The basics
The UAE Corporate Tax Law, Federal Decree-Law No. 47 of 2022, was issued on 9 December 2022 and applies to financial years beginning on or after 1 June 2023. Taxable income up to AED 375,000 is taxed at 0% and taxable income above that at 9%. Qualifying Free Zone Persons can benefit from a 0% rate on qualifying income, and a different regime applies to large multinational groups that meet the OECD Pillar Two criteria.
Why the accounts matter
Taxable income is calculated starting from the accounting net profit shown in the financial statements, then adjusted as the law requires. Errors in revenue recognition, provisions, depreciation or intercompany balances therefore flow straight into the tax computation.
What to put in place
- Financial statements prepared consistently under IFRS (or IFRS for SMEs where permitted)
- Clear documentation of related party and intercompany transactions
- A year-end tax adjustment schedule reconciled to the accounts
- Free zone entities: a documented analysis of which income is qualifying
How we help
Our UAE-headquartered team prepares IFRS financial statements and the supporting schedules your tax adviser needs. Always confirm current rules with the Federal Tax Authority or a registered tax agent.
This article is general information, not accounting, tax or legal advice. Rates, thresholds and effective dates should be confirmed with the official sources (IFRS Foundation, tax authorities, regulators) or your adviser before acting.