UAE Corporate Tax and VAT: What You Owe, When, and What Happens If You Miss It

Do you actually owe corporate tax?

Almost every UAE company is now in scope for corporate tax registration, even if the tax bill itself ends up being zero. Registration and taxation are two separate questions worth keeping apart from the start. You register regardless of income level. You pay 9% only on the portion of taxable income above AED 375,000, and even that can drop to 0% if you are a Qualifying Free Zone Person, or if you qualify for Small Business Relief.

The numbers

What Small Business Relief actually means

If your revenue is under AED 3 million for the relevant tax period, you can elect to be treated as having no taxable income at all — meaning no 9% liability regardless of profit margin. This is not automatic; it is an election you make when filing, and it comes with conditions on how long you can keep claiming it. Plenty of smaller consultancies and holding structures we work with qualify for this and do not realise it, which means they are either overpaying or, worse, not filing correctly because nobody told them the relief exists.

Free zone companies: the 5% rule that catches people out

If you run a Qualifying Free Zone Person, your qualifying income sits at 0% tax. The moment your non-qualifying income — typically UAE mainland-sourced revenue — exceeds 5% of total revenue or AED 5 million, whichever is lower, you lose the 0% rate. Not just on the excess: for the entire current tax period, and for the four tax periods after it. This is the single costliest mistake we see free zone clients make, usually because they picked up one too many mainland clients without checking the math first. We monitor this ratio for retained compliance clients precisely so nobody crosses it by accident.

Filing deadlines and what happens if you miss one

VAT — the other filing most people forget

VAT registration is a separate obligation from corporate tax and has its own revenue threshold. Registration is mandatory once your taxable supplies and imports exceed AED 375,000 over the preceding 12 months (or are expected to in the next 30 days). Below that, voluntary registration is available from AED 187,500 — useful if you want to reclaim input VAT on setup costs before you are trading at volume. VAT itself is charged at the standard 5% rate, with returns typically filed quarterly through the FTA EmaraTax portal. Corporate tax and VAT are assessed independently — being under the corporate tax threshold does not exempt you from VAT obligations, and vice versa.

What we handle & What you will need to provide

• Corporate tax registration with the Federal Tax Authority
• Assessment of Small Business Relief and Qualifying Free Zone Person eligibility
• Annual corporate tax return preparation and filing
• VAT registration, quarterly return filing, and reconciliation
• Ongoing monitoring of the free zone qualifying/non-qualifying income ratio
• Representation in the event of an FTA query or audit

What you will need to provide

• Trade license copy and financial year end date
• Audited or management financial statements for the relevant period
• Breakdown of revenue by source, particularly for free zone entities tracking qualifying vs. non-qualifying income
• Prior year tax filings, if any
• Bank statements covering the tax period

Frequently asked questions