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The arrival of corporate tax in the UAE is a key turning point for the business environment and it includes companies that have to adapt to new regulatory and compliance rules. As businesses operating in the UAE get set to fulfill their duties, they must fully grasp the process of filing corporate tax returns, key deadlines, and the critical nature of proper compliance. At Vigor Accounting & Taxation LLC we deliver enterprise tax returns in the most efficient way, providing companies with the option to pay in a single instalment, thus avoiding any penalties.
Corporate tax in the UAE is a federal tax imposed on the net profits of corporations. The UAE introduced corporate tax as part of its efforts to align with global tax practices, enhance transparency, and diversify its revenue sources. The corporate tax rate is 9% on taxable income exceeding AED 375,000, while income below this threshold is exempt.
Corporate tax applies to all businesses, including those operating in free zones, though certain exemptions may apply for companies conducting business entirely within the free zone. Additionally, certain sectors, such as extractive industries, may have different tax rates or specific exemptions.
All businesses that meet the taxable income threshold are required to file corporate tax returns in the UAE. This includes
Companies doing business in the UAE mainland pay tax according to their global income. They have a duty to pay the tax return according to the procedure of the net profit as of the International Accounting Standards
Foreign companies with a permanent establishment in the UAE or earning the UAE-sourced fund are to file taxes on their own profits garnered from their UAE operations.
Businesses operating in the so-called free zones can take advantage of some special tax breaks if they are able to maintain the substance and conduct the activity exclusively in the free zone or with international clients. Nevertheless, companies that are free zone entities can be taxed on their income from mainland operations in the UAE.
Corporate tax filing involves accurately reporting a company’s taxable income, deductions, and other financial information to determine the tax liability. Below are the main components of corporate tax filing in the UAE:
Filing corporate tax returns in the UAE involves several steps, from determining the taxable income to submitting the return through the Federal Tax Authority (FTA) portal. Here’s an outline of the corporate tax filing process
While corporate tax filing is a straightforward process, businesses in the UAE may face certain challenges, including
The FTA imposes penalties for non-compliance with corporate tax regulations. These penalties can include
A fine for failing to file the corporate tax return by the deadline.
An additional charge for late payment of the tax liability.
Incorrect or incomplete tax returns can also result in fines and require businesses to make corrections and resubmit their returns.
When it comes to business, we at the Vigor Accounting & Taxation LLC give complete expertise to our corporate tax filing services. We assist our clients in managing the challenging points of the corporate tax system of the United Arab Emirates, by providing quality accounting and tax solutions.
Don’t wait—schedule your free consultation today and take the first step towards transforming your vision into reality!