For businesses operating in the UAE, navigating the evolving landscape of corporate tax is more critical than ever. With the introduction of the federal corporate tax regime and subsequent enhancements in 2025, organisations must ensure they are fully compliant to avoid penalties and maintain operational fluidity. Engaging experienced corporate tax advisors for business centres can streamline compliance efforts and support strategic planning in this new era.
1. The Tax Regime Framework
Effective for financial years starting on or after 1 June 2023, the UAE’s corporate tax regime introduced by Federal Tax Authority (FTA) under Federal Decree‑Law No. 47 of 2022 sets out a rate of 0% on taxable income up to AED 375,000 and 9% on taxable profits above that threshold.
Qualifying Free Zone Persons (QFZPs) may continue to benefit from 0% tax on qualifying income, provided they meet criteria around substance, qualifying activities and non-mainland business
From 1 January 2025, the UAE also aligns with the OECD’s Pillar Two framework through the introduction of a Domestic Minimum Top-Up Tax (DMTT) of 15% for multinational enterprises (MNEs) whose effective tax rate falls below that level.
Given this complexity, many businesses are seeking seasoned corporate tax advisors for business centres to ensure adherence and to optimise tax strategy.
2. Registration & Filing Obligations
All taxable persons in the UAE must register for corporate tax, even if their taxable income falls within the 0% bracket.
The corporate tax return must generally be filed within nine months after the end of the tax period. For example, many entities with financial years ending 31 December 2024 must file by 30 September 2025.
Accounting records, audited financial statements (where required) and supporting documentation must be ready in a timely fashion. Entities must review eligibility for the simplified Small Business Relief scheme if revenue thresholds are met.
Working with trusted corporate tax advisors for business centres can help businesses establish robust timelines, ensure audit readiness and avoid last-minute compliance rushes.
3. Key Compliance Requirements for 2025
Transfer Pricing & Related-Party Documentation
The FTA has issued guidance aligning the UAE’s transfer pricing (TP) requirements with the OECD TP Guidelines. Entities engaging in transactions with related parties must adhere to the arm’s length principle and maintain benchmarking studies and TP documentation.
Substance and Free Zone Criteria
Free Zone entities must satisfy qualifying income, substance, employment and operating cost tests to maintain 0% tax status. Failure to meet these may trigger taxation at the 9% rate or the DMTT for MNE groups.
Domestic Minimum Top-Up Tax (DMTT)
From January 2025 businesses belonging to MNE groups with global consolidated revenues exceeding EUR 750 million will be subject to an effective minimum tax of 15%. UAE entities forming part of these groups must review their global tax positions and potentially restructure, while ensuring compliance.
Partnerships, Foundations & Unincorporated Entities
Specific rules under FTA Decision No.5 of 2025 apply to unincorporated partnerships, foreign partnerships and family foundations. These include registration, confirmation filings and deadlines by 31 August 2025 or 31 December 2025 depending on period-end.
Documentation & Record-Keeping
Businesses must keep accounting records, tax computation schedules, audit reports (if applicable), financial statements and all supporting evidence for a minimum period (often 7 years). The FTA portal contains guides and public clarifications to assist taxpayers.
Deploying professional support via corporate tax advisors for business centres ensures these documentation obligations are satisfied, particularly in Free Zone and cross-border structures.
4. Incentives and Compliance Advantages
The UAE continues to provide competitive tax incentives for business expansion and innovation. Although the introduction of corporate tax marks a shift, the regime retains supportive features:
- The 0% rate up to AED 375,000 supports small businesses and startups.
- Free Zone incentive regimes remain in place, subject to qualifying criteria, which may yield 0% tax on certain incomes.
- The UAE tax environment remains business-friendly and globally aligned, supporting inward investment and economic diversification.
Nevertheless, full compliance is non-negotiable, and seeking assistance from corporate tax advisors for business centres can help organisations capitalise on incentives while avoiding pitfalls.
5. Strategic Steps for Businesses
To maintain compliance and optimise tax position in 2025, businesses in the UAE should adopt the following strategic actions:
- Early Audit & Financial Statement Finalisation: Finalise 2024 audited accounts early (especially for entities with audit obligations) to avoid downstream filing delays.
- Review Entity Type & Free Zone Status: Determine whether your entity qualifies as a QFZP, assess whether activities generate qualifying income, and document substance accordingly.
- Transfer Pricing Readiness: Conduct benchmarking studies, document related-party transactions, and ensure margins align with arm’s length standards.
- Group-Wide Compliance Assessment: For groups operating regionally or globally, assess whether Pillar Two or DMTT applies, and restructure if necessary.
- Register & File Promptly: Ensure you are registered on the FTA portal, know your return deadlines (typically nine months from year-end), and prepare documentation ahead of time.
- Maintain Proper Records: Keep books, audit reports, tax computations, TP documentation, invoices and contracts for the prescribed period. Use internal controls and governance procedures to monitor compliance.
Engaging dedicated corporate tax advisors for business centres can ensure your business centre in the UAE remains compliant, while allowing management to focus on growth.
6. Penalties and Enforcement
Non-compliance in the UAE’s corporate tax regime can result in significant consequences. Failure to file, late payments, or not maintaining required documentation can trigger administrative penalties, interest charges and scrutiny by the FTA.
Because the environment is now regulated and aligned with global standards, businesses must treat tax compliance as a core part of corporate governance. Early involvement of corporate tax advisors for business centres helps mitigate risks of non-compliance and reputational damage.
By proactively addressing these factors — rates, registration, transfer pricing, Free Zone status, documentation and deadlines — businesses can navigate the 2025 UAE corporate tax regime confidently and effectively.
Also Read: Understanding UAE Corporate Tax: A Complete Guide for Businesses