Starting a company in the UAE is exciting — but after receiving your trade licence, corporate tax registration is the first legal obligation. The new tax landscape introduced under Federal Decree-Law No. 47 of 2022 mandates that every business must register within three months of incorporation to avoid significant penalties. This requires immediate alignment of your accounting, documentation, and compliance systems right after formation.
That’s where ProAct Chartered Accountants comes in. ProAct specializes exclusively in tax consultancy and post-incorporation compliance, helping companies navigate registration, filing, and FTA audits with precision and speed.
Key Takeaway: After company formation, timely corporate-tax registration isn’t optional — mandatory within three months of the date of incorporation / establishment for entities incorporated on or after March 1, 2024, to avoid AED 10,000 fines.
Understanding UAE Corporate Tax (2025 Update)
What Is Corporate Tax in the UAE?
Corporate tax is a federal levy on business profits introduced to diversify revenue and align the UAE with global tax standards (OECD BEPS framework).
- Effective rate: 9 % on taxable income above AED 375,000 — and a different rate (15%) applies to large multinational enterprises meeting the OECD BEPS Pillar Two (Global Minimum Tax) criteria.
(This demonstrates the UAE’s commitment to international tax standards while keeping the 9 % rate competitive for SMEs.) - Scope: All mainland & most free-zone entities.
- Law: Federal Decree-Law No. 47 of 2022 + Cabinet Decision No. 49 of 2023.
Who Must Register for Corporate Tax?
All resident juridical persons and non-residents with a UAE permanent establishment must register with the Federal Tax Authority (FTA), even if no profit is earned initially.
Timeline & Compliance Milestones for New Businesses
| Stage | Action | Deadline / Notes |
|---|---|---|
| Company formation | Obtain trade licence | Day 0 |
| Tax registration | File CT application via FTA portal | Within 3 months |
| Accounting system setup | IFRS-compliant books | Ongoing |
| First return filing | Within nine months from the end of the relevant Tax Period. | Example: A company with FY 1st Jan–31 Dec 2024 must file its return by 30 Sep 2025 |
| Audit readiness | Keep records 5 years | Mandatory |
Qualifying Free Zone Person (QFZP) & Tax Exemptions
A company may remain taxed at 0% if it qualifies as a QFZP — but conditions are strict:
- Maintain adequate substance in the UAE.
- Earn only “Qualifying Income.”
- Do not elect for mainland tax treatment.
- Comply with transfer pricing & substance rules.
- Undergo an Annual Financial Audit (Mandatory in most free zones to retain QFZP status).
Failure to comply → loss of 0 % benefit & 9 % tax applied retroactively.
Step-by-Step Corporate Tax Compliance Process
1. FTA Registration
- Register on the FTA portal (EmaraTax).
- Upload all required documents including trade licence & EID/passport etc.
- Receive TRN (Corporate Tax Registration Number).
2. Chart of Accounts & Bookkeeping
- Maintain IFRS-compliant books.
- Record transactions chronologically.
- Use accounting softwares like Zoho Books for audit-ready ledgers.
3. Determine Taxable Income
- Start from accounting profit → adjust per tax law.
- Disallow non-deductible expenses (fines, personal spends).
4. Compute Corporate Tax
The Corporate Tax (CT) due is calculated on the amount of Taxable Income that exceeds the AED 375,000 threshold:
CT = (Taxable Income – AED 375,000) * 9%
5. Submit Returns & Pay
- File annually within 9 months after financial year-end.
- Pay electronically via FTA portal.
6. Retain Records & Audit Evidence
Maintain all invoices, contracts, bank statements ≥ 5 years.
Post-Incorporation Compliance Checklist (2025)
| Compliance Area | Action Required | Frequency |
|---|---|---|
| Corporate Tax Registration | File via FTA | One-time |
| Corporate Tax Filing | Return submission | Annual |
| VAT Compliance | Registration (if revenue ≥ AED 375 k) | Monthly/Quarterly |
| AML/CFT Screening | If applicable (DNFBP) | Ongoing |
| Financial Audit | For Free Zone/Mainland authorities | Annual |
How ProAct Simplifies UAE Corporate Tax Compliance
1. 4-Layer Review Process
Every tax return undergoes four levels of internal review — preparing, verifying, reviewing, and final sign-off — eliminating errors before submission.
2. Accounting Dashboard
ProAct’s in-house system connects bank transactions, sales invoices, and expense tags to generate real-time tax reports and FTA alerts.
3. End-to-End FTA Support
From registration to tax filings, ProAct handles the complete journey.
4. Dedicated Advisors
Tax experts in Dubai, Abu Dhabi, and Sharjah serve different free zones (DMCC, JAFZA, RAKEZ, IFZA) to ensure local compliance.
Key Takeaway: Working with ProAct means peace of mind — no missed deadlines, no penalties, and 100 % FTA alignment.
Real-World Example: From Formation to Tax Filing
Scenario:
A consulting LLC in DMCC formed on 15 January 2024.
Steps Handled by ProAct:
- CT Registration: Applied by 10 March 2024 → TRN issued within 2 days.
- Accounting System: Set up Zoho Books with IFRS chart.
- Monthly Bookkeeping: All receipts and vendor bills tagged.
- Year-End Tax Computation: Net profit AED 800 k → Tax = AED 38 250.
- FTA Filing: Done by 30 Sep 2025.
Result: Zero penalties and full FTA compliance within the first year.
Common Penalties for Non-Compliance (2025 FTA Schedule)
| Violation | Penalty (AED) |
|---|---|
| Late CT registration | AED 10,000. (However, the FTA currently provides a penalty waiver for businesses that file CT return within seven months of the end of their first tax period — a crucial compliance window for 2025 registrants.) |
| Failure to file return | 500 → 1 000 each month |
FTA Penalty Waiver for Late Registration (2025 Update)
Businesses that missed their corporate tax registration deadline can still avoid the AED 10,000 late registration penalty by completing registration within seven months from the end of their first tax period.
This waiver, announced by the Federal Tax Authority (FTA) in 2025, applies to companies incorporated before or after March 1, 2024, depending on their accounting year-end.
Example:
A company with its first tax period from 1 January 2024 to 31 December 2024 can register by 31 July 2025 and benefit from the penalty waiver.
(ProAct actively monitors and implements such FTA announcements to help clients remain compliant and penalty-free.)
Industry-Specific Compliance Insights
1. Consulting & Freelance Firms
Often ignore registration thinking “no profits = no tax.” FTA still requires registration.
2. Trading & E-Commerce Firms
Cross-border sales trigger transfer-pricing documentation and VAT adjustments.
3. Real Estate & Property Managers
Rental income qualifies for corporate tax.
4. Professional Services (Finance, Law, Design)
CT applies.
Futureproof Your Compliance
The FTA updates its guidelines regularly (e.g., Ministerial Decision 84 of 2025) introducing new reporting formats and penalty adjustments.
Content Refresh Triggers:
- New FTA penalty circulars.
- Free zone amendments on QFZP criteria.
- OECD or BEPS alignment updates.
- Revised corporate tax return forms.
ProAct monitors these updates, so clients stay ahead without stress.
Key Takeaways
📌 Corporate tax is now central to UAE business operations.
📌 FTA registration within 3 months is mandatory.
📌 Free zone benefits require strict substance tests.
📌 ProAct simplifies the journey from setup to filing.
Frequently Asked Questions (FAQs)
1. When must a new UAE company register for corporate tax?
Within three months of incorporation. Delay = AED 10 000 penalty.
2. What is the corporate tax rate in the UAE in 2025?
9 % on profits above AED 375 000; 0 % below that threshold.
3. Can free-zone companies enjoy 0 % tax?
Yes, if they qualify as QFZPs and earn qualifying income.
4. What documents are needed for FTA registration?
Trade licence, EID/passport, MOA, owner details etc.
5. What is the deadline for filing corporate tax returns?
Within nine months of financial year end.
6. Is tax deducted on foreign income?
Yes, if earned through a UAE permanent establishment.
7. Do I need audited financial statements for corporate tax?
Yes for most free-zones (DMCC, IFZA, JAFZA) and recommended for mainland.
8. How are losses handled under corporate tax?
Losses can be carried forwarded.
9. What happens if I don’t register for corporate tax?
FTA will impose AED 10 000 fine.
10. How is foreign ownership treated?
Corporate tax applies equally to UAE and foreign shareholders.
11. Is bookkeeping mandatory for all businesses?
Yes, IFRS-based records for five years minimum.
12. What is “Qualifying Income”?
Income from Qualifying Activity transactions, listed by FTA.
13. How does transfer pricing apply in UAE?
All related-party transactions must be at arm’s length and documented.
14. Can corporate tax be filed manually?
No, only through FTA’s EmaraTax portal.
15. Are dividends taxable under UAE law?
Dividends are generally exempt if conditions are met.
16. What software does ProAct use for compliance?
Zoho Books + Inhouse Dashboard custom for UAE tax rules.
17. Can a company have different tax and financial years?
No, they must align unless FTA approves a change.
18. What is the difference between Corporate Tax and VAT?
CT = tax on profits; VAT = tax on sales. Both are distinct.
Disclaimer
This article is for informational purposes only and does not constitute legal, tax, or audit advice. Companies should consult ProAct Chartered Accountants directly for tailored compliance solutions.
