For many years, the United Arab Emirates was known globally as a tax-free haven, attracting entrepreneurs and investors from around the world. While this reputation still holds in several key areas, the UAE has recently entered a new phase of corporate taxation to align with international standards and encourage long-term economic sustainability.
While it’s true that the UAE has introduced corporate tax, it remains one of the most competitive jurisdictions globally. With a capped corporate tax rate of just 9 percent, the UAE sits well below the global average of 23.51 percent, as highlighted in the 2024 Tax Foundation study. Combined with zero personal income tax and full foreign ownership options in designated free zones, the UAE continues to offer an exceptionally attractive environment for businesses and investors. Beyond fiscal advantages, the UAE consistently ranks among the safest countries in the world and offers an exceptional quality of life. Its world-class infrastructure, global air connectivity, and business-friendly regulatory environment make it one of the easiest places to establish and grow a business, particularly for those with international ambitions.
At Stratos, we help business owners, startups, and investors understand and navigate this evolving tax environment, ensuring full compliance while maximizing the strategic advantages available under the UAE’s business-friendly tax regime.
The UAE continues to offer one of the most competitive tax environments globally. Key taxes that may apply to businesses include corporate tax, value-added tax (VAT), customs duties, and excise taxes. The federal corporate tax, introduced in June 2023, applies at a rate of 9% on taxable profits exceeding AED 375,000 (USD 100,000) annually . VAT is charged at a flat 5% on most goods and services. There is still no personal income tax in the UAE, allowing individuals to retain 100% of their salaries and profits, and customs duties remain at a standard 5% depending on the type and origin of imported goods. Additionally, excise tax applies to products such as tobacco, sugary drinks, and energy drinks, with rates reaching up to 100%. Businesses operating in free zones may benefit from partial or full tax exemptions, subject to specific qualifying criteria and compliance requirements.
The introduction of corporate tax marks a significant shift in the UAE’s financial landscape. All companies operating in the mainland and certain free zones are now subject to corporate income tax. Foreign entities with a permanent establishment in the UAE and self-employed individuals, including freelancers, are also subject to this tax if their annual profits exceed AED 375,000. Profits below this threshold are taxed at 0% to support small and medium-sized enterprises. A 9% corporate tax rate applies to profits above this limit, while certain multinational corporations may be subject to a 15% rate under the OECD’s global minimum tax framework.
Free zone companies can still enjoy a 0% corporate tax rate on qualifying income, provided they meet conditions related to substance, economic activity within the UAE, and compliance with transfer pricing and other regulatory standards. At Stratos, we assist businesses in determining their eligibility for free zone tax benefits and help them remain fully compliant with the Federal Tax Authority’s guidelines.
Value-added tax, first introduced in 2018, is now a standard part of doing business in the UAE. Companies with taxable supplies exceeding AED 375,000 (USD 100,000) per year are required to register for VAT and submit monthly or quarterly returns .Businesses must issue proper tax invoices, maintain accurate accounting records, and pay VAT amounts to the Federal Tax Authority on time. Our team supports businesses in registering for VAT, maintaining correct documentation, and ensuring full compliance with reporting obligations.
Despite these tax developments, one of the UAE’s most attractive benefits remains unchanged: there is still no personal income tax. This continues to provide a significant advantage for business owners and employees alike, who retain all their income, dividends, and capital gains unless taxed by their country of citizenship or other foreign tax obligations.
At Stratos, we provide a full suite of tax planning and compliance services designed to help your business adapt and grow. Our offerings include corporate tax registration and filing, VAT registration and return submission, and strategic advisory on free zone versus mainland structures. We also guide clients on transfer pricing regulations, Economic Substance Requirements (ESR), international structuring, and financial reporting standards. Additionally, we help businesses secure tax residency certificates and manage cross-border compliance.
If your business generates more than AED 375,000 (USD 100,000) in annual profit, you are required to register for corporate tax with the Federal Tax Authority and begin submitting tax returns. Failing to do so can result in significant penalties and legal complications. Our experts will assess your tax liability and manage every aspect of the registration and compliance process on your behalf, giving you peace of mind and allowing you to focus on business growth.
As the UAE continues to modernize its regulatory framework in line with international financial norms, staying ahead of tax obligations is more important than ever. At Stratos, we ensure your business is structured optimally, remains compliant with the latest regulations, and is positioned to benefit from the UAE’s pro-growth environment.