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What You Need to Know About Corporate Tax Practices in Dubai
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To benefit from the corporate tax exemption in Dubai, your business profits must be below AED 375,000 or your turnover must not exceed AED 3,000,000 by the end of 2026. This type of exemption is specially issued and lasts until 2026. Once your business fulfills the requirements, you must declare that you are covered by the exemption and that you are a qualified or non-qualified company when submitting your corporate tax return to the FTA.
To register for corporate tax in Dubai, businesses are required to register with the Federal Tax Authority (FTA). Businesses can apply for tax registration online through the official website of the FTA. During the application, the required documents such as business information, financial status and contact information of the business must be provided. Upon completion of the registration, the business is issued a Tax Registration Number (TRN), which is used for all tax transactions. You are also required to be registered for corporate tax filing and payment, which is necessary to fulfill tax obligations in Dubai. This process is critical for the business to fulfill its tax responsibilities and comply with local tax regulations.
Corporate tax in Dubai was introduced in the United Arab Emirates with the legislative update on 01.06.2023. According to this new regulation, a corporate tax of 9% has been introduced for businesses in Dubai. However, this tax only applies to businesses whose annual net profit exceeds AED 375,000. Small and medium-sized enterprises (SMEs) are exempt from corporate tax as long as they stay below this limit. This arrangement aims to increase tax revenues while maintaining Dubai's competitiveness as an international trade hub. At the same time, a transparent and sustainable tax structure has been established without deteriorating Dubai's business-friendly environment.
Dubai's corporate income tax measures have also raised questions as to whether businesses in the free zones will also be affected. However, some companies in free zones may be exempt from this tax under certain conditions. As Dubai becomes a major financial center for global business, the corporate tax reform creates new opportunities for local and foreign investors. Both local and international businesses can plan for the long term by taking these tax regulations into consideration.
Corporate tax filing in Dubai is done within the framework of the corporate tax regulations that came into effect in 2023. There are some steps and processes that businesses in Dubai need to follow to file their corporate tax return. Here is the corporate tax filing process in Dubai:
Businesses in Dubai have to file their corporate tax return within a specific period, usually at the end of each fiscal year. Although the tax period in Dubai is usually aligned with the calendar year, the fiscal year of businesses may be different. In this case, the tax return must be filed within 9 months from the end of the entity's fiscal year.
Businesses can submit their corporate tax return online through the Federal Tax Authority (FTA). The FTA is the official body that monitors and audits the tax obligations of businesses in Dubai. The return must be completed and submitted electronically through the FTA's official portal.
In preparing the declaration, the business must accurately declare its net income, expenses, taxable margin and other necessary information. Documents such as audit reports and financial statements may also be requested.
Following the filing of the tax return, the amount of tax due is calculated and must be paid within the specified period. Penalties and interest may apply if the tax debt is not paid. Businesses can still make the payment through the FTA portal.
The corporate tax filing process in Dubai has been made more transparent and faster through a digitized system. In order to fulfill their tax obligations on time, businesses should pay attention to the deadlines and rules set by the FTA.
It has been announced by the ministry that businesses with a turnover not exceeding AED 3,000,000 and valid until the end of 2026 throughout the United Arab Emirates can benefit from the small business discount. To give an example of how to benefit from this discount;
Example for benefiting from the small business discount;
You have a business located in the UAE and your tax period ends on December 31st of each year.
For the tax period ending on December 31, 2026, your company has income of AED 1,250,000. AED 1,300,000 in the previous tax period ending December 31, 2025, then your company is eligible for the small business deduction because it does not exceed the AED 3,000,000 limit .
Example of ineligibility for the small business deduction;
You have a business located in the UAE and your tax period ends on December 31st of each year.
For the tax year ending December 31, 2026, your company has income of AED 1,250,000. In the previous tax period ending December 31, 2025, your company earned an income of AED 3,100,000, your company will not be eligible for the small business deduction because it has exceeded the AED 3,000,000 limit .
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