Quick answers

  • VAT rate: 5% standard, with zero-rated and exempt categories. Mandatory registration above AED 375,000 in taxable supplies and imports.
  • Corporate Tax rate: 0% on the first AED 375,000 of taxable income, 9% above. Effective for financial years beginning on or after 1 June 2023.
  • Small Business Relief: Available for revenue up to AED 3 million through tax periods ending on or before 31 December 2026.
  • Free zones: Subject to Corporate Tax, but Qualifying Free Zone Persons can access 0% on qualifying income.
  • Filing: VAT returns are quarterly or monthly. Corporate Tax returns are annual, due within nine months of year-end.

The new tax landscape in the UAE

The UAE has traditionally been known as a low-tax jurisdiction, but the landscape has changed significantly with the introduction of:

  • Value Added Tax (VAT) at 5% (effective since 2018)
  • Corporate tax on business profits (effective for financial years starting on or after 1 June 2023, with thresholds and exemptions)

For business owners, this means taxation is now part of everyday decision-making. Understanding the basics helps you avoid penalties and structure your affairs efficiently.

VAT in the UAE: key concepts

VAT is an indirect tax charged on most supplies of goods and services.

  • Standard rate: 5%, with some categories zero-rated or exempt.
  • Registration: Mandatory above AED 375,000 in taxable supplies and imports per annum, voluntary above AED 187,500. Exporters and businesses with significant input VAT often benefit from voluntary registration so they can claim a VAT refund.
  • Input vs output VAT:
    • Output VAT: VAT you charge customers on taxable supplies
    • Input VAT: VAT you pay on purchases that may be recoverable

To manage VAT properly, you need:

  • Correct tax invoicing
  • Proper VAT coding in your accounting system
  • Timely preparation and submission of returns
  • Retention of supporting evidence and records

Corporate tax: what it means for your business

Corporate tax applies to the net profits of certain business entities and activities, subject to thresholds, exemptions, and special rules (for example, the 0% rate on Qualifying Income for Free Zones, natural resources, and qualifying income).

Key points include:

  • Scope: Generally applies to juridical persons (companies) and some natural persons engaged in business activities.
  • Rates: 0% on taxable income up to AED 375,000, and 9% on taxable income above. The annual return is filed within nine months of year-end on EmaraTax. See our walkthrough on filing your first UAE Corporate Tax return.
  • Taxable income: Based on accounting profit, adjusted for tax rules (e.g., non-deductible expenses, exempt income).
  • Small Business Relief: Businesses with revenue up to AED 3 million can elect zero taxable income for the period, available through tax periods ending on or before 31 December 2026.
  • Record keeping: Maintain proper books of account and supporting documentation for at least seven years.

Because the regime is still relatively new, many businesses underestimate the effort needed to prepare, especially when:

  • Financial statements are not properly maintained
  • Intercompany transactions are not documented in line with transfer pricing rules
  • Owner-related expenses are mixed with business costs

VAT and corporate tax both rely heavily on accurate, complete accounting records. If your books are unreliable, your tax filings will be too.

A strong tax support framework includes:

  • Clear accounting policies aligned with tax rules
  • Proper classification of expenses (deductible vs non-deductible)
  • Reconciliation between accounting ledgers and tax returns
  • Timely reviews before filing deadlines

How professional tax support adds value

Beyond just completing returns, professional advisors in the UAE can:

  • Assess whether you need to register for VAT and/or corporate tax
  • Review contracts and pricing structures for tax implications
  • Help you choose appropriate legal and business structures
  • Assist with tax authority queries, audits, or reassessments
  • Identify tax efficiencies that align with the law

In a changing tax environment, the right expertise reduces risk and frees you to focus on running your business. For most SMEs, this is best delivered through outsourced accounting and tax support rather than a full in-house finance function.

Frequently Asked Questions

When is VAT registration mandatory in the UAE? When taxable supplies and imports exceed AED 375,000 over the previous twelve months, or are expected to exceed it in the next thirty days. Voluntary registration is available above AED 187,500.

What is the UAE Corporate Tax rate? 0% on taxable income up to AED 375,000, and 9% on taxable income above that threshold. Multinational groups within the OECD Pillar Two scope may face additional rules.

Do free zone companies pay Corporate Tax? Yes, with an exception. Qualifying Free Zone Persons can access a 0% rate on qualifying income. Non-qualifying income is taxed at 9%.

What is Small Business Relief? An election that lets businesses with revenue up to AED 3 million treat themselves as having zero taxable income for the period. It is available through tax periods ending on or before 31 December 2026 and must be claimed on the return.

How often are VAT returns filed? Quarterly for most businesses, monthly for larger taxpayers as determined by the FTA. Returns are due within 28 days of the end of the tax period.

What records do I need to keep? Books of account, tax invoices, contracts, customs documents, and supporting evidence, retained for at least seven years for both VAT and Corporate Tax purposes.

Do I need separate registrations for VAT and Corporate Tax? Yes. Both are managed through EmaraTax but each has its own Tax Registration Number.

How we can help

We handle UAE VAT and Corporate Tax registration, returns, and ongoing compliance, plus the accounting hygiene that makes both of those clean. Book a tax review and we will scope your obligations in 30 minutes.