Overview
The introduction of UAE Corporate Tax on 1 June 2023 marked the most significant fiscal policy shift in the federation’s history. At a headline rate of 9% on taxable income above AED 375,000, with a 0% rate for Qualifying Free Zone Persons on qualifying income, the regime represents a carefully calibrated balance between revenue generation and maintaining the UAE’s competitive tax positioning.
Revenue Impact
The Federal Tax Authority began collecting corporate tax returns for the first applicable financial periods in 2024-2025. While official revenue figures remain limited, market estimates suggest first-year corporate tax revenue in the range of AED 30-50 billion, a meaningful contribution to government revenue diversification.
| Revenue Source | Pre-CT Share | Post-CT Share (Est.) |
|---|---|---|
| Oil & Gas Revenue | 60-65% | 50-55% |
| VAT & Excise | 8-10% | 8-10% |
| Corporate Tax | 0% | 8-12% |
| Fees & Charges | 15-18% | 14-16% |
| Investment Income | 10-12% | 10-12% |
Business Adaptation
The corporate tax regime has triggered significant restructuring activity across the UAE business landscape.
Free zone strategy. Companies with international revenue streams have accelerated migration to or establishment within qualifying free zones to benefit from the 0% qualifying income rate. DIFC, ADGM, JAFZA, and DMCC have all reported increased licence applications since CT implementation.
Transfer pricing. The introduction of arm’s-length transfer pricing requirements has compelled multinational enterprises to formalise intercompany pricing arrangements, often for the first time. This has created substantial demand for tax advisory and compliance services.
Group restructuring. Many family-owned conglomerates and holding structures have undergone significant reorganisation to optimise their CT position, including the consolidation of entities, rationalisation of intercompany transactions, and formalisation of governance structures.
Vision 2031 Relevance
Corporate tax revenue directly supports the Forward Ecosystem pillar’s government sustainability objectives by reducing fiscal dependency on hydrocarbon revenue. The tax regime also enhances the UAE’s compliance with international tax standards (OECD BEPS framework, EU tax governance requirements), supporting the Forward Diplomacy pillar’s positioning of the UAE as a responsible global economic participant.