Dubai businesses generally follow UAE corporate Tax and VAT rules and prepare financial statements under International Financial Reporting Standards (IFRS) or, where eligible, IFRS for small and medium-sized enterprises (SMEs).
The standard Corporate Tax rates are 0% on taxable income up to AED 375,000 and 9% above that amount, although qualifying free zone businesses may receive 0% treatment on qualifying income if they satisfy the applicable conditions.
Key Takeaways
- The 9% Corporate Tax rate applies only to the portion of taxable income over AED 375,000, not to the company’s entire taxable income.
- UAE-resident businesses generally must register for VAT when taxable supplies and imports exceed AED 375,000.
- Financial statements generally follow IFRS, but businesses with revenue not exceeding AED 50 million may use IFRS for SMEs.
- Qualifying free zone businesses can benefit from a 0% Corporate Tax rate on qualifying income.
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What accounting standards does Dubai use?
Dubai businesses generally use International Financial Reporting Standards (IFRS), while eligible businesses with revenue not exceeding AED 50 million may use IFRS for SMEs.
Dubai does not operate under a separate Dubai accounting framework for Corporate Tax purposes.
UAE Corporate Tax rules require taxable persons to prepare financial statements using accounting standards accepted in the UAE.
The FTA states that IFRS for SMEs may be used where revenue does not exceed AED 50 million in the relevant Tax Period.
This is important because Corporate Tax is linked to accounting profits.
A company's accounting net profit or loss is used as the starting point for calculating taxable income, after making the tax adjustments required by UAE law.
What taxes do businesses pay in Dubai?
The main taxes relevant to businesses are UAE Corporate Tax, Value Added Tax (VAT), and Excise Tax, with customs duties also potentially applying to businesses involved in imports.
Businesses in Dubai may be subject to several federal taxes rather than a separate Dubai-specific corporate income tax.
Corporate Tax
UAE Corporate Tax applies to taxable income earned by businesses within the scope of the Corporate Tax Law.
The standard rate is:
- 0% on taxable income up to AED 375,000
- 9% on taxable income exceeding AED 375,000
The tax is generally calculated starting with the accounting profit or loss reported in the financial statements, followed by adjustments required under the Corporate Tax Law.
Corporate Tax applies to UAE companies and other legal entities conducting business, subject to specific exemptions and special rules.
A natural person is generally subject to Corporate Tax when conducting a business or business activity in the UAE and the total turnover from those activities exceeds AED 1 million in a calendar year.
Wages, personal investment income and qualifying real estate investment income are excluded from this test.
Value Added Tax
The UAE has a standard VAT rate of 5%.
Businesses must generally register for VAT when the value of their taxable supplies and imports exceeds AED 375,000 over the previous 12 months or is expected to exceed that amount in the following 30 days.
Voluntary VAT registration is available once taxable supplies, imports, or taxable expenses exceed AED 187,500, subject to the applicable rules.
VAT registration can apply to both mainland and free zone businesses.
Being established in a free zone does not automatically remove a business from VAT obligations.
Excise Tax
Excise Tax rates are generally 100% for tobacco and tobacco products, electronic smoking devices and liquids, and energy drinks.
Sweetened drinks are now taxed under a tiered volumetric model introduced in 2026, with the rate determined by their sugar and sweetener content.
Customs duties
Businesses importing goods into Dubai from outside the GCC Customs Union generally pay a 5% customs duty on the CIF (cost, insurance and freight) value of the imported goods.
Higher rates apply to certain products, including 50% on alcoholic products and 100% on tobacco and tobacco products.
The exact duty treatment can vary according to the type and classification of the goods, their origin, and the applicable customs regime.
Dubai Customs uses the GCC Integrated Customs Tariff and HS classification system to determine the applicable rate.
For businesses involved in international trade, customs duties should therefore be incorporated into the company's costing, accounting, and tax compliance processes, particularly when calculating the landed cost of imported goods.
What documents are required for corporate tax filing in Dubai?
For a Dubai Corporate Tax filing, businesses generally need financial statements and records that support their taxable income, including invoices, bank statements, transaction records, asset and inventory records, and other relevant accounting documents.
The exact documents required can vary according to the business and the nature of its activities.
Common records include:
- Financial statements
- Records of business transactions
- Sales and purchase invoices
- Bank statements
- Asset registers
- Records of liabilities
- Inventory records
- Payroll records
- Loan and financing documents
- Sales and purchase ledgers
- Order records and delivery notes
- Relevant business correspondence
The Federal Tax Authority specifically notes that the records maintained should allow taxable income to be determined and verified.
It may also request the financial statements used to calculate taxable income.
Not every document necessarily needs to be submitted with the Corporate Tax Return itself.
Instead, businesses should maintain the supporting documentation in case it is required by the FTA or needed to substantiate the figures reported.
Businesses generally need to retain relevant tax records for at least seven years following the end of the relevant Tax Period.
What is the deadline for corporate tax filing in Dubai?
A Corporate Tax Return and any Corporate Tax payable are generally due within nine months from the end of the relevant Tax Period.
For example, a business with a financial year ending on December 31, 2025 would generally have until September 30, 2026 to file its Corporate Tax Return and settle the tax due.
The Tax Period generally follows the company's financial year.
Because the deadline is linked to the company's financial year rather than a universal calendar date, businesses should establish their specific filing deadline early and avoid waiting until the end of the nine-month period to prepare their accounts.
Free Zone vs Mainland Tax and Accounting Rules
Dubai mainland businesses are generally subject to the standard UAE Corporate Tax regime, while qualifying free zone businesses can benefit from a 0% Corporate Tax rate on qualifying income if they meet the required conditions.
|
Tax and Accounting Consideration |
Dubai Free Zone |
Dubai Mainland |
|
Corporate Tax |
A qualifying Free Zone Person can benefit from a 0% Corporate Tax rate on Qualifying Income if it meets the required conditions. |
Generally subject to the standard UAE Corporate Tax regime. |
|
Qualifying Income |
The 0% rate applies only to income that meets the requirements for the qualifying regime. |
Standard Corporate Tax rules generally apply, subject to applicable exemptions, deductions, and reliefs. |
|
Business Activities |
The nature of the business and its activities can affect whether income qualifies for the 0% rate. |
Business activities are generally subject to the standard Corporate Tax rules. |
|
Transactions |
Transactions with free zone, mainland, and other non-free-zone businesses can affect the treatment of income. |
Transactions are generally subject to the standard Corporate Tax rules. |
|
Accounting Records |
Businesses must maintain proper financial statements and records, particularly to demonstrate qualifying income. |
Businesses must maintain proper financial statements and accounting records for tax compliance. |
|
VAT |
Free zone status does not automatically exempt a business from VAT registration or compliance. |
VAT registration and compliance requirements apply when the relevant conditions and thresholds are met. |
Accounting requirements remain important for both structures.
Free zone status does not eliminate the need for proper financial statements and records, particularly where the company needs to demonstrate that its income qualifies for preferential Corporate Tax treatment.
When should a Dubai business hire an accountant or tax advisor?
A Dubai business should hire an accountant or tax advisor when its tax position becomes complex, a filing decision could create significant exposure, or it needs to structure transactions correctly before they occur.
Professional advice is particularly valuable when a business:
For smaller businesses, outsourced accounting and tax services may be more practical than hiring a full-time finance professional.
The important consideration is not simply whether a business has an accountant, but whether it has the right expertise before making decisions that affect its tax liability.
Businesses that need support can contact us to discuss their accounting and tax requirements and be connected with appropriate professional expertise in Dubai.
Conclusion
Dubai’s tax environment remains relatively competitive, but the introduction of Corporate Tax has made how a business is structured, recorded, and operated increasingly important.
For many companies, the key issue is no longer simply the headline 9% rate, but whether their accounting treatment, free zone status, transactions, and supporting records produce the right tax outcome.
The practical takeaway is to treat tax and accounting as part of business planning rather than as year-end compliance.
Getting the structure and accounting treatment right before entering transactions can be far more valuable than correcting them after a filing or FTA review.
FAQs
Is VAT mandatory in Dubai?
VAT registration is mandatory for a Dubai business when its taxable supplies and imports exceed AED 375,000, while voluntary registration is available above AED 187,500.
Why do people pay no tax in Dubai?
People generally pay no personal income tax in Dubai because the UAE does not impose a federal personal income tax on individuals.
However, businesses and individuals carrying out qualifying business activities can still be subject to Corporate Tax, while VAT and other indirect taxes also apply.
Does UAE use GAAP or IFRS?
The UAE uses IFRS rather than US GAAP for Corporate Tax purposes, with eligible businesses earning no more than AED 50 million in a Tax Period allowed to use IFRS for SMEs.
Businesses should therefore prepare their financial statements using the applicable IFRS framework.
How much is an accountant paid in Dubai?
An accountant in Dubai typically earns around AED 3,000–6,000 per month, with entry-level roles toward the lower end and experienced accountants earning AED 6,000 or more.
Senior accounting and finance positions can command significantly higher salaries.
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