-related financial records, including input and output VAT reconciliation.

VAT Refund Assistance

• Evaluating the effect of VAT on pricing, margins, and operations to align with financial goals.

VAT Impact Assessment

• Helping eligible businesses claim VAT refunds, such as refunds for tourists or businesses involved in zero-rated supplies.

Tax Audit Support

• Preparing for Federal Tax Authority (FTA) audits by ensuring accurate documentation and compliance with regulations.

Benefits of VAT Services

• Ensures accurate and timely compliance, reducing the risk of penalties.
• Helps businesses identify VAT efficiencies, such as reclaiming input VAT.
• Provides professional support for tax disputes and clarifications with the FTA.
• Enables smooth integration of VAT practices into day-to-day operations.

VAT-Exempt and Zero-Rated Categories

• Zero-Rated Supplies: Healthcare, education, and exports outside the GCC.
• Exempt Supplies: Residential real estate and financial services.

Proper VAT management is vital for businesses operating in the UAE to maintain compliance, optimize tax efficiencies, and stay competitive in a regulated economy.

VAT Implementation

While VAT is not intended to be a tax on business, collecting the tax and remitting it to the government will have significant compliance costs. There could also be cash flow implications. Supply chains need to be reviewed to understand the impact of VAT. VAT costs and accounting obligations will need to be identified so they can be addressed.

There are also implications for IT systems. Adapting to VAT will mean updating or upgrading ERP and IT systems and interfaces to correctly capture input and output VAT. Governance frameworks will also need to be reviewed and updated to ensure policies, processes, and controls comply — and continue to comply — with VAT legislation.

A Glance into our VAT Services

We cover all the elements of VAT and provide the best VAT services in the UAE. Our VAT services include:

• VAT Registration
• VAT Return Filing
• VAT Refund
• VAT Audit
• VAT Accounting
• VAT Deregistration

Excise tax is a type of indirect tax levied on things that are often damaging to people or the environment. The following items must be categorized as excise commodities:

• Tobacco-based items
• Carbonated drinks excluding unflavored aerated water
• Electronic smoking devices and equipment
• Drinks that have been sweetened
• An energy drink is any beverage that is promoted or sold as such and includes stimulator ingredients that provide mental and physical stimulation

Compliance Requirements

• Excise Tax Registration – Businesses dealing with excisable goods must register with the Federal Tax Authority (FTA) before manufacturing, importing, or selling such products.
• Tax Returns and Payments – Periodic filing of excise tax returns, detailing the production, import, or inventory of excisable goods, and payment of the
• Excise Tax Warehouse – Businesses may apply for a designated excise tax warehouse to store goods under suspension until sold, helping to manage tax liabilities.
• Maintaining Records – Accurate documentation of excisable goods, including purchase, sale, and stock, is mandatory to ensure compliance.

Benefits of Excise Tax

• Promotes healthier consumption habits by increasing the cost of harmful products.
• Contributes to reducing healthcare costs associated with diseases caused by unhealthy products.
• Provides a revenue stream for government initiatives, including health and education programs.

Penalties for Non-Compliance

• Businesses failing to comply with excise tax regulations, such as late registration, non-filing of returns, or incorrect documentation, face significant penalties imposed by the FTA.

Proper understanding and compliance with excise tax regulations are critical for businesses dealing with excisable goods to avoid penalties and contribute to a healthier society.

Tourists must pay taxes at eateries, hotels, hotel apartments, and resorts across the country. In the UAE, various facilities may levy one or more of the following taxes:

• 10% off the room rate
• Municipal fees are 10%
• The service charge is 10%
• The Tourism Dirham Fee was implemented in Dubai in 2014, and it is levied by hotels, hotel flats, guest houses, and vacation homes in the emirate. The Tourism Dirham Fee is payable per room per night and varies from AED 7 to AED 20, depending on the hotel’s star rating.
• The city tax (varies from 6% to 10%)
• The tourism charge is 6%