Article about UAE Corporate Tax Return Filing – Guide 2026 : – Reviewed by: Abraham, Senior Chartered Accountant at ProAct — Expert in Auditing, Accounting, Corporate Tax, VAT, AML, UAE Company Formation & Free Zone Compliance.
How to Use This UAE Corporate Tax Return Guide
| What is a UAE Corporate Tax Return? A UAE Corporate Tax Return is the annual filing submitted through EmaraTax to report taxable income and corporate tax liability to the Federal Tax Authority (FTA). It is mandatory for every Taxable Person registered under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses — including mainland companies, free zone entities, and foreign businesses with a UAE Permanent Establishment. In the UAE context, this means: The filing deadline is 9 months from the end of your financial year (e.g. 30 September 2026 for calendar-year businesses). Filing is required even if your corporate tax liability is zero. The return is completed question-by-question on the EmaraTax portal at https://eservices.tax.gov.ae/. The filing is mandatory for all UAE-registered companies — including free zone entities — regardless of whether any tax is due. Failure to file attracts administrative penalties under Federal Decree-Law No. 47 of 2022. Applies to: All juridical persons registered in the UAE mainland, free zones (DIFC, JAFZA, DMCC, RAKEZ, ADGM, SAIF Zone, and others), and foreign entities with a UAE Permanent Establishment. Non-filing attracts administrative penalties under Cabinet Decision No. 75 of 2023 See also: UAE Corporate Tax Guide · Small Business Relief Decision Guide · VAT Filing Services · Accounting Services UAE |
Are you staring at the EmaraTax portal wondering what each Yes/No question actually means for your UAE business ? You are not alone. The 2025 Corporate Tax Return form contains over 30 decision points — and selecting the wrong option can trigger unnecessary compliance obligations, missed reliefs, or FTA scrutiny.
This guide explains every Yes/No question in the UAE Corporate Tax Return (EmaraTax) for 2025 in plain English — helping you understand what each question means, which answer applies to your business, and what the consequences are before you click Submit.
We have seen this first-hand: a free zone company that overlooked the QFZP election question locked itself into an irrevocable five-year standard-regime election. Understanding each step before you click is the cheapest form of tax planning available.
| ⚠️ A wrong answer can create irreversible tax consequences, and separate penalties may apply where this leads to non-compliance. — Or Lock You In for 5 Years The EmaraTax UAE Corporate Tax Return looks straightforward. It is not. Three mistakes we see repeatedly: Wrong election on QFZP (Free Zone standard regime) → irrevocably locked into the wrong regime for 5 years, with no ability to claim the 0% QFZP rate. Missed connected person disclosure → administrative penalty for failing to submit the required form when transactions exceed AED 500,000 per counterparty. Incorrect Small Business Relief election in a loss year → tax losses forfeited permanently, leading to a higher tax bill the following year when the business becomes profitable. None of these mistakes are easy to spot on the form. This guide explains every question so you know exactly what you are clicking. |
| ⚠️ UAE Corporate Tax Penalties — Quick Reference Failure to file or errors on your UAE Corporate Tax Return can attract significant administrative penalties under Cabinet Decision No. 75 of 2023 on Administrative Penalties for Tax Violations: Late filing: AED 500 per month for the first 12 months — increasing to AED 1,000 per month thereafter Incorrect or missing disclosures: Additional penalties apply for failing to submit required schedules (e.g. connected person disclosure forms when the AED 500,000 threshold is exceeded) Missed or misapplied elections: No financial penalty — but the tax impact is irreversible for the lock-in period (5 years for QFZ.2; current period for SBR). Source: Cabinet Decision No. 75 of 2023 on Administrative Penalties for Violations of Federal Tax Laws in the UAE. |
Example Case Study: How One Wrong SBR Election Cost a Dubai LLC AED 25,000
| ProAct Example Case Study — Dubai LLC, Professional Services Sector The problem: A Dubai mainland LLC with revenue of AED 2.1 million elected Small Business Relief for their first UAE Corporate Tax period. The business had made a net loss of AED 280,000 that year — a genuine trading loss from a slow start-up period. What happened: Under Small Business Relief, the tax loss from that period was forfeit — it could not be carried forward. The following year, the business turned profitable with AED 653,000 taxable income. Without the carried-forward loss to offset it, the full AED 653,000 was taxable. At 9% above the AED 375,000 threshold (noting the loss would have reduced taxable income to below the threshold), the impact was an unnecessary tax payment of approximately AED 25,000. The fix: Filing a full Corporate Tax Return in the loss year — answering NO to Small Business Relief — and carrying forward the AED 280,000 loss would have reduced the following year’s taxable income below the threshold entirely, resulting in zero tax payable. The lesson: Revenue below AED 3 million does not automatically mean Small Business Relief is the right answer. Speak to your Expert Tax Consultants like ProAct about your loss position before making this election. |
Most businesses get this wrong — Do You?
In our experience reviewing EmaraTax submissions for UAE businesses, the Small Business Relief election is the single most misunderstood question on the entire Corporate Tax Return form. The logic seems obvious: revenue under AED 3 million, no tax payable, tick YES and move on. Except when you made a loss.
Selecting Small Business Relief in a year when your business made a net loss does not save you money — it costs you money in the following year. The loss disappears. You cannot carry it forward. When profitability returns, the full amount is taxable with nothing to offset it. We have seen this happen with professional services firms, hospitality businesses, and trading companies across Dubai and the UAE.
There are other questions on the EmaraTax return that carry similar risks: the Free Zone standard-regime election (irrevocable for 5 years), the connected persons disclosure threshold, and the Realisation Basis election (one of the most valuable tools available, yet consistently overlooked). This guide explains all of them.
UAE Corporate Tax Regimes at a Glance: Which Applies to You?
Before working through the return, it helps to understand which tax regime governs your business. The table below maps common UAE business scenarios to the correct tax outcome and recommended approach.
| Scenario | Tax Outcome | Rate | Best Option | Watch Out For |
| Profit under AED 375,000 (no loss) | No tax payable | 0% | Standard regime — file full return | Don’t need SBR if no losses to preserve |
| Revenue under AED 3M, profitable year | Zero tax via SBR | 0% effective | Small Business Relief election | – |
| Revenue under AED 3M, loss year | Loss carry-forward at risk | 0% via SBR — but costly | Avoid SBR — file full return to preserve losses | SBR loss forfeiture can cost 9% tax next profitable year |
| Free Zone — qualifying income only | 0% on qualifying income | 0% QFZP | Maintain QFZP status | De minimis breach or substance failure triggers 9% |
| Large group (revenue AED 3.15B+) | Global minimum tax applies | 15% minimum | Pillar Two compliance required | Country-by-Country Reporting, master file obligations |
5 Things Every UAE Business Must Know Before Filing in 2025
- The UAE Corporate Tax Return for tax year 2025 must be filed within 9 months of your financial year-end via the EmaraTax portal of the Federal Tax Authority.
- Every registered Taxable Person must file — even if taxable income is zero, if Small Business Relief is elected, or if you operate as a Qualifying Free Zone Person at 0%.
- The Small Business Relief election and the Free Zone standard-regime election are both irrevocable for their respective lock-in periods. Think carefully before selecting YES or NO on these questions.
- Connected person including their Related Parties transactions exceeding AED 500,000 per counterparty require a formal disclosure form. Owner salaries, family member payments, and shareholder loans all count.
- The Realisation Basis election — which defers tax on unrealised fair value gains — is can be highly beneficial for some asset-holding businesses for asset-holding businesses. It is one of the most impactful elections available.
Not sure which options to select? ProAct can review your EmaraTax return before submission and highlight risk areas within 24 hours. Contact us at proactfs.com or Whatsapp!
| ✅ Before You Start Filing — Quick Check Before working through the return question by question, check whether any of the following apply to you: Unsure whether to elect Small Business Relief or file a full return — especially if you made a loss this year Free zone company – unsure about QFZP status vs. electing the standard Corporate Tax regime (QFZP is irrevocable for 5 years) Connected person transactions with owner, director, or family members — unclear whether the AED 500,000 disclosure threshold applies Holding investment properties or financial assets — the Realisation Basis election could save significant tax and is often overlooked If any of the above apply: ProAct can review your EmaraTax return in 24 hours before you submit — contact us at proactfs.com |
| STEP 1 Taxpayer Details — Who You Are and Basic Business Information |
This is the opening section of the UAE Corporate Tax Return. It captures your identity as a registered taxpayer under Federal Decree-Law No. 47 of 2022. Most fields here are pre-filled based on your EmaraTax registration — you only need to confirm and answer a few Yes/No questions. Getting Step 1 right matters: the FTA uses the details here for all correspondence, including penalty notices and audit communications.
| Q1.1 — Is the above information correct? | |
| YES You confirm that all pre-filled details — your business name, address, mobile, landline, email, and P.O. Box — are accurate and up to date. IMPLICATION The return proceeds normally. The FTA will use these contact details to communicate with you about this filing. Select YES if nothing has changed since you registered. | NO You are indicating that some details shown are wrong or outdated. IMPLICATION You will be prompted to update your information. Do NOT submit with incorrect details, as all FTA correspondence (including assessments and penalty notices) goes to the address on file. Select NO only if something is genuinely outdated. |
| Q1.2 — Is the Taxable Person a partner in one or more Unincorporated Partnerships? | |
| YES Your business owns a stake or participates in one or more unincorporated partnerships — such as a general partnership or an informal joint venture not registered as a legal entity. IMPLICATION Additional reporting is required. The system will ask you to provide details about each partnership and your share of income or losses. Partnership income flows through to your corporate tax return and may increase your taxable income. EXAMPLE: Your LLC co-runs a project with another business on an informal joint venture basis — that would qualify here. | NO Your business does not participate in any unincorporated partnership arrangements. IMPLICATION No additional partnership disclosures are needed. This is the typical answer for most UAE SMEs that operate as a single standalone company. Select NO if your business only operates on its own or through formally registered subsidiary companies. |
| 💡 ProAct Tip: Always keep your registered address and contact details current on EmaraTax. Penalties and audit notices sent to an old address are still legally considered delivered under UAE tax law. |
| Q1.3 — Is the Tax Return being completed by a Government Entity, Government Controlled Entity, Extractive Business or Non-Extractive Natural Resource Business? | |
| YES Your business is one of the following: a UAE federal or emirate-level government body; a company majority-owned or controlled by government; an oil, gas, or mineral extraction business; or a business dealing in non-extractive natural resources (e.g. water, certain agriculture). IMPLICATION These entities are either fully or partially exempt from Corporate Tax, or follow special tax rules under Cabinet Decisions. The system may generate different reporting requirements. | NO Your business is a normal private sector company — not government-owned and not involved in oil, gas, or natural resource extraction. IMPLICATION Standard Corporate Tax rules apply. This is the correct answer for the vast majority of UAE businesses including LLCs, free zone companies, sole establishments, and private limited companies. Select NO if you are a typical private business. |
| Q1.5 — Does the Taxable Person conduct more than one Business or Business Activity? | |
| YES You run more than one type of business under the same legal entity — for example, your LLC provides both property management and event planning services. IMPLICATION You will be asked to list all business activities and estimate the percentage of total revenue from each. This helps the FTA understand your income mix and apply correct tax treatment. EXAMPLE: Short-term accommodation (80%) + Property brokerage (20%) = 100% | NO Your business operates a single line of activity. IMPLICATION You only need to report one business activity and attribute 100% of revenue to it. This is the simpler option and applies to most focused businesses. EXAMPLE: A company that does only short-term holiday home rentals would answer NO here. |
| Q1.6 — Is the Taxable Person a member of a Multinational Enterprise Group? | |
| YES Your UAE business is part of a large multinational group with entities in two or more countries and combined annual revenue over AED 3.15 billion (EUR 750 million). IMPLICATION You may be subject to Country-by-Country Reporting (CbCR) and OECD Pillar Two (Global Minimum Tax at 15%) requirements. Your group’s Ultimate Parent Entity may need to file a master file and local file for Transfer Pricing documentation. | NO Your business is not part of a large multinational group — it is either a purely UAE business or a smaller group below the AED 3.15 billion threshold. IMPLICATION CbCR and Pillar Two obligations do not apply. This is the correct answer for most UAE SMEs and locally-owned businesses. |
| Q1.7 — Is the Taxable Person incorporated or recognised under the laws of the UAE or under the laws of a Free Zone? | |
| YES Your business is registered either on the UAE mainland (DED, ADEC, etc.) or in a UAE Free Zone (DIFC, JAFZA, ADGM, DMCC, RAKEZ, and others). IMPLICATION Your business is a UAE tax resident and must file a Corporate Tax Return. This is the expected answer for virtually all businesses filing on EmaraTax. Free Zone entities will face additional questions about qualifying for the 0% tax rate. | NO Your business is NOT incorporated or recognised under UAE or Free Zone laws — this may apply to foreign companies operating a Permanent Establishment (PE) in the UAE without being formally incorporated here. IMPLICATION Different residency rules and tax treatment may apply. This is extremely rare — if you are filing on EmaraTax, you are almost certainly incorporated in the UAE. |
| Q1.8 — Is the Taxable Person tax resident in a foreign jurisdiction under an applicable Double Taxation Agreement? | |
| YES Your business, although registered in the UAE, is also treated as a tax resident in another country under a Double Taxation Agreement (DTA) — for example, if the company is effectively managed and controlled from another country. IMPLICATION You may need to provide your foreign tax residency certificate. The applicable DTA may limit or modify how your income is taxed in the UAE, and foreign tax credits may also apply. This situation is uncommon but can arise for businesses managed by foreign directors from abroad. | NO Your business is only tax resident in the UAE — it is not considered a tax resident of any other country under a Double Taxation Agreement. IMPLICATION Standard UAE Corporate Tax rules apply in full. No DTA relief or credits from foreign jurisdictions are needed. This is the correct answer for the vast majority of UAE businesses. |
| Q1.9 — Is the taxpayer incorporated, established, or otherwise registered in a Free Zone? | |
| YES Your company is registered in a UAE Free Zone such as JAFZA, DIFC, ADGM, DMCC, RAKEZ, Sharjah Media City, and similar free zones. IMPLICATION Follow-up questions will determine if you qualify as a Qualifying Free Zone Person (QFZP) and are therefore eligible for the 0% corporate tax rate on qualifying income. You must still file a tax return even if you pay 0% tax. | NO Your business is registered on the UAE mainland (not in a Free Zone). IMPLICATION Standard 0%/9% corporate tax rates apply (0% up to AED 375,000 taxable income, 9% above that). No Free Zone specific questions follow. This is the correct answer for mainland LLCs, sole establishments, and civil companies. |
Q1.4 — Financial Statements: Prepared on Cash or Accrual Basis?
This is not a Yes/No question but a choice between two accounting methods. It determines how your income and expenses are recognised for UAE Corporate Tax purposes.
| CASH BASIS | ACCRUAL BASIS |
| You record income when cash is received and expenses when actually paid. | You record income when EARNED (even if not yet received) and expenses when INCURRED (even if not yet paid). |
| Allowed only for businesses with revenue under AED 3 million. | Required for businesses with revenue over AED 3 million and for those complying with IFRS standards. |
| Simpler record-keeping. Taxable income is based only on actual money received or paid during the year. | The internationally recognised standard and what most UAE LLCs and free zone entities use. |
| STEP 2 Elections — Special Tax Relief Options You Can Choose to Apply |
‘Elections’ in UAE Corporate Tax law means you are making a formal choice about how certain tax rules apply to your business. These are optional in most cases — saying NO simply means you are not using that particular relief or treatment. The critical point: several elections under Federal Decree-Law No. 47 of 2022 are irrevocable once made. We have advised clients who made hasty elections they could not undo. Read each question carefully.
| Small Business Relief (SBR) Small Business Relief is an election under the UAE Corporate Tax regime that allows eligible Taxable Persons to be treated as having zero taxable income for a Tax Period. In the UAE context, this means: this means a UAE-registered business with revenue of AED 3 million or less in the current and all prior tax periods since 1 June 2023 pays no corporate tax — and does not need to complete the detailed accounting schedules. Applies to: Juridical persons registered in the UAE mainland or free zones, subject to the revenue ceiling condition in each and every tax period. Not available to free zone entities claiming QFZP status or members of large multinational groups. |
| Q2.1 — Small Business Relief: Would the Taxable Person like to make an election? | |
| YES You are electing to use Small Business Relief. Your taxable income is treated as zero for this period — so your corporate tax bill is AED 0, even if you earned a profit. You do NOT need to fill in the detailed accounting schedules. ELIGIBILITY Revenue must be AED 3 million or less in this AND all previous tax periods since 1 June 2023. WARNING If you elect SBR, you cannot carry forward tax losses from this period to future years. Think carefully if you made a loss — it may be better NOT to elect SBR so you can use that loss to offset future taxable profits. | NO You are choosing NOT to use Small Business Relief and want to file a full Corporate Tax Return. IMPLICATION You must complete all accounting schedules and calculate your actual taxable income. If your taxable income is AED 375,000 or less, you pay 0% tax. Above that, you pay 9%. Select NO if: (a) your revenue exceeds AED 3 million, (b) you made a loss you want to carry forward, or (c) you are part of a group that has elected otherwise. |
| Q2.2 — Transfers within a Qualifying Group: Did the Taxable Person transfer any assets or liabilities to a member of the same Qualifying Group? | |
| YES During the year, your company transferred assets (property, equipment, investments) or liabilities to another company in your group — a group where entities are at least 75% commonly owned. IMPLICATION You can elect to treat the transfer as if it happened at book value (no gain/loss recognised). This defers the tax on any profit until the asset is eventually sold to a third party. You must provide details of the transfer. EXAMPLE: You moved a vehicle or equipment from one group company to another — no taxable gain is recognised at the time of transfer. | NO No assets or liabilities were transferred between group entities during this year. IMPLICATION No special group transfer rules apply. All asset sales or transfers in your return are treated as normal transactions at market value. This is the correct answer if your business operates independently or did not move assets between related companies. |
| Q2.3 — Business Restructuring Relief: Did the Taxable Person transfer a Business or independent part of a Business? | |
| YES Your company sold, merged, or transferred an entire business division or company as part of a restructuring — and the deal was done through a share-for-share exchange (not a cash sale). IMPLICATION You may elect for the taxable gain on that transfer to be deferred. No corporate tax is due at the point of the transfer. However, the receiving party inherits the original cost basis — so the deferred gain is taxed when they eventually sell. EXAMPLE: You merged a subsidiary into the parent company through a share exchange rather than a cash buyout. | NO No business restructuring or mergers occurred during this tax period. IMPLICATION No Business Restructuring Relief is needed. All income and gains are treated under standard rules. This is the typical answer for businesses that operated as-is throughout the year without any corporate restructuring. |
| Q2.4 — Foreign Permanent Establishment Income: Does the Taxable Person have any Foreign Permanent Establishments? | |
| YES Your UAE company has a branch, office, or representative presence in another country that qualifies as a Permanent Establishment under that country’s tax law. IMPLICATION Income earned through the foreign PE is typically taxed in the foreign country. You can elect to EXEMPT that foreign PE income from UAE Corporate Tax to avoid double taxation. However, if the foreign PE makes a loss, that loss also cannot be used to reduce your UAE taxable income. EXAMPLE: Your Dubai LLC has a registered branch office in Germany that earns its own revenue. | NO Your UAE company does not have any operations, offices, or agents abroad that would constitute a foreign Permanent Establishment. IMPLICATION All your income is earned in the UAE or through UAE-based operations and is subject to standard UAE Corporate Tax rules. No foreign PE exemptions or credits are needed. This is correct for the vast majority of UAE-focused businesses. |
| 💡 ProAct Tip: The Small Business Relief election is one of the most commonly misunderstood steps. If your revenue is under AED 3 million and you made a profit, YES is likely the easier and cheaper option. If you made a loss, NO may be better — the loss can be carried forward to offset future taxable profits. Discuss this with your accountant before submitting. |
| STEP 3 Accounting Schedules — Your Financial Statements |
This section is where you enter your financial results for the year. Unlike the earlier Yes/No questions, most entries here are numerical — taken directly from your audited or management accounts. These figures flow directly into the taxable income calculation in Steps 4 and 5. There is one important Yes/No question in this section.
Key Financial Line Items — Explanation
| Line Item | What It Means for Your UAE CT Return |
| Operating Revenue | Total income from your main business activity — rent received, sales made, services billed. This is your ‘top line’ or ‘turnover’ for the tax period. |
| Expenditure in deriving operating revenue | All direct costs incurred to generate that revenue — supplies, cost of goods sold, platform fees, property costs. |
| Gross Profit / Loss | Automatically calculated: Revenue minus direct costs. A negative number means you spent more than you earned on core operations. |
| Salaries, wages and related charges | Total staff costs — salaries, allowances, GOSI/pension contributions, end-of-service gratuity provisions. |
| Depreciation and amortisation | The annual ‘wear and tear’ expense on fixed assets like furniture, equipment, and vehicles. |
| Fines and Penalties | Government fines or regulatory penalties paid during the year. These are NOT tax-deductible under UAE CT law. |
| Donations | Money given to charities. Only donations to UAE-approved Qualifying Public Benefit Entities are tax-deductible. |
| Client entertainment expenses | Costs of entertaining clients — meals, events, gifts. These are subject to a 50% deductibility cap under UAE CT. |
| Interest Income / Expenditure | Bank interest earned or paid on loans. Net interest expense above AED 12 million may be capped under the Interest Deduction Limitation Rule (see Step 5). |
| Gains / Losses on Disposal of Assets | Profit or loss made when you sell business assets like equipment or vehicles. |
| Foreign exchange gains / losses | Profits or losses from currency fluctuations when dealing in foreign currencies. |
| Net profit / (loss) | Your overall bottom line after all income and expenses. This flows to Step 4 as the starting point for taxable income calculation. |
| Q3.1 — Audit: Have the Financial Statements been audited? | |
| YES A licensed external auditor has reviewed and issued an audit opinion on your financial statements. IMPLICATION This adds credibility to your return. If the FTA selects you for review, audited accounts are strong supporting evidence. No additional explanations are required. Note: UAE Corporate Tax law does not yet mandate audits for all businesses, but free zone companies claiming the 0% QFZP rate and companies above AED 50 million revenue thresholds are required to have audited accounts. | NO Your financial statements have NOT been independently audited — they may be management accounts or accountant-prepared statements. IMPLICATION Your return is still valid. However, if the FTA requests a review, you may need to provide more supporting documentation. Unaudited accounts carry higher scrutiny risk. Select NO if you are an SME that prepares its own or accountant-prepared books without a formal audit. |
| 💡 ProAct Tip: If your revenue is significant or growing, investing in an annual audit is strongly recommended — it protects you in case of FTA review and is required by certain UAE Free Zones as a condition of maintaining your licence. |
| STEP 4 Accounting Adjustments & Exempt Income — Converting Accounting Profit to Taxable Income |
Your accounting profit from Step 3 is not the same as your ‘taxable income.’ This step adjusts for items that UAE Corporate Tax law treats differently from standard accounting. That said, the number of adjustments most small and medium UAE businesses actually need to make is surprisingly limited. The questions here determine which adjustments apply to your specific situation.
| Q4.1 — Does the Taxable Person account for any investments under the Equity Method of Accounting? | |
| YES You own shares in an associate company or joint venture and include your share of their profits or losses in your financial statements using the Equity Method (typically for stakes of 20–50%). IMPLICATION The FTA requires you to make an adjustment. Your share of the investee company’s profit included in your accounts needs to be removed from your taxable income — because the actual dividends (when received) may be taxed separately or be exempt. This is common for businesses holding significant minority stakes in other companies. | NO You do not hold investments accounted for under the Equity Method. You either have no significant investments in other companies, or you account for them differently (e.g. at cost, or as financial assets). IMPLICATION No equity method adjustment is needed. Your accounting profit requires no modification on this point. This is the typical answer for operating businesses without major investment stakes. |
| Q4.2 — Has the Taxable Person recognised any realised or unrealised gains or losses that will not subsequently be recognised in the Income Statement? | |
| YES You have gains or losses in your financial statements (e.g. from revaluation of property, pension adjustments, or certain financial instruments) that are recorded directly in equity — NOT in the profit and loss statement. This is known as Other Comprehensive Income (OCI). IMPLICATION A special adjustment is required. Under UAE CT rules, these OCI amounts may still need to be included in or excluded from your taxable income depending on their nature. You will be asked to enter the amounts. | NO All your gains and losses for the year have been run through your Profit and Loss Statement in the normal way. Nothing was ‘bypassed’ directly to equity. I MPLICATION No special OCI adjustment is needed. Your accounting profit and taxable starting point are more straightforward. This is the typical answer for simple trading businesses without complex financial instruments or property revaluations. |
| Q4.3 — Transitional Adjustments: Has the Taxable Person held any Qualifying Immovable Property, Qualifying Intangible Assets or Qualifying Financial Assets/Liabilities during the Tax Period? | |
| YES Your business held property (land or buildings), intangible assets (trademarks, goodwill), or financial assets/liabilities that were already on your books before the UAE Corporate Tax regime began. IMPLICATION You may be eligible to use the ‘fair value at transition date’ as your cost base — meaning any gain accrued before CT was introduced is not taxed when you eventually sell. You must provide supporting documentation of the market value at the start of your first tax period. This is very relevant for real estate businesses and long-standing asset-heavy companies. | NO You do not hold any such pre-existing assets, OR all your assets were acquired after the UAE CT regime began. IMPLICATION Standard cost-basis rules apply. No transitional adjustment is needed. This is the typical answer for newer businesses or businesses without pre-existing real estate or intangible assets. |
| Q4.4 — Exempt Income: Has the Taxable Person received any Dividends or Profit distributions from a UAE Resident Person? | |
| YES Your company received dividend payments or profit distributions from another UAE-registered company during the year. IMPLICATION These dividends are EXEMPT from UAE Corporate Tax under Federal Decree-Law No. 47 of 2022 — you will enter the amount received and it will be deducted from your taxable income. This prevents the same profit being taxed twice within the UAE system. EXAMPLE: Your LLC received dividend income from a UAE subsidiary or associate company. | NO Your company did NOT receive any dividends or profit distributions from UAE-resident companies during this year. IMPLICATION No dividend exemption needs to be applied. All income in your accounts is subject to standard corporate tax treatment. This is the correct answer if your business is purely operational and does not receive investment income from UAE-held shares. |
| Q4.5 — Has the Taxable Person derived any Income or Losses from a Participating Interest? | |
| YES Your company holds at least a 5% stake in another company (UAE or foreign) that qualifies as a Participating Interest, and you received income, dividends, or made a gain from that investment. IMPLICATION This income may qualify for the Participation Exemption — meaning it is excluded from your taxable income. However, losses from such interests are ALSO excluded (you cannot use them to reduce your UAE taxable income). Conditions: the investee must be subject to corporate tax (at least 9%) in its home jurisdiction, and you must have held the stake for at least 12 months. | NO You do not have any qualifying investment stakes, OR you did not derive any income or losses from such investments during the year. IMPLICATION No Participation Exemption applies. All your income is subject to standard UAE Corporate Tax treatment. This is the correct answer for most operating businesses that do not hold significant cross-border investments. |
| STEP 5 Other Adjustments — Non-Deductible Items, Interest Caps, and Related Parties |
This step adds back expenses that your accounts show but UAE tax law does not allow as deductions, and handles special rules for interest, related parties, and investments. This is arguably the most compliance-intensive section of the return for owner-managed UAE businesses — particularly the connected persons questions.
Non-Deductible Expenditure — Items You Must Add Back to Taxable Income
| Non-Deductible Item | Plain-English Explanation |
| Non-deductible Entertainment (50% disallowed) | Client entertainment costs are only 50% deductible under UAE CT rules. Enter the non-deductible 50% portion here. |
| Non-deductible Pension contributions | Pension/retirement contributions beyond what is mandated or approved are added back. |
| Donations to non-qualifying entities | Donations are only deductible if made to a UAE-approved Qualifying Public Benefit Entity. Donations to other charities must be added back. |
| Expenses for Exempt Income | Costs incurred to earn exempt income (like managing tax-exempt investments) are not deductible. |
| Dividends/distributions to owners | Money paid out as dividends or profit distributions to shareholders is NOT a tax deductible expense. It is a return of capital, not a business cost. |
| Expenses not exclusively for business | Any personal or mixed-use expenses run through the business must be added back. Only costs wholly for business purposes are deductible. |
| Other non-deductible expenditure | Any other costs that do not meet the ‘wholly and exclusively for business’ test under the UAE Corporate Tax Law. |
| Interest Deduction Limitation Rule (IDLR) The Interest Deduction Limitation Rule is a UAE Corporate Tax provision that caps the amount of net interest expense a Taxable Person can deduct in any single tax period. In the UAE context, this means: the cap is 30% of the Taxable Person’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation), with a safe harbour floor of AED 12 million — meaning businesses with net interest expense of AED 12 million or less are unaffected. Applies to: All UAE Taxable Persons with net interest expenditure (interest paid minus interest received) exceeding AED 12 million in the current period plus any amounts carried forward. Typically relevant only to large, highly leveraged businesses. |
| Q5.1 — Has the Taxable Person incurred Net Interest Expenditure exceeding AED 12 million in the current Tax Period? | |
| YES Your total net interest expense for the year (interest paid minus interest received), plus any interest carried forward from previous periods, exceeds AED 12 million. IMPLICATION The Interest Deduction Limitation Rule applies. You can only deduct interest up to 30% of your adjusted EBITDA. Any excess is disallowed as a deduction this year but can be carried forward for up to 10 years. This is highly unlikely for most UAE SMEs — it typically affects large businesses or highly leveraged property groups. | NO Your net interest expense (including any carried forward) is AED 12 million or below. IMPLICATION The Interest Deduction Limitation Rule does NOT apply. You can deduct all of your net interest expense in full against your taxable income. This is the correct answer for almost all small and medium-sized UAE businesses. |
| Q5.2 — Does the Taxable Person wish to deduct any brought forward Net Interest Expenditure in the current Tax Period? | |
| YES You have interest expense from a prior year that was restricted under the IDLR, and you want to claim it as a deduction in this year’s return. IMPLICATION The system will allow you to input the amount of carried-forward interest to deduct, subject to the 30% EBITDA cap in this current year. This reduces your taxable income. Select YES only if you actually had restricted interest expense in a prior period. | NO You have no carried-forward interest expense from prior periods, OR you choose not to utilise any carried-forward amount this year. IMPLICATION No prior-year interest deduction is applied. Only current-year interest (within the allowed limits) is deducted. This is the correct answer for businesses in their first tax period or those who have never had restricted interest. |
| Q5.3 — Were there any transactions with Related Parties in the current Tax Period? | |
| YES Your business conducted financial transactions with related parties — for example, you paid rent to a shareholder, received a loan from a parent company, sold goods to a subsidiary, or paid management fees to a connected business. IMPLICATION Transfer Pricing rules apply under UAE Corporate Tax Law. You must ensure all transactions were priced at arm’s length (market rates). The FTA may request a Transfer Pricing disclosure or master file if transaction values are significant. Non-arm’s-length pricing can be adjusted and taxed. | NO Your business had NO transactions with related parties — all business was conducted entirely with independent third parties. IMPLICATION No Transfer Pricing analysis is required. This would be unusual for most established UAE businesses — even paying rent to a shareholder-owned company or receiving an intercompany loan counts as a related party transaction. |
| Q5.4 — Were there any gains/losses realised from assets/liabilities previously received from a Related Party at a non-arm’s-length price? | |
| YES You sold or disposed of an asset that you originally acquired from a related party at below or above market price — and you made a gain or loss on that disposal. IMPLICATION An adjustment may be required to correctly reflect the true cost basis of the asset and recalculate the gain/loss at arm’s length prices. This prevents tax manipulation through artificially priced related-party transfers. EXAMPLE: A shareholder transferred a property to your company for AED 500k (below its AED 1M market value), and you later sold it. | NO No such transactions occurred — either no related-party assets were involved, or all related-party transactions were at arm’s length prices from the start. IMPLICATION No related-party asset disposal adjustment is needed. This is the typical answer for most businesses. |
| Q5.5 — Were there any transactions with Connected Persons in the current Tax Period? | |
| YES Your business had financial dealings with an owner, director, their close family members, or business partners — for example, owner salaries, rental payments to a spouse, or loans from a family member. IMPLICATION These payments must be at market value. If you paid your owner a salary far above or below market rate, the excess/deficit will be disallowed or adjusted by the FTA. The Federal Tax Authority looks closely at owner compensation in small UAE businesses. Select YES — this is the honest and correct answer for most owner-managed UAE businesses. Any owner salary, owner-paid expenses, or owner loans to the business would qualify. | NO No transactions took place with any individuals who are connected to the business at a personal level. IMPLICATION No connected person adjustments are required. Very few owner-managed businesses can truthfully answer NO here — any owner salary, owner-paid expenses, or owner loans would qualify. |
| Q5.6 — Did the aggregate value of transactions with at least one Connected Person exceed AED 500,000? | |
| YES The total value of all transactions with any single connected person (across the full year) exceeded AED 500,000. IMPLICATION You are required to complete a Disclosure of Transactions with Connected Persons form and may need to demonstrate that those payments were at market value. This is an important compliance obligation — failure to disclose can attract penalties under the FTA’s administrative penalties regime. EXAMPLE: Owner’s annual salary + expense reimbursements + loan repayments total more than AED 500k. | NO The total value of transactions with any single connected person was AED 500,000 or less for the year. IMPLICATION No formal connected person disclosure form is required, though the transactions must still be at arm’s length. Your exposure to FTA scrutiny on this point is lower. This is the correct answer if owner-level transactions are modest (e.g. a reasonable salary only). |
| Q5.7 — Has the Taxable Person been an Investor in a Qualifying Investment Fund? | |
| YES Your business invested money in a UAE Qualifying Investment Fund (QIF) and received income or distributions from it. A QIF is a regulated fund that has elected for special tax treatment under UAE CT rules. IMPLICATION Special adjustments are required to correctly include or exclude your share of the QIF’s income from your taxable income, based on the ‘look-through’ approach applicable to Qualifying Investment Funds. EXAMPLE: Your LLC is a limited partner in a DIFC-registered private equity fund. | NO You have not invested in any Qualifying Investment Fund. IMPLICATION No QIF-related adjustments are needed. This is the correct answer for most operating businesses. Unless you have specifically invested in a regulated fund that has elected QIF status, answer NO here. |
| Q5.8 — Has the Taxable Person made an error in a prior Tax Period where the tax impact is AED 10,000 or less? | |
| YES You discovered a minor mistake in a previously filed tax return, and the additional tax or refund from correcting it is AED 10,000 or less. IMPLICATION Instead of filing an amended return for the prior period, you are permitted to correct the error directly in the CURRENT year’s return. This is a simplification measure provided by the FTA. Errors above AED 10,000 require a formal amended return to be filed for the relevant prior period. | NO You have not discovered any errors in prior-year returns, OR any errors found have a tax impact greater than AED 10,000 (which would require a separate amended return). IMPLICATION No prior-year error correction is included in this return. This is the typical answer for most businesses in their first year of filing. |
| Q5.9 — Any other adjustments not captured above? | |
| YES You have a valid tax adjustment that does not fit into any of the specific categories listed in the form. IMPLICATION You will be given a free-text or additional entry field to describe and quantify the adjustment. You should be prepared to justify this adjustment if the FTA asks. EXAMPLE: A specific deduction allowed under a Cabinet Decision that does not have its own line in the standard form. | NO All necessary adjustments have already been captured in the standard fields above. IMPLICATION No additional adjustment entries are made. Your taxable income calculation is complete based on the structured fields. This is the correct answer for most businesses with straightforward tax positions. |
| STEP 6 Tax Liability & Tax Credits — Calculating What You Actually Owe |
By this stage, the EmaraTax system has calculated your Taxable Income. Step 6 applies the tax rates, handles tax losses, and allows you to offset any foreign taxes already paid. For most UAE SMEs, this step is straightforward — but the loss transfer question is critical for group structures.
UAE Corporate Tax Rates for Tax Year 2025 and 2026 — Quick Reference
| Taxable Income / Entity Type | Tax Rate Applicable |
| AED 0 to AED 375,000 (all Taxable Persons) | 0% — No corporate tax payable |
| Above AED 375,000 (all Taxable Persons) | 9% on the amount exceeding AED 375,000 only |
| Qualifying Free Zone Person — Qualifying Income | 0% on qualifying income from qualifying activities |
| Qualifying Free Zone Person — Non-qualifying Income | 9% on non-qualifying income (subject to de minimis test) |
| Large Multinationals (Pillar Two — OECD) | 15% minimum effective rate (MNE groups with revenue over AED 3.15 billion) |
| Small Business Relief elect (revenue ≤ AED 3M) | 0% effective (treated as zero taxable income for the period) |
| Q6.1 — Tax Losses: Does the Taxable Person wish to claim Tax Losses from, or surrender Tax Losses to, another group entity? | |
| YES You want to transfer tax losses between your company and another company in the same qualifying group (75%+ commonly owned). CLAIMING Your company has taxable income and wants to use another group member’s losses to reduce your tax bill. SURRENDERING Your company has losses it cannot use and wants to donate them to a profitable group member. IMPLICATION You must complete the Tax Losses Schedule and confirm group ownership structure. Both the claimant and surrendering entity must agree and both must be in the same 75%+ ownership group. This requires coordination with the other entity’s tax return filing. | NO You do not want to transfer losses between group entities. Your company will use only its own current and carried-forward losses. IMPLICATION Any losses your company has incurred carry forward to offset future profits in your own return only (up to 75% of taxable income in any single year). You cannot access losses held by affiliated companies. This is the typical answer for standalone companies. |
Need to calculate your UAE Corporate Tax liability before filing? ProAct offers a pre-filing review that checks your taxable income calculation, elections, and connected person disclosures. Contact ProAct.
| Q6.2 — Does the Taxable Person wish to use any available Tax Credits? | |
| YES You paid taxes in another country on income that is also taxable in the UAE, and you want to offset that foreign tax against your UAE Corporate Tax bill. IMPLICATION You can reduce your UAE CT payable by the amount of foreign tax paid (subject to a cap — you cannot claim more credit than the UAE CT attributable to that income). You must have supporting evidence (foreign tax receipts, assessments). EXAMPLE: Your UAE company earned consulting income in India and paid Indian withholding tax on it. You can use that Indian tax as a credit against your UAE CT. | NO You did not pay any taxes in foreign jurisdictions, OR you choose not to claim the foreign tax credit. IMPLICATION Your full UAE CT liability as calculated stands. No reduction is applied from foreign taxes. This is the correct answer for businesses that operate purely within the UAE and have no foreign-source income subject to overseas taxation. |
| STEP 7 Review & Declaration — Final Check and Submission |
Before submitting, you are asked to review a summary of your return and make two final declarations. This is the ‘point of no easy return’ — review carefully before clicking Submit. A submitted return can only be amended; it cannot be withdrawn. An amendment may attract scrutiny, so accuracy at this stage is worth the extra time.
| Q7.1 — Have any estimated figures been included in the Corporate Tax Return? | |
| YES One or more numbers in this return are estimates rather than final audited or confirmed figures — for example, your audit is not yet complete and you used unaudited management accounts. IMPLICATION You are putting the FTA on notice that some figures may change. You are expected to file an amended return once final figures are available. Selecting YES does not excuse you from penalties if the estimates are materially wrong, but it demonstrates transparency. WARNING Use this option sparingly. If you knowingly submit materially incorrect figures as ‘estimates,’ this does not protect you from penalties under UAE tax law. | NO All figures in this return are based on final, confirmed numbers from your financial records. IMPLICATION You are declaring that the return is complete and accurate based on available information. This is the expected and preferred answer. Select NO if your books are finalised and you are confident in all numbers entered. |
Required Attachments at Submission
| Document | When Required |
| Financial Statements | Always required. Upload your audited (or management) accounts for the tax period. |
| Market value of Qualifying Immovable Property at start of first tax period | Required if you answered YES to the transitional immovable property question in Step 4 (Q4.3). |
| Market value of Financial Assets/Liabilities at start of first tax period | Required if you answered YES to the transitional financial assets question in Step 4 (Q4.3). |
| Tax residency certificate in the foreign jurisdiction | Required if you claimed to be tax resident in a foreign country under a Double Taxation Agreement (Step 1, Q1.8). |
| SUPPLEMENTARY A Free Zone Elections — Additional Questions for UAE Free Zone Companies |
These questions appear when you have indicated that your business IS registered in a UAE Free Zone. They determine whether you want to be taxed under the standard 9% mainland regime or maintain your Free Zone tax status as a Qualifying Free Zone Person. If you are running a free zone company in 2026, these are the most consequential questions on the entire return.
| Qualifying Free Zone Person (QFZP) A Qualifying Free Zone Person is a juridical person incorporated or established in a UAE Free Zone that meets the conditions set out in Article 18 of Federal Decree-Law No. 47 of 2022 and Cabinet Decision No. 100 of 2023. In the UAE context, this means: a QFZP pays 0% Corporate Tax on Qualifying Income and 9% on non-qualifying income. To maintain QFZP status, the entity must maintain adequate substance in the free zone, have audited financial statements, meet the de minimis test (non-qualifying income must not exceed 5% of total revenue or AED 5 million, whichever is lower), and derive income only from qualifying activities. Applies to: UAE Free Zone entities including those registered in DIFC, JAFZA, ADGM, DMCC, RAKEZ, Sharjah Media City, and all other designated UAE free zones. |
| QFZ.1 — Is the taxpayer incorporated, established, or otherwise registered in a Free Zone? | |
| YES Your company is formally registered and licensed within a UAE Free Zone (e.g. DIFC, ADGM, JAFZA, DMCC, RAKEZ, SAIF Zone, Sharjah Media City, and similar). IMPLICATION Two additional important questions appear (QFZ.2 and QFZ.3 below). You may be eligible for the Qualifying Free Zone Person (QFZP) regime, which allows 0% corporate tax on Qualifying Income. | NO Your company is NOT in a Free Zone — it is on the UAE mainland. IMPLICATION The Free Zone sub-questions do not appear. Standard 0% / 9% mainland corporate tax rates apply straightforwardly. This would be the answer for any Dubai mainland LLC, Abu Dhabi commercial licence, and similar entities. |
| QFZ.2 — Is the Taxable Person making an election to be subject to Corporate Tax under the standard Corporate Tax regime? | |
| YES You are VOLUNTARILY opting out of the Free Zone tax regime and choosing to be taxed like a mainland company — subject to 0% on the first AED 375,000 and 9% above that. WHY CHOOSE YES Your Free Zone company earns significant income from non-qualifying activities, so the 0% QFZP rate does not apply anyway. You want full access to UAE Double Tax Treaties (treaty access may be restricted for QFZPs). You want simpler compliance (QFZP rules require strict substance and activity tests) IMPLICATION Once elected, this election is IRREVOCABLE for 5 years. Think carefully before selecting YES — this is one of the most consequential elections in the entire UAE Corporate Tax regime. | NO You are NOT making this election — you want to pursue or maintain your status as a Qualifying Free Zone Person (QFZP), potentially paying 0% on Qualifying Income. WHY CHOOSE NO Your Free Zone company earns income primarily from qualifying activities. You meet the economic substance requirements in your free zone. You want to benefit from the 0% rate on qualifying transactions IMPLICATION You remain subject to QFZP rules — you must pass the de minimis test (non-qualifying income must not exceed 5% of total revenue or AED 5 million), maintain adequate substance, and have audited financial statements. |
| SUPPLEMENTARY B Realisation Basis & Transitional Rules — Asset Gains and Pre-CT Period Assets |
These questions appear in Step 2 (Elections) of UAE Corporate Tax Return and give you important choices about WHEN gains and losses are recognised for tax purposes, and how to handle assets that existed before the UAE CT regime started. The Realisation Basis election is one of the most powerful tax planning tools available to UAE businesses in 2025 — but it is also often overlooked.
| QB.1 — Would the Taxable Person like to elect to use the Realisation Basis? | |
| YES You elect to only pay tax on gains when they are ACTUALLY REALISED — i.e. when you sell, dispose of, or otherwise convert the asset to cash. IMPLICATION Unrealised gains (such as increases in the fair value of investment properties, financial instruments, or assets held at fair value) are EXCLUDED from your taxable income until you sell. This is a significant cash flow benefit for asset-heavy businesses. EXAMPLE: Your investment portfolio increased in value by AED 500,000 this year, but you did not sell anything. Under the Realisation Basis, you pay NO tax on that AED 500,000 this year. NOTE Once elected, this basis applies consistently going forward. You cannot switch back and forth. | NO You do NOT elect the Realisation Basis — instead, ALL gains and losses (including unrealised/fair value changes) are included in your taxable income as and when they are recognised in your accounts. IMPLICATION If your accounts show a fair value gain this year (even on assets you have not sold), that gain is taxable now. This matches your accounting treatment more closely but can create a tax liability on gains you have not yet ‘banked’ in cash. This may be suitable for businesses with minimal fair-value movements. |
| QB.2 — Is the Taxable Person a Bank or Insurance Provider? | |
| YES Your business is a licensed bank, investment bank, or insurance company regulated by the UAE Central Bank or Insurance Authority. IMPLICATION The Realisation Basis election works DIFFERENTLY for banks and insurers. Specific rules apply to their trading books, insurance liabilities, and regulatory capital requirements. The system applies the appropriate rules for regulated financial institutions. | NO Your business is NOT a bank or insurance company. You are a standard trading, services, or investment business. IMPLICATION The standard Realisation Basis rules apply as described above. This is the correct answer for virtually all non-financial businesses — including property companies, trading firms, tech companies, and hospitality businesses. |
| QB.4 — Transitional Rules: Election to adjust Taxable Income for gains on Qualifying Immovable Property owned prior to the first Tax Period | |
| YES You elect to use the FAIR MARKET VALUE of your property at the start of your first tax period as the cost base for calculating future gains. IMPLICATION Any appreciation in property value that occurred BEFORE CT was introduced is effectively ring-fenced and not taxed when you eventually sell. Only the gain from the CT start date onwards is taxable. EXAMPLE: You bought a building in 2018 for AED 5M. It was worth AED 8M on 1 Jan 2025 (your first CT period start). If you sell for AED 10M in 2027, only AED 2M (10M minus 8M) is taxable — not AED 5M. DOCUMENTATION REQUIRED: You must obtain a professional valuation of the property as at your first tax period start date and attach it to your return. | NO You do NOT make this election — the original purchase price (historical cost) is used as the cost base. IMPLICATION When you sell, the FULL gain from original purchase price is potentially subject to UAE CT (subject to any other exemptions). Select NO if: you have no property owned before CT started, your property has not appreciated significantly, or you do not want to obtain a formal valuation. |
| QB.5 — Election to adjust Taxable Income for gains on Qualifying Intangible Assets owned prior to the first Tax Period | |
| YES You elect to use fair market value at CT start date as the cost base for intangible assets — trademarks, patents, licences, goodwill, software, and brand names owned before UAE CT began. IMPLICATION Gains on intangibles that accrued before CT was introduced are not taxed when you eventually sell or license those intangibles. EXAMPLE: A franchise licence purchased for AED 200k in 2019, worth AED 1.5M in 2025. If you sell it later, only the gain above AED 1.5M is taxable. DOCUMENTATION: A professional IP or business valuation as at your first CT period start date is required. | NO You use historical cost as the base — no transitional adjustment for intangible assets. IMPLICATION The full gain from original cost is potentially taxable when you sell or dispose of intangibles in future. Select NO if you have no significant pre-existing intangibles, or if their value has not changed materially since you acquired them. |
| QB.6 — Election to adjust Taxable Income for gains and losses on Qualifying Financial Assets and/or Qualifying Financial Liabilities owned prior to the first Tax Period | |
| YES You elect to use fair market value at CT start date for financial assets and liabilities — shares, bonds, loans, derivatives, and other financial instruments held before CT started. IMPLICATION Gains (or losses) on financial instruments that were already accruing before CT started are excluded from your taxable income. Only changes in value from the CT start date count. NOTE: This election captures BOTH gains AND losses — if your investments fell in value before CT started, that pre-CT loss cannot be used to reduce your CT taxable income either. | NO Historical cost is used as the base for all financial assets and liabilities. IMPLICATION The entire gain or loss from original cost is included in your taxable income when you realise it. Select NO if you have minimal financial investments, or if their values are similar to cost. |
QB.3 — Realisation Basis Scope: Option A vs Option B
If you elected YES to the Realisation Basis above, this sub-question asks WHICH assets you want to apply it to.
| OPTION A: Fair Value / Impairment Assets | OPTION B: Capital Account Assets |
| Applies ONLY to assets already measured at fair value in your accounts (e.g. investment properties under IFRS, equity instruments at FVTPL). | Applies to ALL assets and liabilities held as ‘capital assets’ — assets held for long-term use or investment, not for trading in the ordinary course of business. |
| Narrower scope — only where your accounting standard already requires fair value measurement. | Broader scope — covers any capital asset including properties, equipment, long-term investments, and financial assets regardless of how they are measured in the accounts. |
| Best for: businesses that want to defer tax only on specific fair-value assets while keeping other assets on normal tax treatment. | Best for: property companies, investment holding companies, or any business with significant long-term capital assets that may appreciate in value over time. |
| SUPPLEMENTARY C Realisation Basis Adjustments — Step 4 Technical Adjustments |
This section appears in Step 4 (Accounting Adjustments) when you have elected the Realisation Basis. It bridges the gap between your accounting profit — which may include unrealised items — and your taxable income, which should only include amounts you have actually realised.
| QC.1 — Has there been any unrealised Gains / Losses recognised in Accounting Income in the current Tax Period? | |
| YES Your financial statements include gains or losses from changes in the fair value of assets you still own — these are ‘paper’ profits or losses, not cash transactions. IMPLICATION Since you elected the Realisation Basis, these unrealised amounts must be REMOVED from your taxable income. You will enter the adjustment in the fields below (Realisation Basis Adjustment lines). The system will reverse these out, so you are only taxed on REALISED gains. EXAMPLE: Your investment property was revalued upward by AED 300,000 in your accounts — but you did not sell it. That AED 300,000 is in your accounting profit but should NOT be in your taxable income (deferred until sale). | NO Your Profit & Loss account contains ONLY realised transactions — no fair value uplifts or impairments on assets you still hold. IMPLICATION No Realisation Basis adjustment is needed. Your accounting profit and taxable income are aligned on this point, and no entries are needed in the adjustment fields below. |
Realisation Basis Adjustment Fields — Reference
| Field Name | What It Means and When to Use It |
| Adjustments to depreciation which INCREASE Taxable Income (for assets on realisation basis) | When an asset is on the Realisation Basis, you defer the gain — but you also cannot claim normal accounting depreciation as a deduction on that same asset. This field adds back depreciation charged in your accounts for assets under the Realisation Basis. EXAMPLE: Capital investment property on realisation basis — AED 50,000 depreciation charged in accounts must be added back here. |
| Adjustments to depreciation which DECREASE Taxable Income (for assets on realisation basis) | The reverse situation — where a realisation basis asset adjustment reduces your taxable income. This typically applies when you sell the asset and realise the gain; the accumulated depreciation adjustments reverse out. A technical entry that your accountant will calculate when you eventually dispose of a realisation basis asset. |
| Other adjustments for unrealised gains/losses which DECREASE Taxable Income | Any unrealised gain that appeared in your accounting profit that must be REMOVED for tax purposes because you elected the Realisation Basis and have not sold yet. EXAMPLE: Fair value gain of AED 200,000 on equity investments still held — enter AED 200,000 here to remove it from taxable income. |
| Other adjustments for unrealised gains/losses which INCREASE Taxable Income | Any unrealised LOSS in your accounting profit that must be ADDED BACK for tax purposes (the loss is not yet deductible because you have not sold the asset). EXAMPLE: Fair value loss of AED 80,000 on an investment still held — enter AED 80,000 here to remove the benefit of that loss from your taxable income until the asset is sold. |
| 💡 ProAct Tip: The Realisation Basis adjustment fields are highly technical — in practice, your accountant should calculate these entries. The key concept for business owners: if you elected the Realisation Basis, you are NOT paying tax on paper gains until you actually sell the asset. |
Frequently Asked Questions: UAE Corporate Tax Return 2026
The questions below reflect the most common queries we receive at ProAct Chartered Accountants from UAE business owners and their accountants filing the EmaraTax Corporate Tax Return for tax year.
| Who must file a UAE Corporate Tax Return and by when? Every Taxable Person registered under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses must file a Corporate Tax Return via the EmaraTax portal of the Federal Tax Authority, even if no tax is payable. This includes mainland UAE companies, free zone entities, and foreign companies with a UAE Permanent Establishment. The filing deadline is 9 months from the end of your financial year — for a calendar-year entity (01/01/2025 to 31/12/2025), the deadline is 30 September 2026. Failure to file attracts administrative penalties under Cabinet Decision No. 75 of 2023. |
| Can I elect Small Business Relief if my revenue was just under AED 3 million but I made a loss this year? Technically yes, if your revenue is AED 3 million or less in the current and all prior tax periods since 1 June 2023. However, electing Small Business Relief in a loss year is often not advisable. Under SBR, your tax losses for that period cannot be carried forward to offset future taxable profits. If you made a significant loss — and expect future profitability — filing a full Corporate Tax Return and preserving those losses for carry-forward is usually the better strategy. ProAct recommends modelling both scenarios before making this election, which is irrevocable for the period once submitted. |
| What is the difference between a Related Party and a Connected Person under UAE Corporate Tax law? A Related Party under UAE CT law is broadly any entity or individual with a significant ownership or control relationship to the Taxable Person — including shareholders holding 50% or more, subsidiaries, sister companies, and their associates. A Connected Person is a narrower but distinct category that focuses on personal relationships: the business owner themselves, a director or officer, close family members of the owner, and business partners. Transactions with Related Parties are subject to Transfer Pricing rules (arm’s length standard). Transactions with Connected Persons are additionally subject to a specific disclosure requirement when the aggregate exceeds AED 500,000 per counterparty per year. |
| If a UAE free zone company elects the standard Corporate Tax regime under QFZP, can it change its mind later? No. The election under QFZP to be subject to Corporate Tax under the standard mainland regime is irrevocable for a minimum of five consecutive tax periods once made. This is one of the most consequential elections in the entire UAE Corporate Tax regime. The rationale is that it gives the Federal Tax Authority certainty about the applicable regime. Before making this election, free zone entities should carefully assess their income mix (qualifying vs. non-qualifying), their need for UAE Double Tax Treaty access, their ability to meet QFZP substance and de minimis conditions, and their medium-term business plans. ProAct strongly recommends a dedicated tax advisory session before QFZP is submitted. |
| What is the Realisation Basis election, and why should most UAE businesses with assets elect it? The Realisation Basis election under UAE Corporate Tax law allows a Taxable Person to defer taxation of unrealised gains — fair value increases on assets still held — until the asset is actually sold or disposed of. Without this election, unrealised gains recognised in your accounts (such as investment property revaluations or equity instrument fair value increases) would be taxable in the year they arise, even if no cash has been received. For property companies, investment holding entities, and any business holding long-term capital assets, this election provides a significant cash flow advantage. The broader Option B (capital account assets) applies to all capital-held assets regardless of accounting measurement, making it the more powerful choice for most asset-heavy UAE businesses. |
| What happens if I submit estimated figures in my UAE Corporate Tax Return? Submitting a UAE Corporate Tax Return with estimated figures is permitted under the EmaraTax system — you flag this by selecting YES on the relevant question in Step 7. The Federal Tax Authority is thereby put on notice that some figures may change. You are expected to file an amended return once final figures are available. However, flagging figures as estimated does not protect you from administrative penalties if those estimates are found to be materially incorrect or if the amended return is filed significantly late. ProAct advises clients to use this option only when an audit is genuinely pending, and to file the amended return as promptly as possible once final accounts are available. |
| Does a UAE free zone company need to be audited to file a Corporate Tax Return? Not every UAE free zone company is legally required to have audited financial statements under Corporate Tax law alone. However, Qualifying Free Zone Persons (QFZPs) claiming the 0% tax rate on qualifying income are required to have audited financial statements — this is one of the conditions for maintaining QFZP status under Cabinet Decision No. 100 of 2023. Additionally, many UAE free zones impose their own audit requirements as a condition of maintaining a trade licence. For free zone companies electing the standard Corporate Tax regime under QFZP, audited accounts are not mandated by CT law but are strongly advisable as a matter of prudent compliance given the higher audit risk profile of entities transitioning out of the QFZP regime. |
| Can I revise or amend my UAE Corporate Tax Return after it has been submitted on EmaraTax? Yes. A submitted UAE Corporate Tax Return can be amended via the EmaraTax portal of the Federal Tax Authority, subject to certain conditions and timeframes. You should file an amended return as soon as you identify an error or receive final figures that differ from estimates submitted. However, amendments that result in additional tax payable may attract late payment surcharges. Amendments triggered proactively — before an FTA audit or query — are generally treated more favourably than corrections made after the FTA initiates contact. Minor errors with a tax impact of AED 10,000 or less can alternatively be corrected in the following year’s return without filing an amended return. |
| Can the FTA reject a UAE Corporate Tax Return, and what happens if it does? The Federal Tax Authority can raise a tax assessment under Federal Decree-Law No. 47 of 2022 if it disagrees with positions taken in a submitted Corporate Tax Return — for example, if it determines that claimed exemptions are not applicable, that related party transactions were not at arm’s length, or that a Small Business Relief election was incorrectly made. The FTA may also impose administrative penalties for incomplete filings, missing disclosures, or late submission. If you receive an FTA assessment you disagree with, you have the right to file a reconsideration request and, if necessary, appeal to the Tax Disputes Resolution Committee. |
| What happens if I select the wrong option on an EmaraTax UAE Corporate Tax Return question? The consequences depend on which question was answered incorrectly. For factual questions (such as whether you have related party transactions), submitting an incorrect answer could result in an FTA assessment, penalties for non-disclosure, or a requirement to file an amended return. For elections — particularly the Small Business Relief election and the Free Zone standard-regime election under QFZP — the consequences are more serious because both are irrevocable for their respective lock-in periods. An incorrectly made election cannot simply be withdrawn. If you discover an error after submission, the first step is to contact a UAE-licensed tax advisor and assess whether an amended return should be filed proactively before any FTA review is initiated. |
| Can the Federal Tax Authority audit my UAE Corporate Tax Return after it has been submitted? Yes. The Federal Tax Authority has the power to conduct tax audits and investigations of any Taxable Person’s corporate tax affairs under Federal Decree-Law No. 28 of 2022 on Tax Procedures. There is no guarantee that any particular return will or will not be audited. Audit selection can be triggered by inconsistencies in the return, unusually high exemptions or deductions relative to revenue, discrepancies between VAT returns and CT returns, connected person transactions, or sector-wide compliance campaigns. The FTA has up to 5 years from the end of the relevant tax period to initiate an audit in most cases. Maintaining complete, well-organised financial records — and ideally audited accounts — is the most effective protection against an adverse audit outcome. |
| Do I need an accountant or tax advisor to file a UAE Corporate Tax Return on EmaraTax? There is no legal requirement to use a licensed accountant or tax advisor to file your UAE Corporate Tax Return on EmaraTax — a business owner can file directly. However, given the number of irrevocable elections in the return (including Small Business Relief, the Free Zone standard-regime election, and the Realisation Basis), the connected person disclosure obligations, and the transfer pricing requirements for related party transactions, professional input is strongly advisable for most businesses. The cost of a pre-filing review by a UAE-licensed chartered accountant is typically a fraction of the cost of correcting a misapplied election or responding to an FTA assessment. ProAct Chartered Accountants provides UAE CT return reviews and EmaraTax filing support for businesses of all sizes. |
ProAct’s 4-Step UAE Corporate Tax Return Process
If you are ready to file your UAE Corporate Tax Return and want professional support, here is how ProAct Chartered Accountants works with clients through the EmaraTax filing process.
| Step | What We Do | What You Provide |
| 1 — Pre-Filing Review | We review your accounting records, assess applicable elections, identify non-deductible items, and flag connected person or related party disclosures required. | Final or management accounts; list of related party and connected person transactions; details of any investments or restructuring. |
| 2 — Taxable Income Calculation | We prepare a formal taxable income computation, applying all relevant adjustments under Federal Decree-Law No. 47 of 2022 and Ministerial Decisions. | Audited or management accounts; bank statements; depreciation schedules; lease agreements. |
| 3 — EmaraTax Submission | We complete every question on the EmaraTax Corporate Tax Return, select appropriate elections, and prepare all required schedules and attachments for FTA submission. | EmaraTax login credentials; signed letter of engagement. |
| 4 — Post-Filing Documentation | We provide a filing confirmation, copies of all submitted schedules, and a post-filing memo noting key elections made and their implications for future tax periods. | No additional input required from you at this stage. |
| About ProAct Chartered Accountants ProAct Chartered Accountants is a UAE-based financial advisory firm providing Accounting, Auditing, Corporate Tax, VAT, AML Compliance, and Business Setup services across Dubai, Abu Dhabi, and UAE Free Zones including IFZA, DMCC, RAKEZ, and DIFC. Our team of chartered accountants advises mainland LLCs, free zone entities, and SMEs on EmaraTax filing, FTA compliance, transfer pricing, and Corporate Tax planning under Federal Decree-Law No. 47 of 2022. |
Talk to a UAE Corporate Tax Expert — No Commitment Required
If you have worked through this UAE Corporate Tax Return guide and still have questions about your specific situation, ProAct Chartered Accountants is available to help. We respond to all initial queries within 24 hours. There is no sales pitch, no minimum engagement requirement, and no obligation to proceed. We simply review your situation, identify the key decisions you need to make before filing, and tell you clearly what needs to be done.
DISCLAIMER: This guide about UAE Corporate Tax Return is prepared for general educational and informational purposes only. It does not constitute legal, tax, or financial advice. Every UAE business situation is unique, and the application of UAE Corporate Tax law under Federal Decree-Law No. 47 of 2022 and associated Cabinet and Ministerial Decisions may differ depending on your specific facts and circumstances. Always consult a UAE-licensed tax advisor or chartered accountant before making elections or submitting your Corporate Tax Return via EmaraTax.
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