UAE Business Taxes · 2025 Edition
New UAE Corporate Tax Updates & Compliance Requirements in 2025
A complete 2025 guide for UAE business owners, freelancers, investors, and companies operating under the new Corporate Tax Law. This explains the updated rules, filing requirements, exemptions, deadlines, and penalties you must understand to stay legally compliant.
Disclaimer: This is general information, not legal or tax advice. Corporate tax compliance changes frequently, and professional guidance is recommended.
1. Overview of UAE Corporate Tax in 2025
Corporate Tax (CT) in the UAE officially applies to financial years starting June 2023 onward. By 2025, thousands of businesses have completed their first full tax year under the system. This means 2025 is the year of active enforcement, compliance audits, updated rules, and penalty implementations.
The UAE Corporate Tax rate remains one of the most competitive globally:
- 0% tax on profits up to AED 375,000
- 9% tax on profits above AED 375,000
However, the biggest changes in 2025 revolve around:
- Updated compliance deadlines
- More strict Transfer Pricing enforcement
- Mandatory record-keeping for 7 years
- New rules for Free Zone companies
- Clarifications for small businesses and freelancers
- Heavier penalties for wrong or late filings
This guide breaks down everything a UAE business owner needs to know to stay compliant in 2025 and avoid costly mistakes.
2. Major Corporate Tax Updates Introduced for 2025
2.1. Mandatory Corporate Tax Registration for All Businesses
In 2025, every UAE business—including freelancers, sole proprietors, e-commerce sellers, influencers, and free-zone entities—must register for Corporate Tax, even if:
- they operate at 0% tax,
- they have no profit,
- or they are exempt.
Non-registration leads to immediate administrative penalties.
2.2. New Clarifications for Free Zone Corporate Tax “Qualifying Income”
Free Zone companies can still enjoy the 0% corporate tax rate in 2025, but only if they meet the new “Qualifying Income” tests. Updates include:
- Strict substance requirements (real office, employees, operations)
- Prohibition on “passive” mainland activity
- Mandatory documentation proving compliance
- 0% applies only to qualifying transactions
Any deviation from the rules can disqualify the Free Zone entity permanently from 0% tax.
2.3. Stricter Transfer Pricing (TP) Audits
Transfer Pricing is now a major focus of UAE tax audits. In 2025:
- Master file & Local file may be required for many SMEs
- Intercompany loans, royalty payments, and service fees must be “arm’s length”
- FTA can request TP documentation anytime
Companies engaged in related-party transactions must be fully ready.
2.4. Updated Rules for Small Business Relief
The UAE’s “Small Business Relief” scheme remains available in 2025 for taxable income under AED 3 million, but now includes:
- New anti-abuse rules
- Restrictions on artificial separation of businesses
- Mandatory documentation to justify eligibility
Businesses incorrectly claiming this relief risk future penalties.
3. Who Must Pay Corporate Tax in the UAE in 2025?
The UAE Corporate Tax applies to most business activities, including:
- Mainland companies
- Free Zone companies (for non-qualifying income)
- Foreign companies with UAE branches
- Freelancers and sole proprietors
- E-commerce sellers & online businesses
- Influencers & content creators
- SMEs and large corporations
The only businesses exempt from tax are those explicitly listed under the law, such as government entities, extractive industries, and specific investment funds.
4. Compliance Requirements for UAE Corporate Tax (2025 Rules)
4.1. Maintain Proper Accounting Records (7 Year Rule)
All companies must maintain audited financial statements and preserved accounting records for at least 7 years.
4.2. Prepare & File Corporate Tax Return Annually
Businesses must file a Corporate Tax return within 9 months from the end of their financial year. Failure to file = penalties + possible audits.
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