UAE tax compliance services.

Companies operating in the UAE are subject to three primary tax obligations, each with separate registration, filing and payment requirements. Corporate tax at 9% on taxable income exceeding AED 375,000 applies under Federal Decree-Law No. 47 of 2022. VAT at 5% applies to taxable supplies above the mandatory registration threshold of AED 375,000 in any 12-month period, with voluntary registration available from AED 187,500. Excise tax applies to specific goods including tobacco, energy drinks and sweetened beverages.

All UAE-registered companies, including free zone entities, must register with the Federal Tax Authority for corporate tax regardless of revenue or profit level. VAT registration is mandatory once the turnover threshold is crossed. A small business relief election is available to resident persons with revenue not exceeding AED 3 million in the relevant and preceding tax periods, effectively reducing the corporate tax liability to zero for eligible smaller businesses. For a full breakdown, see the guide to corporate tax in the UAE.

Free zone companies are subject to UAE corporate tax but can access a 0% rate on qualifying income if they meet the conditions to be treated as a Qualifying Free Zone Person (QFZP) under Federal Decree-Law No. 47 of 2022. QFZP status is not automatic and requires the entity to:

• Maintain adequate substance in the free zone, including sufficient assets, employees and operational expenditure
• Derive income from qualifying activities as defined in the applicable ministerial decisions
• Prepare audited IFRS-compliant financial statements
• Comply with transfer pricing rules on transactions with related parties
• Keep non-qualifying income below the de minimis threshold of 5% of total revenue or AED 5 million, whichever is lower

Income from excluded activities, including certain transactions with UAE mainland customers and direct real estate management, is taxed at the standard 9% rate. Free zone companies must also register for VAT if their taxable supplies exceed AED 375,000.

Key filing and payment deadlines for UAE-registered businesses are as follows. Corporate tax returns must be filed and any tax due paid within nine months of the end of the relevant financial year, falling on 30 September for companies with a 31 December year-end. The transfer pricing disclosure form must be filed alongside the corporate tax return. VAT returns are due within 28 days of the end of each quarterly tax period for most businesses, with monthly filing required for businesses with annual taxable turnover exceeding AED 150 million. Excise tax returns are filed and paid monthly, due by the 15th of the following month.

All filings are submitted through the FTA’s EmaraTax portal. Late filing and late payment each attract separate administrative penalties under Cabinet Decision No. 75 of 2023, and the two charges apply independently.

The Federal Tax Authority applies a structured penalty regime under Cabinet Decision No. 75 of 2023. Key penalties include:

• Failure to register for corporate tax or VAT on time: AED 10,000 for a first offence rising to AED 20,000 for repeat failures
• Late VAT return filing: 2% of unpaid tax immediately, rising to 4% after seven days and 1% per day thereafter up to a maximum of 300%
• Late corporate tax payment: 14% per annum on the outstanding amount
• Failure to maintain required records: AED 10,000 for a first offence rising to AED 20,000 for repeat failures

Businesses that voluntarily disclose errors before an FTA audit are subject to reduced penalties under the voluntary disclosure framework. Repeated or deliberate non-compliance can result in prosecution under UAE tax law.

The UAE is introducing a mandatory e-invoicing framework under a phased implementation programme established by Ministerial Decisions No. 243 and 244. The system uses a Continuous Transaction Control model, requiring invoices to be transmitted to the FTA’s central platform in real time or near real time before being delivered to the recipient, and applies to B2B and B2G transactions.

The rollout is phased by revenue threshold, with businesses with annual revenue of AED 50 million or more falling into the first mandatory wave. Smaller businesses will be required to comply in a subsequent phase preceded by a voluntary pilot period. Compliance requires businesses to integrate their accounting or ERP systems with an Accredited Service Provider to generate invoices in the required XML format, obtain a digital signature and transmit each invoice to the FTA platform at the time of issuance. E-invoices must be stored within the UAE for a minimum of ten years. Companies that have not assessed their systems readiness should do so ahead of their applicable implementation date to avoid FTA penalties.

VAT in the UAE is levied at a standard rate of 5% on the supply of most goods and services. VAT-registered businesses charge output VAT on taxable supplies and can recover input VAT on qualifying business expenses, with the net amount filed and paid to the FTA quarterly for most businesses.

Zero-rated VAT at 0% applies to exported goods, international transport services and certain healthcare and education services, allowing full input VAT recovery. VAT-exempt supplies, including bare land transactions and local passenger transport, do not allow input VAT recovery on related costs. Free zone businesses supplying goods or services within a designated zone may benefit from specific VAT treatments that differ from mainland rules, and transactions between free zone entities and UAE mainland customers are generally treated as taxable supplies subject to standard VAT rules.