UAE Corporate Tax: what changes at the AED 375,000 threshold
How the 0% and 9% bands work and what to prepare before your first return.
The timeline
| When | What |
|---|---|
| Before 31 December 2026 | Decisions that must be in place during the tax period: related-party pricing, owner pay, agreements, elections you plan to make |
| January to March 2027 | Close the books and prepare financial statements |
| April to June 2027 | Audit, where required, and the taxable income calculation |
| By 30 September 2027 | File the return and pay the tax on EmaraTax |
The return and payment are due within nine months of the end of the tax period. Leaving the work until the summer means any problem found then cannot be fixed for 2026, only explained.
Before 31 December
- Confirm registration. Check that the company, and every entity in the group, is registered for Corporate Tax and that the details on EmaraTax are current. Registration is required even when no tax is due.
- Review payments to owners and directors. Salaries, bonuses and benefits paid to shareholders and directors are deductible only up to a market value for the work actually done. Agree and document the basis now, not after the year has closed.
- Put related-party arrangements in writing. Loans from shareholders, services between sister companies and shared costs should have written terms and an arm's length price. See transfer pricing basics for owner-managed companies.
- Decide on Small Business Relief. If revenue is AED 3 million or less, 2026 is the last year the relief is available for a December year-end, unless the rules are extended. Weigh it against any tax losses you would give up. More in Small Business Relief explained.
- Check free zone conditions. A free zone company relying on 0% as a Qualifying Free Zone Person must meet every condition for the whole year, including substance and limits on non-qualifying income. A failure in one year can affect the following four years too.
- Clean up the books. Reconcile bank, receivables, payables and intercompany balances before year-end, so the closing accounts start from reliable numbers.
After year-end
- Prepare IFRS financial statements. Taxable income starts from the accounting profit, so the accounts must be complete and correct. Businesses with revenue of AED 50 million or less may use IFRS for SMEs.
- Arrange the audit if required. Audited statements are required for Qualifying Free Zone Persons and for businesses with revenue above AED 50 million. Book the auditors early; spring is their busiest season.
- Calculate taxable income. Start from accounting profit and make the adjustments the law requires. Common ones are listed below.
- Use losses correctly. Tax losses brought forward can reduce taxable income by up to 75% of the taxable income for the year, so some tax may still be due in a year with large past losses.
- Prepare any required disclosures. Businesses with significant transactions with related parties or connected persons may need to file disclosure forms with the return. Check the current thresholds before filing.
- File, pay and keep the file. Submit on EmaraTax and pay by 30 September 2027. Keep the working papers and supporting records for at least seven years.
Common adjustments from accounting profit
| Item | Typical treatment |
|---|---|
| Client entertainment | 50% of the cost is not deductible |
| Fines and penalties | Not deductible |
| Donations | Deductible only when made to a qualifying public benefit entity |
| Net interest costs | Deductible up to the higher of AED 12 million or 30% of adjusted EBITDA |
| Payments to connected persons | Deductible only up to market value |
| Dividends from UAE companies | Exempt income, removed from taxable income |
A Corporate Tax return is only as good as the accounts and the decisions behind it. December is when you can still change the facts.
The one-page checklist
- Registration and EmaraTax details confirmed for every entity
- Owner and director pay documented at market value
- Related-party agreements signed and priced
- Small Business Relief or other elections decided
- Free zone conditions tested for the full year
- Books reconciled and closed; IFRS statements prepared
- Audit booked where required
- Taxable income reconciliation with every adjustment explained
- Disclosures prepared where thresholds are met
- Return filed and tax paid by 30 September 2027; records kept for seven years
This article is general information based on UAE Corporate Tax rules as published by the Federal Tax Authority and the Ministry of Finance. It is not advice for your business, and thresholds and guidance change. Ask Hassan to review your position before year-end.
Official sources: Federal Tax Authority · UAE Ministry of Finance
