06 Jul
2025
For years, the UAE has been a beacon for entrepreneurs seeking tax freedom, offering no income tax, no capital gains tax, and simple incorporation structures. But in 2025, the truth isn’t black and white. While the country still offers major tax advantages compared to most of the world, the introduction of corporate tax and other regulations means business owners must now pay closer attention to compliance. This doesn’t make the UAE any less attractive — it just makes being informed more important than ever. In this detailed guide, we explore the updated tax structure, what’s changed, and how you can build a fully compliant business in the UAE without missing out on its incredible benefits.
The image of the UAE as a zero-tax paradise is partially true — but increasingly misleading. While individuals continue to enjoy zero personal income tax, and most foreign investments remain untaxed, businesses operating in the country are now under a more structured regulatory environment. The introduction of a federal corporate tax law has made it clear that while the UAE still promotes economic freedom, it also expects businesses to operate transparently. Entrepreneurs can no longer assume full tax exemption by default. The good news? With smart structuring, many businesses can still enjoy significantly lower tax burdens — or even qualify for 0% corporate tax legally.
Whether you’re setting up in the Mainland, a Free Zone, or even operating remotely with a UAE license, it’s crucial to understand the various tax types that may affect your business. Corporate tax is just the beginning. You also need to be aware of VAT, excise duties (if applicable), import duties, and the compliance requirements attached to each. While none of these are as aggressive or layered as in Western countries, they’re real — and failing to plan for them could lead to penalties. Here’s an updated view of the tax types that exist in the UAE as of 2025:
| Tax Type | Rate | Applies To | Notes |
|---|---|---|---|
| Corporate Tax | 9% | Profits above AED 375,000 | Introduced in 2023, enforced strictly by 2025 |
| Value Added Tax | 5% | Most goods & services | Mandatory VAT registration above AED 375,000 revenue |
| Excise Tax | 50%–100% | Specific goods (tobacco, sugary drinks) | Applicable to industry-specific businesses |
| Import Duty | 5% (avg) | Imports into Mainland UAE | Free Zones may be exempt, depending on re-exporting |
| Income Tax | 0% | Individuals | No income tax on salaries, capital gains, or dividends |
The UAE’s introduction of corporate tax was a significant move — aimed at aligning the country with global tax standards, improving transparency, and preventing base erosion. As of 2025, businesses earning profits above AED 375,000 annually are subject to a flat 9% corporate tax. This sounds simple, but the application depends on how your company is structured, where it operates, and the nature of your revenue. Even small businesses and freelancers are expected to register and file tax returns, even if they don’t owe anything. Knowing when the 9% applies — and when it doesn’t — is key to making informed business decisions.
| Profit (Net) | Corporate Tax Rate |
|---|---|
| Up to AED 375,000 | 0% |
| Above AED 375,000 | 9% |
Free Zones have long been promoted as 100% tax-free environments, and in many cases, that’s still true — if you meet specific conditions. In 2025, being a Free Zone company doesn’t automatically exempt you from corporate tax. You must be recognized by the FTA as a Qualifying Free Zone Person (QFZP) to maintain your 0% corporate tax status. This qualification depends not only on where you’re licensed but also on how you earn your income, who your clients are, and whether you maintain a physical presence in the Free Zone. If you engage in certain activities with the Mainland, or fail to meet reporting obligations, you could lose this benefit.
To qualify for 0% tax as a QFZP, you must:
Be registered in a UAE Free Zone
Have adequate substance (office space, presence) in the Free Zone
Earn income only from eligible activities, such as other Free Zone companies or foreign clients
Avoid direct trading with the UAE Mainland (exceptions apply)
Maintain audited financials
File tax returns and be registered with the FTA
Failing to meet any of these could disqualify you from the 0% benefit — turning your Free Zone company into a fully taxable one at 9%.
Many founders assume they’ll be taxed — when in fact, they might be exempt entirely. The UAE government has made it clear that startups, small businesses, and certain Free Zone companies won’t be burdened unless their profits cross AED 375,000/year. Additionally, some government-related or regulated entities are also excluded. Knowing whether you fall under an exemption can save you money — and reduce compliance stress.
Your business profits are under AED 375,000/year
You qualify as a QFZP in a Free Zone
You’re a government-owned entity or public benefit organization
Your income comes from capital gains or qualified dividends
You’re a foreign company with no permanent establishment in the UAE
Important: Exemption does not mean you skip registration. All entities must register and file with the FTA.
Whether or not you owe tax, the registration requirement is universal. Every business with a valid trade license — including freelancers, e-commerce stores, agencies, and startups — must register for corporate tax through the UAE’s EmaraTax platform. This is part of a broader movement toward transparency and data-driven regulation. Filing even at 0% is mandatory and missing this step can result in fines. Registering also gives your business credibility with banks, partners, and regulators.
EmaraTax account (https://eservices.tax.gov.ae)
Trade license copy
Emirates ID or passport copy of the owner
Projected or audited financials
Once processed, you’ll receive a Corporate Tax Registration Number (TRN) to be used in all future filings.
This is one of the most misunderstood parts of the tax law — and a major reason businesses lose their 0% tax benefit. Qualifying income means revenue that comes from transactions which meet the FTA’s criteria for tax exemption. If you receive most of your revenue from other Free Zone companies or international clients, and don’t deal directly with the UAE mainland, your income is likely qualifying. But the moment you start invoicing clients inside Mainland UAE — without proper distribution structures — you risk losing that tax-free status.
Sales to other Free Zone entities
Exported services or products to clients outside the UAE
Certain warehousing, support, or technical services (case-dependent)
If in doubt, always check before making structural decisions. At Bizvisor, we help you analyze and plan your income streams to remain compliant.
Introduced in 2018, VAT continues to apply independently of corporate tax. Even if your business pays zero corporate tax, you might still need to charge VAT — and file quarterly returns. The 5% VAT applies to most goods and services sold within the UAE. If your annual turnover exceeds AED 375,000, you must register. You can also voluntarily register if turnover exceeds AED 187,500 — which often helps with vendor relationships and input tax credits.
Proper invoicing
Quarterly filings
Input/output tax reconciliation
Correct VAT registration linked to your license
Failure to file VAT or incorrect calculations can result in heavy fines.
The FTA takes compliance seriously. Penalties apply for late filings, non-registration, and incorrect disclosures. Many businesses assume that filing late — especially if they don’t owe any tax — won’t be a problem. Unfortunately, that’s not the case. Even a 0% tax return must be filed on time to avoid administrative penalties.
| Violation | Penalty |
|---|---|
| Failure to register | AED 10,000 |
| Late return filing | AED 500/month (up to 12 months) |
| Late payment | 1% per month + interest |
| Incorrect/incomplete disclosures | Up to 300% of the unpaid tax |
One of the most common questions we hear at Bizvisor is from freelancers and solo entrepreneurs: “Do I need to pay corporate tax?” The answer depends entirely on your annual net profit. In 2025, if you’re a freelancer licensed in the UAE (through a Free Zone or Mainland) and you earn over AED 375,000 in net profit, you are legally obligated to register and pay 9% corporate tax. However, if your profit is below that threshold, you’re exempt from paying — but still required to register with the FTA.
This applies even to small creators, consultants, and online business owners. If you’ve been issued a trade license, the government considers you a taxable person unless stated otherwise. Registering ensures you’re on the right side of the law — and opens doors to banking, payment gateways, and other professional tools.
Understanding how the rules apply in real life is the best way to make sense of corporate tax. Here are a few common scenarios Bizvisor encounters:
Example 1: Free Zone E-commerce Business
License: Free Zone (e.g., Sharjah Media City)
Revenue: AED 800,000
Profit: AED 420,000
Clients: 90% international, 10% Free Zone
Status: Qualifies for 0% corporate tax (QFZP), assuming audited financials and proper registration
Example 2: Mainland Retail Store
License: Dubai Mainland
Revenue: AED 1.5 million
Profit: AED 700,000
Clients: Local UAE walk-in customers
Status: Subject to 9% corporate tax on AED 325,000
Example 3: Freelance Graphic Designer
License: Freelance Permit in a Free Zone
Earnings: AED 220,000/year
Status: No tax payable, but registration required
These examples show how structure, location, and profit levels play a huge role in determining your tax liability.
Missing tax-related deadlines can be costly. The UAE’s Federal Tax Authority (FTA) has set clear timelines for when to register, file, and pay — and it’s every entrepreneur’s responsibility to track them. Here’s what you should know:
| Action | Deadline |
|---|---|
| Corporate Tax Registration | As per FTA timeline (ASAP recommended) |
| First Corporate Tax Return Filing | 9 months after end of first fiscal year |
| VAT Return Filing | Quarterly (based on FTA calendar) |
| Annual Financial Statement Submission | Along with return filing |
At Bizvisor, we track these dates for our clients and set up reminders and documentation support to ensure you’re always compliant — without having to manage the stress yourself.
Setting up your business is only the beginning. True success lies in staying compliant, optimizing your tax position, and avoiding costly surprises. That’s where Bizvisor becomes more than just a setup partner — we act as your ongoing growth ally.
Here’s what we offer:
Tax-compliant business setup (zone selection, licensing, documentation)
Corporate tax registration and TRN support through EmaraTax
Qualification analysis for Free Zone tax benefits (QFZP eligibility check)
VAT registration and return support
Audit-ready documentation assistance
Ongoing updates on regulatory changes
Many businesses unknowingly enter structures that increase their tax exposure — or worse, become non-compliant. Our goal is to help you avoid that from day one.
👉 Explore Bizvisor’s Free Zone Services
👉 Contact Our Experts for a free tax impact review
The UAE isn’t a zero-tax paradise anymore — but it remains one of the most tax-efficient ecosystems in the world. Whether you’re a first-time founder, a solo freelancer, or an expanding international brand, you can still enjoy incredible financial advantages here. The key is understanding the new rules and structuring your company the smart way.
At Bizvisor, we help you go beyond just setting up a business. We help you build one that lasts — compliant, scalable, and ready for long-term growth in a dynamic and globally respected market.
Ready to launch or restructure your business with full tax clarity?
Let’s talk. The first consultation is on us.
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