Federal Decree-Law No. 47 of 2022 (Corporate Tax Law) and related regulationschapter by chapter

Article 2.1-2.2Article 2 - Cash Basis of Accounting Eligibility

A person may use the cash basis of accounting if revenue does not exceed AED 3,000,000, or with FTA approval in exceptional circumstances.

Article 4.1-4.2Article 4 - Applicable Accounting Standards

Taxable Persons must apply IFRS to determine taxable income under the Corporate Tax Law, while those with revenue not exceeding AED 50,000,000 may instead apply IFRS for SMEs.

Article 4.4-retRecord Retention — Qualifying Intellectual Property nexus-ratio records (ownership, expenditure, in

Records of Qualifying Intellectual Property nexus-ratio ownership, expenditure, income and linkage must be kept seven years after the relevant Tax Period ends.

Article 26.1-26.5Article 26 - Qualifying Group Transfers

Asset and liability transfers between Qualifying Group members with at least 75% common ownership need not trigger gain or loss recognition, but the relief is clawed back at market value if assets leave the group within two years.

Article 27.1-27.7Article 27 - Business Restructuring Relief

Taxable Persons may transfer their entire business without recognizing gains or losses if conditions are met; relief can be clawed back within two years under specific circumstances.

Article 60.1-60.3Article 60 - Assessment and Penalties

A person may face corporate tax assessments and administrative penalties under the Tax Procedures Law, as the Corporate Tax Law does not separately set penalty amounts.

Article 37.1-37.4Article 37 - Tax Loss Relief

Tax losses may be carried forward and offset against later Taxable Income, capped at 75% of that period's income before loss relief.

Article 39.1-39.3Article 39 - Limitation on Tax Losses Carried Forward (Ownership Continuity)

Tax losses may be carried forward only if the same persons continuously owned at least 50% of the taxable person from loss period through offset, and the business continued similarly after any ownership change above 50%; listed companies are exempt.

Article 18.1-18.3Article 18 - Qualifying Free Zone Person Conditions

A Free Zone Person keeps Qualifying Free Zone Person status and the 0% rate on Qualifying Income only while it maintains adequate substance, meets income, election and transfer pricing conditions; failure causes loss of status.

Article 19.1-19.2Article 19 - Election to be Subject to Corporate Tax

A Qualifying Free Zone Person may elect to be subject to standard Corporate Tax at 0% or 9% rates instead of the QFZP regime, effective from the current or following Tax Period.

Article 16.8-16.10Article 16 - Unincorporated Partnership Election

Partners in an Unincorporated Partnership can apply for taxable status, making the partnership liable for corporate tax, with one partner responsible for obligations.

Article 17.1-17.3Article 17 - Family Foundation Election

A family foundation may apply to the Federal Tax Authority to be treated as an unincorporated partnership for fiscal transparency if it meets beneficiary, asset-management, no-business and non-avoidance conditions, with the FTA able to request records to monitor compliance.

Article 45.1-45.2Article 45 - Withholding Tax

Payers of certain state-sourced income to non-resident persons must deduct withholding tax at 0% or a Cabinet-specified rate and remit it to the FTA in the prescribed form and timeline.

Article 48 - Corporate Tax Payment

A Taxable Person must settle its Corporate Tax Payable within nine months after the relevant Tax Period ends, or by any other date set by the FTA.

Article 49.1-49.2Article 49 - Corporate Tax Refund

A taxable person may apply to the FTA for a Corporate Tax refund where withholding tax credit exceeds tax payable, and the FTA must issue a decision notice.

Article 30.1-30.4Article 30 - General Interest Deduction Limitation

Taxable Persons may deduct net interest expenditure only up to 30% of accounting EBITDA, with excess carried forward for ten tax periods; banks, insurers and individuals are excluded.

Article 31.1-31.3Article 31 - Specific Interest Deduction Limitation

Interest paid on related-party loans used to fund dividends, share redemptions, capital contributions or acquisitions of related-party interests is non-deductible for corporate tax unless the main purpose test is met.

Article 32.1-32.2Article 32 - Entertainment Expenditure

Only 50% of entertainment, amusement or recreation expenditure on customers, shareholders, suppliers or business partners is deductible for corporate tax purposes in a Tax Period.

Article 61.1-61.2Article 61 - Transitional Opening Balance Sheet

A taxable person's corporate tax opening balance sheet is its financial-reporting closing balance sheet at the end of the prior financial year, prepared on arm's length principles.

Article 56.1-retRecord Retention — Tax Return supporting records / Taxable Income computation records

Tax records supporting returns and taxable income computations must be retained for seven years from the end of the relevant tax period.

Article 56.2-retRecord Retention — Exempt Person status evidence records

Exempt Person status evidence records must be retained for 7 years from the end of the relevant Tax Period.

Article 53.1-53.2, 53.7Article 53 - Tax Returns

Taxable Persons must file a corporate tax return with the FTA by nine months after the tax period ends, and Parent Companies file for their Tax Groups.

Article 54.1-54.2Article 54 - Financial Statements

The FTA may request financial statements used for Taxable Income within a prescribed timeline, and the Minister may require certain Taxable Persons to prepare audited or certified financial statements.

Article 55.1-55.4Article 55 - Transfer Pricing Documentation

Taxable persons above FTA thresholds for related party transactions must keep transfer pricing master and local files and submit them within 30 days of an FTA request.

Article 56.1-56.2Article 56 - Record Keeping

A taxable person must keep records supporting its tax return for seven years after each tax period ends; exempt persons must keep records evidencing exempt status similarly.

Article 58 - Change of Tax Period

Taxable persons may apply to the FTA to change their tax period start or end date, or adopt a different tax period, subject to FTA-prescribed conditions.

Article 59.1-59.2Article 59 - Clarifications / Advance Pricing Agreement

Persons may apply to the Federal Tax Authority for a corporate tax clarification or an advance pricing agreement on a proposed or completed transaction, in the prescribed form.

Article 20.1, 20.3, 20.5-20.6Article 20 - Determining Taxable Income / Accounting Method

Taxable Income is based on standalone financial statements under State-accepted accounting standards, and taxable persons may request FTA approval to switch from cash to accrual basis.

Article 21.1-21.3Article 21 - Small Business Relief Election

Resident Taxable Persons with revenue not exceeding the Minister-set threshold may elect Small Business Relief, being treated as having no Taxable Income, but losing exempt income, reliefs and loss relief.

Article 51.1-51.3Article 51 - Tax Registration

Taxable Persons must register for Corporate Tax with the FTA and obtain a Tax Registration Number, unless an exception is prescribed; certain Exempt Persons may also need to register.

Article 52.1-52.4Article 52 - Tax Deregistration

A person must apply for tax deregistration with the FTA when ceasing business, ensuring all tax obligations are met.

Article 34.1-34.11Article 34 - Arm's Length Principle

Related Parties must set transactions at arm's length, using accepted pricing methods; the FTA may adjust Taxable Income and make a corresponding adjustment to the Related Party.

Article 36.1, 36.6Article 36 - Payments to Connected Persons

Payments to Connected Persons are deductible for corporate tax only if at Market Value and wholly and exclusively for business; listed or regulated Taxable Persons are exempt.

Article 47.4-retRecord Retention — Foreign Tax Credit supporting records

Foreign tax credit supporting records must be retained for seven years from the end of the relevant tax period under the general federal corporate tax record-keeping rule.

Article 4.3-4.6Article 4 - Exempt Person

Qualifying investment funds and pension funds must apply to the FTA for corporate tax exemption, which ends from the first Tax Period in which conditions are no longer met.

Article 7.1(c), 8.1(d)Article 7-8 - Extractive / Non-Extractive Natural Resource Business

A Person claiming the Extractive or Non-Extractive Natural Resource Business exemption must notify the Ministry of Finance and keep separate financial statements for any non-exempt business exceeding 5% of total Revenue.

Article 9.3Article 9 - Qualifying Public Benefit Entity

The FTA may request information or records from a Qualifying Public Benefit Entity to monitor ongoing compliance with exemption conditions, within the deadline it specifies.

Article 40.1, 40.3-40.9Article 40 - Tax Group Formation

Resident parent companies may form a Tax Group with at least 95%-owned resident subsidiaries; the parent files and pays for the group, and members are jointly liable for tax.

Article 42.1, 42.11Article 42 - Tax Group Taxable Income / Consolidated Financial Statements

The Parent Company must consolidate subsidiaries' results, assets and liabilities, eliminating intra-Group transactions, to determine Tax Group Taxable Income, and the Tax Group must prepare consolidated financial statements.

Article 69 - Application to Tax Periods

The Corporate Tax Law applies to Tax Periods commencing on or after 1 June 2023.

Article 2, 3.1-3.2Article 2-3 - Imposition and Rate

Corporate Tax applies at 0% on taxable income up to the Cabinet-set threshold and 9% above it; Qualifying Free Zone Persons pay 0% on qualifying income and 9% on non-qualifying income.

Article 2.1-2.4Article 2 - Qualifying and Excluded Activities List

Qualifying activities for a qualifying free zone person include manufacturing, commodity trading, fund and wealth management, reinsurance, and headquarter services, while most dealings with natural persons, banking, and insurance are excluded.

Article 3 - De Minimis Requirements

QFZP non-qualifying Revenue is de minimis if it does not exceed 5% of total Revenue or AED 5,000,000, whichever is lower, in the Tax Period.

Article 4.4Article 4 - Qualifying Intellectual Property Income Record-Keeping

A qualifying free zone person claiming qualifying intellectual property income must keep records of ownership, expenditure, income and their link, and make them available to the FTA.

Article 5.1-5.2Article 5 - Additional QFZP Conditions (Audited Financial Statements)

A QFZP must keep non-qualifying revenue within the de minimis threshold and prepare audited financial statements; failing any condition loses QFZP status for that and four following Tax Periods.

Article 3.1-3.4, 4.1-4.3Article 3-4 - Qualifying Income and De Minimis

A Qualifying Free Zone Person's qualifying income covers free zone transactions, qualifying activities with non-free zone persons, and de minimis other income; permanent establishment income is excluded.

Article 7.1-7.2Article 7 - Adequate Substance and Outsourcing

Qualifying Free Zone Persons must conduct core income-generating activities in a Free Zone with adequate assets, qualified employees and operating expenditure, and may outsource if they adequately supervise the outsourced activity.

Article 2.1-2.3, 3.1-3.2Article 2-3 - Revenue Threshold and Additional Conditions

Small Business Relief requires Revenue not exceeding AED 3,000,000 in each relevant and previous Tax Period, and excludes MNE group constituents and Qualifying Free Zone Persons.

Article 6.1-6.2Article 6 - Artificial Separation of Business

Where businesses are artificially separated to combine revenue above the AED 3,000,000 threshold while claiming Small Business Relief, the arrangement is treated as a corporate tax advantage under the General Anti-Abuse Rule.

Article 2.1-2.5, 3.1-3.5, 4.1-4.3Article 2-4 - Transitional Gain Exclusion Elections

A taxable person may elect per asset, generally irrevocably, to exclude pre-Corporate Tax gains on property, intangibles and financial assets held at historical cost, made on the first return.