UAE tax legislation is relatively new and has developed incrementally over the past decade. The primary statutes include Federal Decree-Law No. 8 of 2017 on Value Added Tax, Federal Decree-Law No. 7 of 2017 on Excise Tax, and more recently, Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (the “Corporate Tax Law”). Amendments are made on an ad hoc basis rather than following an annual cycle.

The legislative process typically begins with the Ministry of Finance (MoF), which drafts proposed amendments. These are reviewed and approved by the Cabinet of Ministers and then promulgated by the President as a Federal Decree-Law. The Cabinet and the Minister of Finance are further empowered to issue Cabinet Decisions and Ministerial Decisions providing implementing rules. All legislation is published in the Official Gazette and applies at the federal level.

Recent practice illustrates the UAE’s responsiveness to international tax initiatives, it has. For example, the Corporate Tax Law (Federal Decree-Law No. 47 of 2022) was amended by Federal Decree-Law No. 60 of 2023 (effective 24 November 2023) to introduce a Domestic Minimum Top-Up Tax under Pillar Two, ensuring a 15% minimum effective tax rate for in-scope large multinational groups.

Accordingly, while there is no prescribed frequency of amendment, UAE tax law evolves whenever required to align with global standards, clarify technical provisions, or introduce compliance measures such as e-invoicing. The system is deliberately flexible, enabling rapid adaptation to both international and domestic developments.

Under the Corporate Tax Law, taxpayers are required to register with the Federal Tax Authority (“FTA”) and obtain a Tax Registration Number. Each taxpayer must file an annual corporate tax return within nine months from the end of its financial year (Article 53). Payment of any tax due is required by the same deadline.

Taxpayers must maintain adequate financial records for at least seven years from the end of the relevant tax period (Article 56). Records should be sufficient to verify taxable income, deductions, and other tax positions. Where applicable, consolidated group records and transfer pricing documentation must also be retained. Ministerial Decision No. 97 of 2023 requires multinational groups exceeding the revenue thresholds to prepare a master file and local file consistent with OECD standards.

For VAT and excise tax, similar obligations apply under Federal Decree-Law No. 8 of 2017 (VAT) and Federal Decree-Law No. 7 of 2017 (Excise), supported by Cabinet Decision No. 52 of 2017 (VAT Executive Regulations). These require periodic returns (typically quarterly for VAT, monthly for excise) and robust transactional records.

Failure to comply may result in administrative penalties under Cabinet Decision No. 75 of 2023, which prescribes fines for late filing, late payment, or incomplete records.

The FTA, established under Federal Law No. 13 of 2016, is the central tax administration in the UAE. It is responsible for the implementation, collection, and enforcement of all federal taxes, including VAT, excise tax, and corporate tax. The Ministry of Finance retains a policy-making role and is the competent authority for international tax matters, including double taxation agreements and exchange of information.

The FTA engages with taxpayers primarily through electronic platforms. Registration, filing of returns, payment of tax, and submission of refund claims are managed online via the FTA portal. The Authority also issues public clarifications, guides, and FAQs to explain its interpretation of the law. Formal communications are delivered electronically, and taxpayers are expected to monitor their accounts regularly.

Tax issues are first resolved through administrative procedures. A taxpayer may submit a request for reconsideration to the FTA within 40 business days of being notified of an assessment or penalty (Article 27, Tax Procedures Law). If unsatisfied, the taxpayer may escalate the matter to the Tax Disputes Resolution Committee (TDRC), an independent body established under Article 30 of the Tax Procedures Law. Decisions of the TDRC involving amounts under AED 100,000 are final, while higher-value cases may be appealed to the competent courts.

Tax disputes in the UAE are governed by Federal Decree-Law No. 28 of 2022 on Tax Procedures (“Tax Procedures Law”), which repealed and replaced Federal Law No. 7 of 2017. The framework provides a structured mechanism for taxpayers to challenge decisions of the FTA, combining administrative reconsideration, independent quasi-judicial review, and judicial oversight.

The process begins with a request for reconsideration submitted directly to the FTA. Pursuant to Article 27 of the Tax Procedures Law, taxpayers must file such a request within forty (40) business days of notification of the disputed decision, assessment, or penalty. The FTA is then required to issue a decision within twenty (20) business days, which may be extended once if necessary. This stage ensures that the Authority has the opportunity to review and, if appropriate, correct its own decision before external escalation.

If the taxpayer remains dissatisfied, the matter may be referred to the Tax Disputes Resolution Committee (TDRC), established under Article 30 of the Tax Procedures Law. The TDRC is composed of independent experts appointed by the Ministry of Justice in coordination with the Ministry of Finance, thereby ensuring impartiality. For disputes not exceeding AED 100,000, the TDRC’s decision is final and binding. Where the amount in dispute exceeds AED 100,000, the TDRC’s decision may be appealed before the competent courts of the federal judiciary. Importantly, Article 32 provides that objections before the TDRC are admissible only if the taxpayer has paid the full amount of tax assessed together with at least 50% of the penalties, or alternatively has provided an acceptable bank guarantee. This admissibility requirement marks a significant tightening of the regime compared to the earlier 2017 law.

Appeals against TDRC decisions exceeding AED 100,000 are heard initially by the Court of First Instance, and may subsequently proceed to the Court of Appeal and ultimately the Court of Cassation. These courts operate independently from the FTA and are vested with the authority to uphold, amend, or overturn assessments and penalties. Judicial proceedings typically take longer than administrative review, often extending beyond a year where appeals progress through multiple levels of the judiciary.

In practice, the timelines vary considerably. Under Article 27 of Federal Decree-Law No. 28 of 2022 on Tax Procedures, the Federal Tax Authority must issue its decision on a reconsideration request within twenty (20) business days from the date of receipt, notifying the applicant accordingly, whereas proceedings before the TDRC may take several months depending on the complexity of the case. Judicial litigation is the lengthiest stage, with resolution times depending on the courts’ caseload and whether appellate review is pursued.

In summary, the UAE’s tax dispute framework is characterised by a multi-tiered process. While initial review is administrative, independent oversight is provided through the TDRC and the federal courts. This structure reflects the UAE’s commitment to balancing efficient tax administration with the rights of taxpayers to challenge decisions through independent and impartial fora, albeit subject to strict admissibility conditions that require careful consideration before initiating proceedings.

The deadlines for the payment of taxes in the UAE depend on the specific tax regime in question. Under the Corporate Tax Law, Article 53 requires taxable persons to file their corporate tax return and settle the tax due within nine (9) months from the end of the relevant financial year. At present, there is no requirement for advance instalment payments or provisional returns, making the UAE regime relatively straightforward compared with other jurisdictions.

For Value Added Tax (VAT), introduced under Federal Decree-Law No. 8 of 2017, tax periods are typically set on a quarterly basis, although larger taxpayers may be required to file and pay on a monthly cycle. Payment is due at the time of filing the VAT return. The VAT return and payment must be submitted no later than the 28th day following the end of the tax period.

Excise Tax, established under Federal Decree-Law No. 7 of 2017, follows a more frequent schedule, with returns and payments required monthly, due by the 15th day of the following month.

Where a statutory deadline falls on an official holiday or weekend, the due date is automatically extended to the next working day. In all cases, the deadlines are communicated and enforced through the FTA’s electronic portal.

Where a tax assessment is disputed, the Tax Procedures Law (Federal Decree-Law No. 28 of 2022) establishes a strict principle in Article 44, namely that the disputed tax must be paid in order for an objection or appeal to be admissible. This requirement reflects the priority accorded to protecting state revenues but can impose a material cashflow burden on taxpayers pursuing challenges. While the full tax liability must be settled, only 50% of the penalties need to be paid or secured by a bank guarantee at the objection stage.

Non-compliance with the statutory deadlines exposes taxpayers to administrative penalties. Accordingly, businesses operating in the UAE must exercise strict discipline in monitoring their tax compliance calendars. Even where an assessment is contested, the general rule is that disputed amounts must be paid upfront, with the taxpayer’s rights of appeal preserved through the dispute resolution and judicial process.

Yes. The UAE tax framework imposes a clear and legally binding duty of confidentiality on tax authorities with respect to taxpayer information. Under Article 44 of the Tax Procedures Law (Federal Decree-Law No. 28 of 2022, which repealed Federal Law No. 7 of 2017), all employees, agents, and representatives of the FTA are prohibited from disclosing information obtained in the performance of their official duties, except in narrowly defined circumstances.

In practice, this legal framework strikes a balance between taxpayer confidentiality and the UAE’s international commitments on tax transparency and exchange of information. The UAE, as a member of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes, has implemented standards that restrict the use of taxpayer information strictly to authorised purposes.

Breach of confidentiality obligations by FTA officials or other persons entrusted with taxpayer data may expose them to disciplinary sanctions and potential criminal liability under UAE law. Accordingly, taxpayers can reasonably expect their data to be safeguarded, with disclosure occurring only in cases where it is legally mandated and strictly regulated.

The UAE is a signatory to the OECD Common Reporting Standard (CRS) and has implemented automatic exchange of financial account information since 2018. The Ministry of Finance (MoF) is designated as the competent authority for CRS purposes. The framework is primarily enacted through Cabinet Resolution No. 9 of 2016 on the Common Reporting Standard Regulations and subsequent Ministerial Decisions, which set out the due diligence and reporting obligations of financial institutions.

Under this regime, financial institutions in the UAE are required to collect, maintain, and report information regarding account holders and controlling persons. This data is exchanged annually with partner jurisdictions under the CRS framework, in accordance with the UAE’s bilateral and multilateral treaties.

Separately, the UAE has introduced comprehensive rules on Ultimate Beneficial Ownership (UBO) in line with global transparency initiatives and FATF Recommendations. Cabinet Resolution No. 58 of 2020 on the Regulation of Beneficial Owner Procedures obliges all UAE companies (except those wholly owned by federal or local governments or listed on regulated stock markets) to maintain registers of:

• ultimate beneficial owners,
• shareholders/partners, and
• nominee directors.

These registers must be filed with the relevant licensing authority and updated within statutory timelines upon any change. Non-compliance may result in administrative penalties.

The Corporate Tax Law establishes clear rules for determining tax residence. Article 11 provides that a juridical person is considered resident in the UAE if it is either:

• incorporated, established, or otherwise recognised under UAE legislation (including Free Zone entities and entities incorporated by decree); or
• incorporated outside the UAE but effectively managed and controlled in the UAE.

The “effective management and control” test aligns with international standards and looks at where key strategic decisions are made, typically at the level of the board of directors.

Transparent entities such as partnerships are addressed in Article 16, which allows them to apply for treatment as fiscally transparent if all partners are UAE taxable persons or if the entity itself is not subject to corporate tax under UAE law. In such cases, the partners are taxed on their share of income.

Yes. The UAE applies international tax principles to cross-border transactions within multinational groups, primarily through its transfer pricing regime and its adherence to OECD Base Erosion and Profit Shifting (BEPS) standards.

Under Articles 34–37 of the Corporate Tax Law, related-party transactions must be conducted on an arm’s length basis. The FTA has the authority to review intra-group transactions, including financing, service arrangements, and intellectual property licensing, to ensure compliance. Ministerial Decision No. 97 of 2023 requires large taxpayers and multinational groups to maintain transfer pricing documentation (master file and local file) consistent with OECD guidelines.

Cross-border payments such as interest, royalties, or service fees are also monitored to prevent base erosion. While the UAE currently imposes no withholding tax, the deductibility of such payments depends on compliance with arm’s length pricing and business purpose requirements.

The UAE also participates in international information exchange under double taxation agreements and the Common Reporting Standard, giving the FTA visibility on cross-border structures.

In practice, while the UAE remains a competitive jurisdiction, the introduction of transfer pricing rules has significantly enhanced scrutiny of international group transactions, bringing the framework closer to international standards.

The UAE does not have a traditional Controlled Foreign Corporation (CFC) regime, such as those commonly found in OECD jurisdictions, where a resident taxpayer is required to include the undistributed income of low-taxed foreign subsidiaries in its taxable base.

Instead, the UAE Corporate Tax framework addresses base erosion and profit shifting risks through a combination of targeted provisions:

1. Participation Exemption Conditions
   • Under Article 23 of the Corporate Tax Law, dividends and capital gains derived from qualifying foreign shareholdings are exempt from corporate tax.
   • However, to qualify for this exemption, several conditions must be met, including:
     • a minimum ownership interest of 5%;
     • the subsidiary must be subject to a tax rate of at least 9% (or equivalent) in its jurisdiction of residence, unless it is incorporated in a Qualifying Free Zone Person regime; and
     • the subsidiary must not derive the majority of its income from passive sources (e.g., interest, royalties, dividends), subject to exceptions.
   • These requirements prevent UAE businesses from benefitting from exemptions where subsidiaries are established in zero-tax jurisdictions or where the income profile suggests artificial profit shifting.
2. Transfer Pricing and Anti-Avoidance Rules
   • Articles 34 to 37 of the Corporate Tax Law impose a comprehensive transfer pricing regime, requiring related-party transactions (including with foreign subsidiaries) to be conducted at arm’s length, supported by documentation.
   • The General Anti-Abuse Rule (GAAR) in Article 50 also empowers the FTA to counteract arrangements lacking commercial substance where the main purpose is to obtain a tax advantage.
3. Global Minimum Tax (BEPS Pillar Two)
   • In line with the OECD/G20 Inclusive Framework, the UAE introduced Federal Decree-Law No. 60 of 2023, establishing a 15% minimum effective tax rate for large multinational groups (those with consolidated revenues of EUR 750 million or more).
   • This ensures that multinational groups headquartered or operating in the UAE cannot shift profits into low-tax jurisdictions without being subject to a top-up tax.

Taken together, while the UAE does not impose a formal CFC regime, its participation exemption limitations, transfer pricing rules, GAAR, and implementation of Pillar Two achieve a functionally similar outcome: discouraging profit shifting to low-tax jurisdictions and aligning the UAE’s tax policy with international standards on anti-avoidance.

Yes, the UAE has introduced a comprehensive transfer pricing (TP) regime under Articles 34–37 of the Corporate Tax Law, effective from 1 June 2023. These provisions require all transactions with related parties and connected persons to adhere to the arm’s length principle, in line with the OECD Transfer Pricing Guidelines.

Transfer Pricing Documentation

• Taxpayers must be able to demonstrate compliance with TP rules.
• Ministerial Decision No. 97 of 2023 sets out documentation requirements:
  • Taxpayers meeting either (i) annual revenue of AED 200 million or more, or (ii) being part of a multinational group subject to Country-by-Country Reporting (CbCR) obligations, must maintain both a master file and a local file.
  • All taxpayers, regardless of size, must complete a transfer pricing disclosure form when filing their corporate tax return, summarizing related-party transactions.
• The FTA may request TP documentation within 30 business days of a notice.

Thin Capitalization Rules

• The UAE does not have a standalone “thin capitalization” regime.
• However, Article 28 of the Corporate Tax Law restricts the deductibility of net interest expense:
  • Deduction is capped at 30% of EBITDA (earnings before interest, tax, depreciation, and amortisation), consistent with OECD BEPS Action 4.
  • A safe-harbour de minimis threshold of AED 12 million applies, below which the limitation does not restrict deductions.
  • Exemptions may apply for certain financial institutions and standalone entities not part of a multinational group.

Advance Pricing Agreements (APAs)

• The Corporate Tax Law allows taxpayers to seek certainty on transfer pricing through advance pricing agreements.
• While the enabling provision exists, the UAE has not yet published detailed procedural guidance on APA applications. However, the inclusion of APAs in the law reflects the UAE’s alignment with international best practices.

Yes. Article 50 of the Corporate Tax Law introduces a general anti-abuse rule (GAAR) empowering the FTA to counteract arrangements that are not genuine and that have been put in place with the main purpose of obtaining a tax advantage inconsistent with the law’s intent.

Under the GAAR, the FTA may disregard or recharacterize a transaction if it concludes that the arrangement lacks commercial substance and is designed primarily to reduce the tax burden. Factors such as the economic reality of the transaction, the presence of artificial steps, and consistency with business purpose are taken into account.

The GAAR operates in addition to specific anti-avoidance rules, such as the limitation of interest deductions and restrictions on exempt participation income. Enforcement follows the usual dispute resolution process: taxpayers may challenge FTA adjustments first through reconsideration, then before the TDRC, and ultimately in court.

Although the GAAR is still new, it represents a significant shift in the UAE’s tax landscape. Its scope is broad, and taxpayers should be prepared to substantiate the commercial rationale of their structures and transactions.

The UAE does not levy a standalone digital services tax (DST). Instead, it relies on its general tax framework, particularly VAT and the Corporate Tax Law, to capture income from digital and e-commerce activities. VAT at the standard rate of 5% applies to the supply of most digital services, including those provided by non-resident suppliers to UAE customers, with special rules for electronic marketplaces.

From a corporate tax perspective, non-resident entities earning income from UAE customers may be subject to UAE tax if they have a permanent establishment in the UAE or earn UAE-sourced income within the scope of Article 13 of the Corporate Tax Law.

The UAE has committed to the OECD’s Pillar One and Pillar Two framework, which is intended to replace unilateral DSTs with a multilateral solution for taxing the digital economy. Accordingly, the UAE has avoided introducing a DST and is unlikely to do so given its international commitments.

Yes. The UAE has progressively implemented many of the OECD Base Erosion and Profit Shifting (BEPS) recommendations. The UAE has committed to BEPS 2.0. Federal Decree-Law No. 60 of 2023 amended the Corporate Tax Law introducing a Domestic Minimum Top-Up Tax in line with Pillar Two of the OECD/G20 framework. While detailed implementing rules are pending, this marks a significant policy alignment with global standards.

With respect to Pillar One, the UAE has expressed support but has not yet introduced domestic legislation, pending finalisation of the multilateral convention.

Accordingly, the UAE has already implemented core BEPS measures and is actively incorporating BEPS 2.0 into its domestic law.

The OECD Base Erosion and Profit Shifting (BEPS) initiative has been one of the most significant external drivers of tax reform in the UAE, shaping both domestic legislation and international commitments.

Economic Substance Rules (Action 5)

In response to BEPS Action 5 on harmful tax practices, the UAE introduced Economic Substance Regulations (ESR) in 2019 (Cabinet Resolution No. 31 of 2019), which were subsequently refined through Cabinet Resolution No. 57 of 2020 and Ministerial Decision No. 100 of 2020. These rules require UAE entities engaged in “relevant activities” (e.g., headquarters, financing, IP, distribution) to demonstrate adequate substance in the UAE, ensuring that the UAE’s low-tax environment could not be used for artificial profit shifting.

Country-by-Country Reporting (Action 13)

The UAE implemented CbCR obligations through Cabinet Resolution No. 32 of 2019, later replaced by Cabinet Resolution No. 44 of 2020. This requires UAE-headquartered multinational enterprise (MNE) groups with consolidated revenues above AED 3.15 billion (approx. EUR 750 million) to file CbC reports. The objective is to enhance transparency and allow tax administrations to assess transfer pricing risks across jurisdictions.

Corporate Tax Law (BEPS Actions 4, 6, 13, and GAAR)

The introduction of the Corporate Tax Law reflects several BEPS measures:

• Transfer Pricing (Articles 34–37): Incorporates OECD-aligned arm’s length standards.
• Interest Limitation Rule (Article 28): Restricts net interest deductibility to 30% of EBITDA, implementing BEPS Action 4.
• General Anti-Abuse Rule (GAAR) (Article 50): Empowers the FTA to disregard arrangements lacking economic substance and enacted primarily for tax benefits.
• Participation Exemption (Article 23): Aligns with BEPS Action 6 by preventing treaty and exemption abuse through minimum tax and ownership conditions.

Global Minimum Tax (BEPS 2.0 – Pillar Two)

In 2023, the UAE enacted Federal Decree-Law No. 60 of 2023, introducing a Qualified Domestic Minimum Top-up Tax (QDMTT) consistent with the OECD Pillar Two rules. This ensures that large multinational groups (consolidated revenues ≥ EUR 750 million) are subject to a 15% minimum effective tax rate in the UAE, neutralizing the impact of preferential regimes and reinforcing tax base protection.

The cumulative effect of BEPS has shifted UAE tax policy from an incentive-driven, low-tax environment toward a framework balancing:

• International credibility and compliance with OECD/FATF standards;
• Competitiveness, by maintaining a low general corporate tax rate (9%) for businesses outside Pillar Two;
• Transparency, through ESR, CbCR, and transfer pricing obligations.

This alignment with BEPS has significantly enhanced the UAE’s reputation as a cooperative and transparent jurisdiction, mitigating the risk of being blacklisted by the EU or other standard-setting bodies.

The UAE tax system incorporates elements consistent with international models but remains selective in scope.

• Business profits: The Corporate Tax Law imposes corporate tax on resident juridical persons and non-residents with a permanent establishment or UAE-sourced income. The rate is 0% on taxable income up to AED 375,000 and 9% thereafter (Article 3). A higher rate of 15% applies to large multinational groups (deriving consolidated global revenues of at least 750 million Euros in at least two of the four preceding fiscal years) within scope of OECD Pillar Two (Decree-Law No. 60 of 2023).
• Employment income and pensions: Employment income is not subject to UAE corporate tax or personal income tax. Social security contributions apply only to UAE and GCC nationals under separate federal and emirate-level legislation. However, if a natural person is carrying on a business activity (e.g. consultancy, sole proprietorship), then they can be subject to corporate tax as a “natural person conducting business” (Article 11(6), clarified by Cabinet Decision 49 of 2023).
• Indirect tax (VAT and excise): VAT was introduced under Federal Decree-Law No. 8 of 2017 at a standard rate of 5%. Excise tax applies under Federal Decree-Law No. 7 of 2017 to certain goods (tobacco, carbonated and energy drinks, electronic smoking devices, sweetened beverages) at rates ranging from 50% to 100%.
• Savings income and royalties: Dividend and capital gains income is generally exempt under Article 22 of the Corporate Tax Law if participation exemption conditions are met. Royalties are taxable at the standard corporate tax rate if derived by a UAE resident or attributable to a UAE permanent establishment of a non-resident.
• Income from land: Rental income is taxable if earned in the course of a business (e.g. property developers, real estate businesses). Passive rental income of individuals not engaged in a business activity is not taxed.
• Capital gains: Taxable in the hands of businesses, unless exempt under participation exemption rules. No separate capital gains tax regime exists.
• Stamp duties and capital duties: The UAE does not levy federal stamp duty, inheritance, or wealth taxes. Certain emirates impose transaction fees on property transfers and notarisation, but these are administrative charges, not taxes.

In sum, the UAE tax system is deliberately limited: it taxes business profits, indirect consumption, and excisable goods, while leaving employment income, passive personal income, and wealth outside the tax net.

Yes. The UAE corporate tax regime taxes the net accounting profits of a business, adjusted for tax purposes. Article 20 of the Corporate Tax Law provides that taxable income is determined on the basis of financial statements prepared in accordance with International Financial Reporting Standards (IFRS), subject to specific adjustments.

Adjustments include non-deductible expenses (e.g. certain fines, donations not to qualifying entities, entertainment expenses capped at 50%), limitations on interest deductibility (Article 28), and the exclusion of exempt income (Article 22). Reliefs such as participation exemptions, group relief, and foreign tax credits are also applied at this stage.

Small business relief is available under Ministerial Decision No. 73 of 2023, which allows small businesses with revenue below AED 3 million to be treated as having no taxable income.

Accordingly, corporate tax in the UAE is levied broadly on accounting profits, with adjustments to align the taxable base with international best practice.

Under the Corporate Tax Law, the treatment of business vehicles depends on their legal form:

• Companies: Juridical persons incorporated in the UAE (mainland or Free Zone) are taxable as resident persons on worldwide income, subject to exemptions. Foreign companies with a permanent establishment or UAE-sourced income are taxable as non-residents.
• Partnerships and other unincorporated vehicles: Article 16 provides that entities without separate legal personality (such as general partnerships) are treated as transparent for tax purposes. In such cases, the partners are directly subject to tax on their share of income. However, an election may be made for certain partnerships and unincorporated joint ventures to be treated as taxable persons.
• Trusts and foundations: These are not specifically addressed in the Corporate Tax Law but may be treated as juridical persons if they have separate legal personality. Family foundations can elect to be treated as transparent where conditions are met (Ministerial Decision No. 127 of 2023).

Overall, companies are taxable, while partnerships and certain foundations may be tax transparent depending on elections and structuring. This provides flexibility while ensuring that income is not left untaxed.

Yes. Liability to UAE corporate tax is based on tax residence or source.

• Resident persons: Article 11 of the Corporate Tax Law states that a juridical person is resident if incorporated in the UAE or if effectively managed and controlled in the UAE, regardless of place of incorporation. Resident persons are subject to tax on worldwide income (with exemptions).
• Natural persons: Cabinet Decision No. 85 of 2022 clarifies residence for individuals based on physical presence (183 days, or 90 days with additional criteria) and centre of vital interests. Individuals conducting a business activity may therefore be subject to corporate tax.
• Non-residents: Article 12 provides that non-residents are taxable only on (i) income attributable to a UAE permanent establishment, (ii) UAE-sourced income under Article 13, or (iii) income from a nexus in the UAE (e.g. real estate).

Accordingly, the UAE applies a residence-based system for residents and a source-based system for non-residents, consistent with international norms.

Yes. The UAE Corporate Tax framework provides preferential regimes in specific circumstances, most notably for Free Zone entities and for natural resource businesses.

Under Article 18 of the Corporate Tax Law, a Qualifying Free Zone Person (“QFZP”) may benefit from a 0% corporate tax rate on income that qualifies as “Qualifying Income.” In order to access and maintain this preferential treatment, a Free Zone entity must maintain adequate substance in the UAE, derive income that meets the statutory definition of Qualifying Income, refrain from electing to be taxed under the standard 9% regime, and comply with transfer pricing and other administrative obligations.

The scope of Qualifying Income and activities is set out in Cabinet Decision No. 100 of 2023 and Ministerial Decision No. 229 of 2025 repealed the earlier Ministerial Decision No. 265 of 2023. These decisions provide detailed rules on what constitutes qualifying and excluded activities. Qualifying activities include, among others, manufacturing, processing, holding of shares and securities, fund and treasury services, and logistics and distribution of goods within or from a designated zone. Excluded activities, such as certain financial services, income from immovable property located outside Free Zones, and most intellectual property income, fall outside the preferential regime unless they are ancillary to qualifying activities.

In addition to the Free Zone regime, Article 7 of the Corporate Tax Law provides that businesses engaged in extractive activities, such as oil and gas exploration and production, and certain non-extractive natural resource activities remain outside the scope of federal corporate tax to the extent they are already subject to emirate-level taxation. This carve-out preserves the fiscal autonomy of individual Emirates in respect of their natural resource revenues.

Overall, these favourable regimes strike a balance between maintaining the UAE’s attractiveness as a tax-efficient jurisdiction for international business and aligning with global standards such as the OECD’s BEPS initiatives and the implementation of Pillar Two minimum taxation rules.

The UAE Corporate Tax Law does not operate a traditional “patent box” regime of the type commonly found in certain OECD jurisdictions. However, preferential treatment is available for Qualifying Intellectual Property held by QFZPs).

Article 18 of the Corporate Tax Law allows QFZPs to benefit from a 0% corporate tax rate on income derived from Qualifying Income, provided that the entity meets substance requirements and does not elect to be subject to the standard 9% rate. The detailed scope of what constitutes Qualifying Intellectual Property income is provided in Ministerial Decision No. 229 of 2025, which explicitly aligns the UAE regime with the OECD “nexus approach” under BEPS Action 5. This means that only income derived from IP where the relevant research and development expenditure has been incurred in the UAE, or within a jurisdiction with equivalent standards, will qualify for the preferential rate.

Qualifying Intellectual Property for these purposes is narrowly defined and generally includes patents, copyrighted software, and similar assets that result from substantial research and development. Importantly, marketing-related intangibles such as trademarks, customer lists, and goodwill do not qualify.

Accordingly, while there is no standalone patent box regime in the UAE, the rules on Qualifying Intellectual Property under the Free Zone regime allow preferential treatment in a controlled and OECD-compliant manner, making the jurisdiction attractive for IP-driven businesses that are willing to maintain genuine substance in the UAE.

Yes. The Corporate Tax Law allows tax grouping under Article 40, permitting two or more resident juridical persons to form a tax group and file a single consolidated return, subject to conditions.

The parent company must directly or indirectly hold at least 95% of the share capital, voting rights, and entitlement to profits and net assets of the subsidiary. All group members must have the same financial year and prepare financial statements on the same accounting standards. Free Zone companies that qualify for the 0% regime cannot be included in a tax group with mainland companies.

Where a tax group is formed, the group is treated as a single taxable person. Intra-group transactions are eliminated, and only consolidated taxable income is reported. However, transfer pricing rules continue to apply to ensure transactions with entities outside the group are at arm’s length.

For companies that do not form a tax group, intragroup relief is available under Article 26, allowing deferral of gains or losses on qualifying transfers between resident group members (75% common ownership). Article 37 also permits loss relief, enabling taxable losses to be offset against the profits of other group entities, provided there is at least 75% ownership and certain restrictions are met.

In summary, the UAE permits and recognises group taxation, but the regime is carefully structured and excludes Free Zone entities benefitting from the 0% regime.

The UAE Corporate Tax Law establishes a withholding tax regime under Article 45, which provides that certain categories of UAE-sourced income paid to non-residents may be subject to withholding tax. This ensures that the framework for taxing outbound payments exists in law, consistent with international practice.

At present, however, the applicable withholding tax rate has been set at 0% by Cabinet Decision. This applies to all relevant categories of payments, including dividends, interest, royalties, and other UAE-sourced income paid to foreign persons. Accordingly, while the mechanism is present in the legislation, it is currently neutral in practice.

It is important to note that this does not mean the UAE has “no withholding tax.” Rather, the regime exists but operates at a 0% rate. The structure allows the Cabinet to amend the rate by further decision, which could potentially introduce a positive rate in the future without the need to amend the Corporate Tax Law itself.

The UAE does not impose standalone environmental taxes under federal law. However, excise tax under Federal Decree-Law No. 7 of 2017 has environmental and public health objectives. For example, excise applies to carbonated and sweetened beverages, as well as to electronic smoking devices, at rates of 50% or 100%. While framed as a public health measure, this tax also discourages environmentally harmful consumption patterns.

At the emirate level, certain environmental levies exist, such as fees on waste disposal or plastic use, but these are administrative charges rather than taxes within the scope of the federal system.

Dividend income is generally exempt from corporate tax in the UAE under the participation exemption, per Article 23 of the Corporate Tax Law. To qualify, a UAE taxpayer must hold at least 5% of the shares in a subsidiary, and the subsidiary must be subject to a tax rate of at least 9% (or equivalent) in its jurisdiction of residence. Additional conditions include limitations on the subsidiary’s asset structure to prevent artificial use of dormant or passive holdings.

Dividends received from UAE‑resident companies are exempt without conditions to eliminate domestic double taxation. In the case of dividends from Free Zone entities, the exemption may still apply provided the paying entity is a QFZP and the income qualifies as Qualifying Income. Specifically, Article 4(1)(c) of Cabinet Decision No. 100 of 2023 clarifies that dividends received by a QFZP from another Free Zone Person are treated as Qualifying Income, subject to normal substance, activity, and documentation requirements.

If the participation exemption does not apply, if the subsidiary is domiciled in a low-tax jurisdiction, relief may still be available through the foreign tax credit mechanism under Article 47 of the Corporate Tax Law. However, this credit is limited to the UAE corporate tax liability on that income; it cannot exceed the domestic tax that would have been due.

Moreover, the UAE has established an extensive network of double tax treaties (DTTs) with over 140 jurisdictions. These treaties often reduce or eliminate foreign withholding taxes on dividends, sometimes lowering rates from 10–15% to as low as 0–5%, thereby enhancing tax efficiency even when the participation exemption does not apply.

In practice, the FTA has issued a dedicated guide titled “Exempt Income: Dividends and Participation Exemption”, which clarifies how dividends (including in‑kind distributions, distributions upon share redemption, and non‑arm’s length payments) qualify for the exemption. The guide also provides definitions of “dividend,” explains what counts as a participating interest, and confirms that the exemption applies to both domestic and foreign dividends when conditions are met.

The UAE offers a combination of advantages that make it a leading hub for international groups.

Advantages include:

• Competitive tax regime: A low corporate tax rate of 9%, with 0% for qualifying Free Zone income, and no withholding taxes, wealth tax, or personal income tax.
• Extensive treaty network: Over 140 double taxation agreements, enhancing certainty and reducing cross-border tax costs.
• Regulatory environment: Robust legal and regulatory framework with clear tax procedures under Federal Law No. 28 of 2022, supported by transparent FTA guidance.
• Strategic location: Global connectivity and proximity to emerging markets in the Middle East, Africa, and Asia.
• Business infrastructure: Free Zones, modern financial centres (DIFC, ADGM), and advanced logistics networks.

Disadvantages/considerations include:

• International compliance pressures: As a signatory to OECD BEPS and CRS, the UAE has implemented economic substance rules, transfer pricing, and minimum taxation (Pillar Two), which may increase compliance costs.
  • Scope of exemptions: Free Zone benefits are tightly circumscribed under Cabinet Decision No. 100 of 2023 and Ministerial Decision No. 229 of 2025, requiring careful structuring.
• Unsettled practice: As the Corporate Tax Law is new (effective June 2023), administrative practice and jurisprudence are still evolving, leading to some interpretive uncertainty.

Overall, the UAE remains one of the most attractive jurisdictions for relocation due to its tax efficiency, business ecosystem, and international alignment.