The introduction of UAE Federal Corporate Tax marks the most significant shift in the country's fiscal landscape in a generation. For businesses operating across the mainland and free zones, the practical questions are the same — and urgent: Where do we stand? What must we file? How do we structure for the years ahead?
What the law actually says
Federal Decree-Law No. 47 of 2022 introduces a headline corporate tax rate of 9% on taxable profits above AED 375,000, with a 0% rate below that threshold. The regime applies from financial years beginning on or after 1 June 2023, and captures juridical persons resident in the UAE, foreign entities managed from the UAE, and natural persons carrying on business activity above prescribed turnover limits.
The intent is not simply revenue collection — it is alignment with the OECD BEPS Pillar Two framework and the UAE's commitment to global tax transparency.
Who is affected, and to what degree
- Mainland companies — broadly captured, at 9% above the AED 375,000 threshold.
- Qualifying Free Zone Persons (QFZP) — may retain a 0% rate on qualifying income, provided substance, income, and de minimis tests are met.
- Multinational groups with consolidated global revenues above EUR 750 million fall under the OECD-aligned 15% top-up regime.
- Natural persons conducting business activity where turnover exceeds AED 1 million per calendar year.
Three actions to take now
1. Confirm your tax residency and registration status
Every taxable person must register with the Federal Tax Authority and obtain a Tax Registration Number. Missed deadlines carry administrative penalties. Even entities expecting to fall below the threshold should register to ensure the position is documented.
2. Review intercompany and related-party arrangements
Transfer pricing rules based on OECD guidelines now apply. Related-party transactions must be conducted on an arm's-length basis, and disclosure forms accompany the tax return. Legacy structures — management fees, IP holding, back-to-back financing — should be assessed for defensibility.
3. Reassess your free zone position
The 0% rate for free zone persons is conditional, not automatic. If your qualifying income is diluted by mainland-sourced revenue, or if adequate substance is not maintained in the free zone, the entire entity may fall to 9%. A structural review often reveals options that preserve the benefit.
How Ahlen Legal supports clients
Our corporate tax practice combines legal advisory with tax structuring, working alongside your finance team from registration through to audit defence. We advise on:
- Restructuring for QFZP eligibility and continued 0% treatment where achievable
- Transfer pricing documentation and controlled-transaction disclosures
- Group consolidation, tax group elections, and loss-utilisation strategies
- Voluntary disclosures, penalty mitigation, and FTA correspondence
If you would like a confidential review of your position, book a consultation and one of our senior advisors will be in touch within one business day.