Are you an entrepreneur or business owner in Dubai wondering if the new corporate tax applies to you?
You’re not alone. The introduction of a federal corporate tax in Dubai (and across the UAE) marks a big shift for businesses here.
Let’s break down who needs to pay corporate tax and who’s exempt, so you know exactly where you stand and how to stay compliant.
Understanding Dubai’s New Corporate Tax Regime
Dubai and the UAE have long been known for a tax-friendly environment, but times are changing.
As of 2023, the UAE government introduced a corporate tax on business profits for the first time.
The corporate tax percentage in UAE is set at 9% on taxable profits above AED 375,000 (profits below that amount are taxed at 0%). This threshold gives small businesses a breather.
Who Needs to Pay Corporate Tax in Dubai?
In simple terms, any company or business earning profits in Dubai/UAE is subject to corporate tax unless specifically exempted.
The law defines these as “taxable persons”, covering a broad range of scenarios:
- UAE Companies (Mainland & Free Zone): If you have a company in Dubai – whether a mainland LLC or a free zone entity – it falls under the corporate tax regime.
Free zone businesses can still benefit from a 0% rate on qualifying income if they meet the conditions (e.g. not regularly doing business in the mainland).
Otherwise, any non-qualifying income is taxed at 9%.
- Foreign Companies & Branches: Foreign businesses aren’t off the hook. If a company is effectively managed and controlled from Dubai, it can be treated as a UAE resident for tax purposes.
Also, any foreign company with a branch or permanent establishment in Dubai will pay tax on income from its UAE activities.
If you’re a foreign investor doing business here (not just holding shares), you’re within the corporate tax net.
- Individuals with Business Licenses: Corporate tax isn’t just for big corporations.
If you’re an individual conducting business under a commercial license – say, a solo entrepreneur or freelancer registered in a free zone or as a professional – your business income is subject to corporate tax.
(This applies only to your business profits, not your personal salary or bank interest.)
Small Business Relief: To support small businesses, the UAE introduced a Small Business Relief.
If your annual revenue is AED 3 million or less, you can elect to be treated as having zero taxable income for the tax years 2024–2026 (meaning you pay 0% corporate tax in those years).
This temporary relief lets startups and SMEs grow in the early years without an immediate tax burden.
Who Is Exempt from Corporate Tax?
Not everyone in Dubai will be paying this tax. There are important exemptions to note:
- Personal Income & Investments: If you’re earning a salary or income from personal investments, you do not pay corporate tax on it.
Salaries, bank interest, dividends, capital gains, and personal rental income are all outside the scope of corporate tax.
The UAE isn’t taxing individuals’ paychecks or personal investment returns – the focus is only on business profits.
- Certain Sectors & Entities: Some businesses are fully exempt by law. For example, companies involved in extraction of natural resources (e.g. oil & gas) are exempt from the federal corporate tax, since they’re taxed at the Emirate level instead.
Also, the government can exempt qualifying government-owned enterprises, charities, and investment or pension funds via Cabinet Decision.
These carve-outs ensure strategic industries and non-profits aren’t impacted by the new tax.
Navigating Compliance and Next Steps
If your business is subject to corporate tax, you’ll need to register with the Federal Tax Authority (FTA) and file annual tax returns.
Keeping accurate financial records is essential. Getting everything in order now is key.
At Corporate Business Services (CBS), we offer comprehensive corporate tax services in Dubai – from registration to filing – to ensure you maximize reliefs and stay compliant.
Our expert corporate tax consultants in Dubai work as your partners, so you can focus on growing your business while we handle the tax side of things.
If you’re unsure about your status under the new tax or want guidance to navigate it smoothly, don’t hesitate to reach out to us.
With the right support, you can turn this compliance requirement into a strategic advantage – and continue thriving in Dubai’s dynamic, business-friendly environment.
