Accounting, VAT and corporate tax: what you actually have to do

01Corporate tax: the thresholds and the dates

The rate is 0% on the portion of taxable profit at or below 375,000 AED, and 9% above that. It applies to financial years starting on or after 1 June 2023.

Registration with the Federal Tax Authority must happen within three months of incorporation for companies formed since 1 March 2024. Being late costs 10,000 AED. There is a relief measure: the penalty is waived, or refunded if already paid, when the return for the first tax period is filed within seven months of its end. That measure only applies to the first period.

The return and the payment are due within nine months of the end of the financial year. A year ending 31 December must be filed before the end of September the following year.

02Small Business Relief expires at the end of 2026

This is the most important thing on this page, and the least read. Small Business Relief lets a company with less than 3 million AED of turnover be treated as having no taxable profit. But it only applies to financial years ending on or before 31 December 2026.

In other words: if your year ends after that date, you become taxable again under the standard rules. The relief is also closed to free zone companies that hold Qualifying Free Zone Person status, and to members of large multinational groups.

03Free zone: the 0% is not automatic

Many people think a free zone company is exempt by nature. That is wrong: the 0% rate applies only to qualifying income, and to five cumulative conditions. You need real substance in the zone — assets, full-time staff, operating expenses —, you must earn qualifying income, you must not have elected for the standard regime, you must respect transfer pricing, and you must have your accounts audited whatever your turnover.

Non-qualifying income must not exceed the lower of two thresholds: 5% of total income, or 5 million AED. Above that, the status is lost for the current year and the four that follow. Five years at 9% for one qualification error: that is the heaviest penalty in the whole system.

04Audit, records, and the obligation that no longer exists

An audit is mandatory with no turnover threshold for free zone companies holding Qualifying Free Zone Person status. For everyone else, it becomes mandatory from 50 million AED of turnover. Careful: the free zone itself may require one regardless of tax rules.

Records must be kept for at least seven years after the end of the tax period concerned, including for exempt persons.

Finally, one piece of good news few websites pass on: ESR reporting obligations have been removed for financial years ending after 31 December 2022. If a provider still bills you for an annual economic substance filing, ask them which text they are relying on.