Dubai corporate income tax full analysis: which enterprises can enjoy the 0% tax rate
2025-11-10
Author:joyce 
Source:Zhuoxin Enterprise 
Current online readers: 33 With the formal implementation of corporate income tax in the UAE from 2023, many companies operating in Dubai and other parts of the UAE, especially overseas companies, have paid more attention to tax compliance and preferential policies.
this paper will systematically sort out the development background of Dubai's corporate income tax, the conditions for applying the 0% tax rate, typical cases, and provide practical suggestions for enterprises.
the UAE has long been known as a "zero corporate income tax", attracting a large number of international companies. However, in order to adapt to the trend of tax reform in the global economy and enhance fiscal sustainability, the UAE announced the introduction of a corporate income tax system in 2022, which will take effect in the fiscal year beginning after June 1, 2023.
Core changes:
the standard tax rate is 9%
exemption for enterprises with annual net profit not exceeding 375000 dirhams
eligible businesses in the free zone can still enjoy a 0% tax rate.
1. Local enterprises (non-free zone)
annual net profit ≤ 375000 dirhams: exempt
the excess is taxed at 9%
2. Free Zone Enterprises: Qualified Free Zone Personnel (QFZP)
free zone enterprises to enjoy the 0% tax rate, must meet all of the following conditions:
revenue Compliance
at least 95% of income is "qualified income"
non-qualified income may not exceed 5% of gross income or 5 million dirhams (whichever is lower)
"Qualified Income" includes
transactions with other free zone personnel (the other party is the beneficiary)
engaged in "qualifying activities" (e. g. manufacturing, logistics, commodity trading, fund management, etc.)
revenue from qualifying intellectual property
substantial operating requirements
there are physical offices in the free zone.
Have sufficient staff and operating expenses to ensure the existence of business substance.
Business Activity Limitations
limited to qualified activities published by the Ministry of Finance
if you engage in "excluded activities" (e. g. banking, insurance, real estate development), you will not be eligible for the 0% tax rate.
Compliance Declaration
submission of audited financial statements
compliance with transfer pricing regulations and provision of related transaction documentation
case 1: Free Zone Logistics Company
business: Procurement of goods from overseas and distribution to Saudi customers through designated regions
tax treatment: belongs to "qualified activities", income is qualified income, applicable to 0% tax rate
case 2: Free Zone Sales Agency
business: Provide sales agency services for local publishing companies and collect commissions.
Tax treatment: does not involve the transfer of ownership of the goods, belongs to the service income, if the QFZP conditions are not met, the 9% tax rate applies.
Case 3: Local trading company
BUSINESS: WHOLESALE IN DUBAI DOMESTIC, PROFIT ANNUAL DREAM 400000
tax treatment: the excess 375000 (I. e. 45000) is taxed at 9%
how to make a reasonable plan for the sea enterprise?
Although Dubai's corporate income tax system has been implemented, enterprises can still effectively control the tax burden through reasonable business structure design and regional selection. Especially for offshore enterprises, the free zone architecture is still one of the preferred paths.
However, the policy details are complex, such as the determination of "qualified income", substantive operational requirements, transfer pricing compliance, etc., which require professional judgment.
We recommend: Before setting up or restructuring, communicate with a professional team with UAE tax practice experience to conduct comprehensive tax planning for your business model, customer structure, capital flow, etc. to ensure compliance and maximize policy dividends.
Zhuoxin Enterprise provides agency services such as domestic and foreign company registration, bank account opening, annual tax return, agency bookkeeping, trademark registration, ODI Overseas Investment Filing, etc. If you have any business needs in this area, please feel free to consult our online customer service!
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