UAE Corporate Tax Exemptions: Your Comprehensive 2025 Guide
As the second year of UAE corporate tax comes up, businesses establishing themselves in the Emirates must have a clearer understanding of the exemptions available to them than ever before. So, this guide gives the latest insights — specific to 2025 — on corporate taxes exempted.
UAE Corporate Tax: The Essentials
Effective from June 1, 2023, UAE corporate tax applies at:
- 0% for taxable income up to AED 375,000
- 9% for taxable income exceeding AED 375,000
Corporate Tax Rates
Free Zone Businesses
- Must engage in qualifying activities
- Adhere to economic substance requirements
- New for 2025: Stricter monitoring of mainland transactions
Government Entities
- Non-commercial entities owned or operated by the government
- Includes entities engaged in sovereign functions
Charities and Non-Profits
- Must be approved by the Federal Tax Authority (FTA)
- 2025 Update: New guidelines for proving public benefit activities
Small Businesses
- Taxable income below AED 375,000
- Note: Filing requirements still apply
Natural Resource Companies
- Both extractive and non-extractive businesses may qualify
- Subject to Emirate-level taxation on extractive income
Investment Funds
- Includes REITs and qualifying investment vehicles
- 2025 Focus: Enhanced transparency requirements
New for 2025: Emerging Sectors Exemptions
The UAE has introduced targeted exemptions for emerging sectors to boost innovation
- Renewable Energy Projects: 5-year tax holiday for qualifying green energy initiatives
- AI and Robotics Startups: 3-year exemption for companies developing cutting-edge technologies
- Space Industry: Special exemptions for companies contributing to the UAE's space program
Key Documents for 2025 Applications
- Assess Eligibility: Review the latest criteria, especially for new sector-specific exemptions
- Register with FTA: Mandatory for all businesses, even those seeking exemption
- Submit Application: Provide comprehensive documentation, including new requirements for 2025
- Await Approval: Processing times may vary; plan accordingly
- Maintain Compliance: Regular audits and reporting are crucial for retaining exempt status
Key Documents for 2025 Applications
- Certificate of Incorporation
- Trade license
- Audited financial statements (last 2 years)
- Detailed business activity description
- Economic substance documentation (for free zone entities)
- Proof of eligibility for sector-specific exemptions (if applicable)
Strategic Considerations for 2025
- Review Transfer Pricing: Ensure transactions with related parties are at arm's length
- Assess Substance Requirements: Free zone entities face increased scrutiny
- Plan for Digital Economy Taxation: New rules may affect e-commerce and digital services
- Consider Restructuring: Evaluate if your current structure optimizes tax benefits
Expert Tip: Preparing for 2026
While focusing on 2025 compliance, forward-thinking businesses should prepare for potential changes in 2026:
- Possible adjustments to tax rates
- Introduction of new sector-specific incentives
- Potential harmonization with global minimum tax initiatives
By staying informed and proactive, your business can maximize the benefits of UAE’s tax-friendly environment while ensuring full compliance with evolving regulations.
Need personalized guidance on navigating UAE corporate tax exemptions in 2025? Contact Hallerbos for expert consultation tailored to your business needs.[Contact Hallerbos Now] – Secure your tax exemption and propel your business forward in the UAE’s dynamic economy.