The Essentials 

The UAE’s first corporate tax season revealed both challenges and opportunities. Key pitfalls included misaligned first tax periods, free-zone misunderstandings, transfer pricing gaps, and cash-flow stresses. Businesses that invested in robust accounting, governance, and documentation mitigated risks and positioned themselves strategically. Looking toward 2026, proactive planning, clear compliance, and smart tax structuring will turn corporate tax from a regulatory obligation into a competitive advantage. 

The UAE’s corporate landscape entered uncharted territory when the Corporate Tax (CT) regime came into effect for financial periods starting 1 June 2023. For decades, the UAE was celebrated for its zero-tax environment, but this shift marked a new era of fiscal maturity, transparency, and alignment with global standards. 

Now, as businesses reflect on the inaugural CT season, the focus is shifting toward 2026 and beyond – the first full year under the regime where experience, systems, and strategic planning will truly determine winners. With evolving rules around free-zone benefits, transfer pricing, and global minimum tax compliance, companies that leverage lessons from the first season can turn UAE corporate tax compliance into a tool for competitive advantage, rather than just a compliance obligation. 

Let’s explore the lessons learned from the first UAE CT season, highlighting common pitfalls, compliance challenges, and strategic opportunities, while also preparing businesses for the next chapter of UAE taxation in 2026. 

Setting the Context: Why the UAE Introduced Corporate Tax? 

Understanding the backdrop helps explain why the first season feels so consequential. 

• Policy shift and alignment: The UAE’s CT regime is not just about raising revenue. It’s about aligning with international best practices, creating a more sustainable non-oil revenue base, and signaling to global investors that the UAE operates like a mature, regulated economy. 

• Global minimum tax (Pillar Two): The UAE’s CT law lays the foundation for its participation in global minimum tax regimes. Indeed, the “domestic minimum top-up tax” (DMTT) – 15% – for large multinational enterprises (MNEs) takes effect in financial years starting 1 January 2025. 

• Free zone considerations: The law respects the strategic role of free zones in the UAE economy. However, the zero‑percent rate for Qualifying Free Zone Persons is tightly conditioned, not automatic.  

• International principles: The UAE’s Corporate Tax and Transfer Pricing (TP) regime largely adheres to the OECD’s arm’s‑length principle, demanding related-party transactions reflect “market value.” 

This wider policy purpose means that the first CT season was never just about “let’s file a return.” It was a test of how deeply the UAE’s private sector could adapt to a new paradigm  of governance, discipline, and tax transparency. 

UAE Corporate Tax Compliance: Milestones & First‑Season Realities 

To evaluate lessons of UAE corporate tax compliance, it’s helpful to map out what actually happened during the first season: registrations, filing deadlines, and initial compliance dynamics. 

Registration Surge & Scale 

• The Federal Tax Authority (FTA) reported over 640,000 business registrations for corporate tax. 

• This high uptake reflects broad awareness but also the challenge: many of these entities are small, new, or lightly active, which raises questions about data readiness, financial record-keeping, and compliance capacity. 

Filing Deadlines & First Returns 

• Under the CT Law, taxable persons must file their CT return electronically within 9 months after their tax period ends. 

• For many companies with calendar-year financials (1 Jan to 31 Dec), the first filing deadline is 30 September 2025.  

• The FTA imposed and continues to emphasize strict deadlines: non-filing or late-filing carries escalating penalties.  

• For free-zone and other special-category entities, there was initial ambiguity around “first tax period” definitions. The FTA issued a Public Clarification to clarify that the first tax period could vary (six to 18 months in certain cases), depending on the company’s accounting year.  

Free Zone and Qualifying Income Rules 

• The UAE clarified free-zone taxation via Cabinet Decision No. 55 of 2023 and Ministerial Decision No. 139 of 2023, which define “qualifying activity” and “qualifying income” for zero‑rate purposes.  

• These decisions are critical: not all free zone entities automatically enjoy 0% CT. Only those meeting specific criteria (substance, activity, TP compliance) qualify.  

Transfer Pricing Framework 

• The CT Law introduced TP rules effective from the first tax period, requiring related-party transactions to be at arm’s length.  

• The FTA published a Transfer Pricing Guide to help taxpayers understand obligations, documentation, and benchmarks.  

Key Pitfalls & Compliance Challenges 

The first CT season has surfaced several recurring pain points. For accurate UAE corporate tax compliance, companies are grappling with real operational, financial, and governance challenges. 

Mis‑determining the First Tax Period for UAE Corporate Tax Compliance 

• One of the most fundamental errors businesses made was misaligning their first tax period. 

• Companies whose financial year starts before 1 June 2023 may have assumed that their existing year-end is their first CT period, but the FTA clarified that the first tax period begins only for the first financial year starting on/after 1 June 2023.  

• There are also special rules for non-resident companies with a UAE permanent establishment (PE): the first tax period may be the period of the PE’s operations, subject to certain conditions.  

• These miscalculations create risks: incorrect filings, need for amendments, or even penalties if first-period income or losses are misstated. 

Lesson: Establish and clearly document your first tax period via board resolutions, accounting policies, and tax calendars. Verify with tax advisors and align with FTA clarifications early. 

Underestimating Registration and Late‑Registration Risk 

• Even though the law has been in place, many businesses underestimated the urgency of registration. 

• The FTA has made clear: not registering on time may trigger penalties. According to some accounts, an AED 10,000 fine is levied for late registration. 

• Importantly, there was a relief initiative: the FTA and Ministry of Finance announced a waiver for the AED 10,000 penalty if the first CT return (or annual statements) is filed within 7 months from the end of the first tax period.  

• But relying on such relief is risky: policy may change, clarifications may reduce eligibility, and non-registrants may find themselves scrambling under pressure. 

Lesson: Don’t treat registration as a box‑ticking exercise. Register early, confirm status, and ensure your first return timeline allows use of any available relief. 

Liquidity & Cash‑Flow Stress 

• Many business leaders are realizing that UAE corporate tax compliance has real cash flow implications. 

• If tax payments are not planned, firms may end up using short-term funding or dipping into reserves, which can strain operations. 

• Compounding this, some companies lack a formal tax provision process during the year. Without a provision, they might face a nasty surprise when the tax liability crystallizes at year-end. 

Lesson: Establish a tax provisioning model. Integrate CT cash planning into your financial forecasting. Begin conversations now (well ahead of filing) about how to manage liquidity, especially if the first return is significant. 

Record-Keeping & Accounting Challenges 

• Transitioning to a CT regime also forced many businesses to confront the quality of their financial records. 

• Some SMEs have never maintained audited accounts or reconciled opening balances properly. The introduction of CT now requires rigor –  accurate GL, reconciliations, and proper accounting bases.  

• There are accounting-versus-tax adjustments: non-deductible expenses, timing differences, deferred tax considerations, etc. Without a tax‑accounting team or process, these reconciling items are being left to year-end, creating risk. 

• For financial reporting, some businesses may need to revisit their accounting policies (e.g., revenue recognition, provisioning, impairment) in light of CT’s tax base. 

Lesson: Tighten your accounting processes now. Invest in reconciliations, align your GL with tax workpapers, and ensure auditors and tax teams collaborate closely. Document all reconciling items and tax accounting assumptions to make future filings smoother and defensible. 

Transfer Pricing Documentation Burden 

• TP compliance turned out to be a more significant burden than many expected. 

• The CT Law requires documentation to show that intra-group and related-party transactions comply with arm’s-length pricing.  

• The FTA’s TP Guide outlines the need for a Master File, a Local File, and possibly benchmarking studies.  

Some areas remain unclear, notably: 

• Which entities or transactions cross the TP disclosure threshold?  

• What mark-up is acceptable for “low value-adding” intra-group services?  

• Whether “ordinary course” transactions are exempt from disclosure.  

Advance Pricing Agreements (APAs) may be possible, but uptake is likely to be slow in the first cycle given unfamiliarity. 

Lesson: Don’t wait until year-end to tackle TP. Develop or refine TP policies now, conduct benchmarking, prepare documentation, and engage advisors. Even if you believe your mark-ups are conservative, you need to support them with data for accurate UAE corporate tax compliance. 

Free‑Zone Misconceptions & Substance Risk 

• Free zones were once seen as tax havens. Under the CT regime, the 0% rate is attractive but many businesses made flawed assumptions. 

• A Qualifying Free Zone Person (QFZP) must meet specific activity and substance requirements. Cabinet Decision No. 55 of 2023 and Ministerial Decision No. 139 of 2023 outline which activities qualify.  

• “Qualifying income” is defined narrowly: not all revenues of a free-zone entity may qualify for 0% rate. Some non-qualifying income will be taxed at 9%.  

• Related-party pricing: TP rules apply even to free-zone entities seeking 0% CT. If related-party transactions are not at arm’s-length, or substance is lacking, the benefit may be challenged.  

Lesson: For free-zone entities, assume 0% is not automatic. Map your operations, document substance, and ensure you meet the regulatory definitions of “qualifying” activity and income. Prepare for TP scrutiny. 

First-Year Systems, Governance & Ownership Gaps 

Perhaps the most pervasive challenge has been operational infrastructure and internal ownership: 

• In many firms, tax remains siloed: finance teams did not set up a dedicated tax owner, so CT tasks fell through the cracks. 

• Some businesses did not have a tax calendar or tax-close process; CT items like documentation, reconciliations, board approvals, and return preparation were left to the last minute. 

• The FTA portal, while digital, has capacity constraints. Late filers risk system congestion, extra stress, and possible penalties. Reddit 

• The lack of familiarity  both with CT law and with FTA’s filing infrastructure meant many taxpayers had a steep learning curve. Errors in API, form filling, or disclosures were not uncommon. 

Lesson: Build a robust internal UAE CT compliance model. Assign a tax lead (or team), establish tax workflows and a calendar, and proactively engage with the FTA portal. Early mock filings and dry runs will pay off. 

Strategic Opportunities Emerging from UAE Corporate Tax Compliance 

While CT introduces cost and compliance burden, it also unlocks real strategic value  for those who approach it proactively. 

Strengthened Corporate Governance 

• The introduction of CT is pushing businesses to reckon with financial discipline in a new way. 

• Tax‑driven governance: Companies are now forced to maintain better documentation, regular reconciliations, and structured decision-making (board minutes, tax policies), which can drive more transparent and robust governance. 

• Investor confidence: For both local and international investors, good CT compliance signals maturity. It can become part of a firm’s ESG or governance story especially for private equity or multinationals. 

Lawful Tax Planning and Incentives 

• Free‑zone structuring: Entities that rigorously meet QFZP requirements can maintain zero-rate status. With the right substance, they can legitimately benefit from UAE’s free-zone incentive without falling foul of TP rules. 

• Emerging tax credits: There are credible signals (though not final) that the UAE government is considering R&D credits and high-value employment incentives. Some reports suggest refundable credits of 30–50% for eligible R&D spending.  

• Tax group planning: For multinationals, the CT law allows group consolidation and intra-group planning. With proper TP policies and structure, companies can optimize the tax burden across entities. 

Alignment with Global Tax Regimes 

• Pillar Two readiness: With DMTT (15%) in place, very large MNEs must model not just their UAE CT, but their global effective tax rate. The UAE regime provides predictability and a platform for compliance. PwC Tax Summaries 

• Transparency & reputation: As more jurisdictions adopt or enforce global minimum tax, being in a jurisdiction with a well-structured CT regime enhances corporate credibility. 

Modernizing Finance Capabilities 

• Integrated tax and finance systems: CT is pushing firms to integrate tax workpapers, ERP/GL systems, and financial close processes. 

• Digital transformation: Companies are building or upgrading tax dashboards, provision models, and data governance frameworks. 

• Talent development: The demand for corporate tax expertise is growing rapidly, pushing firms to strengthen internal tax capabilities or partner with external advisors. 

Risk‑Managed Growth 

With CT, risk management becomes more structured: 

• Audit readiness: Having solid documentation, board minutes, TP studies, and forecasted provision builds resilience if the FTA audits you. 

• Scenario planning: Businesses can run “what-if” models for tax liabilities under different revenue or profit scenarios, helping in budgeting and capital allocation. 

• M&A and valuation upside: Clear tax compliance and forward-looking tax planning add value in M&A, especially for foreign investors who prize transparency and predictable tax risk. 

Risk Management & Audit Preparedness 

• Documentation is king: If FTA audits come, having detailed TP studies, board approvals, reconciliations, and provision worksheets will be essential. 

• Scenario planning: Model alternative tax outcomes (e.g., what if the FTA challenges your TP studies? What if your substance is questioned?). 

• Continuous monitoring: Establish an internal or external audit‑tax loop to check that your CT processes, assumptions, and documentation remain consistent and defensible. 

• Engagement with tax authority: Use FTA’s clarifications, guidance, and pre-filing queries (if possible) to reduce exposure. 

UAE Corporate Tax Compliance: Strategic Opportunities Going Forward 

Looking beyond the challenges, companies that leverage the first CT season’s lessons can realize real strategic advantages. 

• Strategic reinvestment: Use the CT process as a catalyst to reinvest in governance, financial systems, and tax infrastructure. 

• Value creation: Enhanced tax governance and compliance can make entities more valuable in M&A deals or to foreign investors. 

• Tax-driven business strategy: Align operations, substance, and business model to optimize for CT: free‑zone decisions, service‑line planning, local investment. 

• Thought leadership: Companies that tackle CT well can position themselves as “tax‑smart” market leaders, influencing peers and contributing to policy dialogue. 

MS: Your Strategic Partner for Corporate Tax Success in the UAE 

The first UAE CT season has highlighted that compliance is about strategy, planning, and operational readiness. At MS, we provide support to ensure your business stays compliant, mitigates risks, and unlocks strategic advantages from the new tax regime. 

Our services include: 

Corporate Tax Compliance & Advisory 

• Registration with the FTA and confirmation of correct first tax periods. 

• Preparation and filing of accurate CT returns in line with FTA guidance. 

• Identification of eligible deductions, exemptions, and free-zone benefits. 

Transfer Pricing & Documentation 

• Development of arm’s-length pricing policies for related-party transactions. 

• Preparation of TP documentation, including Master and Local Files. 

• Benchmarking studies to support compliance and defend against FTA audits. 

Free Zone & Substance Advisory 

• Assessment of qualifying activities and income for zero-rate eligibility. 

• Substance mapping: board decisions, operational presence, and local management. 

• Guidance on maintaining compliance while optimizing tax benefits. 

Tax Planning & Cash Flow Management 

• Modeling corporate tax liabilities and provisions for better cash-flow planning. 

• Strategic advice on tax structuring, intra-group planning, and operational adjustments. 

• Ongoing support for audit readiness and risk mitigation. 

The Essentials

The UAE Federal Tax Authority (FTA) has clarified corporate tax of family wealth management structures, including family foundations, holding companies, SPVs, and family offices. The guidance explains when entities and family members qualify for tax transparency, outlines compliance requirements, and highlights exemptions on investment and real estate income, helping families manage wealth efficiently while staying fully compliant.

The UAE Federal Tax Authority (FTA) has recently issued clarifications on the corporate tax of family wealth management structures, offering crucial guidance for high-net-worth individuals, family offices, and their advisors. The clarification addresses the tax implications for entities such as family foundations, holding companies, Special Purpose Vehicles (SPVs), Single Family Offices (SFOs), Multi-Family Offices (MFOs), and family members, referencing Article 17 of Federal Decree-Law No. 47 of 2022 and Ministerial Decision No. 261 of 2024.

This guidance is intended to enhance transparency, clarify compliance obligations, and provide clarity on the conditions under which family wealth management structures may achieve tax-efficient status.

Corporate Tax of Family Wealth Management Structures

1. Family Foundations
 Foundations, trusts, or similar domestic or foreign vehicles can achieve tax transparency, meaning they are not considered taxable persons in their own right, if they meet the criteria outlined in Article 17(1) of the Corporate Tax Law.

• Foundations with a separate legal personality must apply to the FTA for tax-transparent treatment.
• Vehicles without a separate legal personality are automatically considered tax transparent.
• This ensures that income generated through the foundation flows directly to beneficiaries without being taxed at the entity level, simplifying reporting and reducing potential tax liabilities.

2. Holding Companies & SPVs
 Entities wholly owned or controlled by a tax-transparent family foundation may also apply for tax transparency, provided they meet the relevant conditions.

• If they do not qualify as tax transparent, these entities are taxable in their own right.
• Such entities may still benefit from exemptions on certain income, including dividend income and income from holding activities if it is a QFZP.
• Entities located in UAE Free Zones may qualify for a 0% corporate tax rate, subject to specific Free Zone criteria.

3. Single Family Offices (SFOs) & Multi-Family Offices (MFOs)
SFOs and MFOs are generally subject to corporate tax unless they meet the conditions for tax transparency. Key considerations include:

• SFOs/MFOs must charge arm’s length fees when providing services to related parties to comply with transfer pricing rules.
• Free Zone offices may benefit from a 0% corporate tax rate on Qualifying Income if they are regulated by competent authorities such as the DFSA, FSRA, or UAE Central Bank.
• Unregulated offices do not qualify for these preferential rates on management or financial services income.

Corporate Tax Treatment of Family Members

Family members generally remain exempt from corporate tax of family wealth management structures on income received from:

• Tax-transparent vehicles
• Qualified family wealth management structures
• Personal investment or real estate income

Exception: Tax liability arises if commercial business income from these holdings exceeds AED 1 million per year, ensuring that personal investment activities remain largely tax-efficient while larger business operations are appropriately taxed.

Corporate Tax of Family Wealth Management Structures: Implications and Key Takeaways

• Assess Tax Transparency: Family foundations and other wealth management vehicles should evaluate whether applying for tax transparency is beneficial.
• Prefer Regulated Free Zone Entities: Using regulated Free Zone structures can result in substantial exemptions for qualifying income.
• Compliance Matters: Ongoing compliance and annual confirmation to the FTA are mandatory to maintain tax transparency status.
• Family Member Considerations: Personal investment and real estate income generally remain exempt, but commercial business income thresholds must be monitored.
• Dividend and Capital Gains Exemptions: Even non-transparent entities may benefit from exemptions on qualifying income streams.

How MS Can Help in Corporate Tax of Family Wealth Management Structures

MS provides comprehensive support to family offices, foundations, holding companies, and SPVs in understanding and applying corporate tax of family wealth management structures in the UAE. From evaluating eligibility for tax transparency and preparing FTA applications to advising on Free Zone benefits, compliance, and corporate tax planning, we help families and their advisors manage wealth efficiently, optimize tax outcomes, and ensure long-term preservation and growth of their assets.

The Essentials 

For many UK families moving to the UAE, preserving wealth across generations is just as important as growing it. The challenge lies not only in transferring assets but also in ensuring continuity, clarity, and governance for future decision-makers. 

ADGM and DIFC foundations are increasingly seen as the solution of choice. They provide a structured, secure, and internationally recognized framework that allows families to: 

• Protect assets 

• Simplify inheritance and succession 

• Empower heirs responsibly 

• Preserve long-term family vision 

In recent years, an increasing number of UK families moving to the UAE have looked beyond familiar shores, gravitating towards Dubai and Abu Dhabi as strategic bases for preserving and growing wealth. While the UAE’s tax-free status often steals the spotlight, its true appeal runs much deeper: world-class asset protection, flexible succession planning, investor-friendly property markets, and secure pathways to long-term residency. 

Supported by internationally recognized legal systems and adaptable ownership structures, the UAE offers a stable, transparent, and strategically located platform for both immediate relocation and multi-generational planning. Its economic resilience, global connectivity, and cosmopolitan lifestyle create an environment where wealth and quality of life can thrive in tandem. 

Let’s explore the many layers behind this migration, revealing how UK families moving to the UAE are harnessing the region’s unique advantages to safeguard assets, seize opportunities, and shape enduring legacies. 

Why are UK Families Moving to the UAE? 

1. Tax Advantage – But Not the Only Reason 

The UAE’s no personal income tax, no capital gains tax, and no inheritance tax remain powerful magnets. When compared to the UK’s high tax environment, with income tax up to 45%, capital gains up to 28%, and a 40% inheritance tax, the savings are significant. 

However, for many UK families, tax is only one part of the equation. Increasingly, they are drawn by the UAE’s ability to offer not just financial efficiency but also long-term security, flexible wealth planning, and a globally respected legal framework. 

2. Wealth Protection and Risk Management 

When relocating and investing in overseas property, one of the key considerations for UK families moving to the UAE is how to protect assets from potential risks. High-value real estate portfolios can be vulnerable to unforeseen events such as legal disputes, business-related liabilities, or creditor claims. 

In the UAE, certain corporate and holding structures available through jurisdictions like the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC) offer a legal environment rooted in English common law. This framework is widely recognized internationally, making it easier to enforce contracts, manage cross-border transactions, and maintain credibility with global stakeholders. 

3. Succession and Estate Planning 

Passing wealth to the next generation is rarely a simple process, especially across borders. In the UK, inheritance can involve prolonged probate procedures, high legal costs, and significant tax liabilities. For families with international assets, these challenges multiply. 

In the UAE, legal and ownership frameworks allow for arrangements where control of an asset can change hands without the need to sell it outright, which helps reduce delays and administrative complexity. These frameworks can also be paired with governance tools such as family constitutions, trusts, or foundations to ensure that decision-making and asset management align with the family’s long-term vision. 

4. Access to the UAE Golden Visa and Lifestyle Benefits 

The UAE’s Golden Visa program grants long-term residency to property investors who meet specific thresholds, currently a minimum property value of AED 2 million. Qualifying assets can be residential or, in certain cases, commercial, provided they meet the valuation criteria and other eligibility requirements. 

This residency pathway offers a range of advantages, including: 

• Stability for the entire family, with access to world-class education and healthcare 

• Independence from local sponsorship requirements, allowing greater personal and business freedom 

• Full access to UAE banking and investment opportunities 

• Long-term planning certainty, with visas valid for up to 10 years and renewable 

For UK families moving to the UAE, the Golden Visa creates not only a secure legal foothold in the country but also the flexibility to live, work, and invest in one of the region’s most dynamic markets. 

5. Market Opportunity and Diversification 

Dubai’s property market has consistently outperformed many Western markets in recent years. Prime villa prices rose by almost 94% between 2020 and 2024, and rental yields often average 7–8%, compared to the UK’s 3–5%. 

For UK families, investing in UAE real estate offers: 

• Exposure to a fast-growing, globally attractive market 

• A hedge against volatility in the UK property sector 

• Diversification into a region with a currency pegged to the US dollar, providing exchange rate stability 

• Opportunities across both residential and commercial property segments 

6. Compliance and Global Credibility 

Ownership and holding structures available in the UAE’s ADGM and DIFC operate under internationally recognized regulatory frameworks that emphasize transparency and robust governance. These frameworks: 

• Strengthen investor confidence when engaging with global stakeholders 

• Streamline due diligence processes for banks and financial institutions 

• Ensure high standards of corporate governance and clear reporting practices 

7. Flexibility in Ownership and Control 

UAE property ownership arrangements can be tailored to accommodate different needs, such as: 

• Dividing benefits and responsibilities clearly among multiple family members 

• Allocating decision-making authority through defined voting rights 

• Allowing ownership interests to be transferred or sold without affecting the underlying property title 

How MS Can Help the UK families moving to the UAE 

At MS, we specialize in guiding families through every stage of their UAE journey, from initial exploration to full integration. Our expertise spans wealth structuring, succession planning, and residency solutions, ensuring your move is not only seamless but strategically aligned with your long-term goals. 

We combine deep knowledge of Dubai and Abu Dhabi’s regulatory landscapes with an understanding of the unique priorities of UK families. Whether it’s establishing the right corporate or ownership structure, navigating property investments, or ensuring compliance with local and international frameworks, our multidisciplinary team delivers solutions tailored to protect and grow your assets. 

The Essentials: First Corporate Tax Return Filing in the UAE 

• Deadline: 30 Sept 2025 (for FY Jan–Dec 2024). 

• Who Files: Mainland & Free Zone companies, foreign PEs, and individuals with >AED 1M turnover. 

• Rates: 0% up to AED 375K, 9% above AED 375K, 0% for Qualifying Free Zone income. 

• Penalties: AED 500/month (first year), AED 1,000/month after, plus 14% interest. 

• Key Prep: TRN active, audited/IFRS accounts, supporting docs, transfer pricing records (if relevant). 

The UAE’s introduction of Corporate Tax marks a new chapter in the country’s business landscape and 2025 is when theory turns into practice. For thousands of businesses, this year will bring their first Corporate Tax return filing in the UAE. 

Your first filing sets the tone for how your business will approach tax compliance in the years ahead. A rushed or inaccurate submission can lead to costly penalties, while a well-prepared return can protect your reputation, potential tax efficiencies, and build confidence with regulators. 

1. Key Filing Deadline 

For businesses whose financial year runs from 1 January 2024 to 31 December 2024, the first corporate tax return filing in the UAE must be submitted on or before 30 September 2025. This 9-month post-year-end window is fixed by the Federal Tax Authority (FTA). 

If your financial year does not follow the calendar year, your filing deadline will be different. Always confirm your entity’s exact due date through the EmaraTax portal. 

2. Who Must File a Return? 

You must file if you are: 

• Mainland companies operating in the UAE. 

• Free Zone companies, including those enjoying the 0% rate on Qualifying Income (must still file to maintain status). 

• Foreign companies with a Permanent Establishment in the UAE. 

• Natural persons carrying on a business, with annual turnover exceeding AED 1 million in 2024. 

3. Corporate Tax Rates to Remember 

• 0% rate on taxable income up to AED 375,000. 

• 9% rate on taxable income above AED 375,000. 

• 0% rate for Qualifying Free Zone income (subject to substance and compliance requirements). 

Even if you fall entirely under the 0% bracket, you must still file your return. 

4. Consequences of Missing the Deadline 

Failing to submit your first corporate tax return filing in the UAE on time can result in: 

Administrative Penalties: 

• AED 500 per month for the first 12 months of delay. 

• AED 1,000 per month thereafter. 

Interest Charges: 14% per year on unpaid tax, calculated monthly from the due date. 

Increased Audit Risk: Late filings can draw greater scrutiny from the FTA. 

Compliance Impact: Non-compliance may affect your ability to obtain clearances, licenses, or maintain Free Zone benefits. 

5. Essential Preparations Before Filing 

To ensure smooth submission, start working on the following now: 

A. Registration Check 

• Confirm that your Corporate Tax Registration Number (TRN) is issued and active. 

• Verify your entity is correctly listed on the EmaraTax portal. 

B. Financial Statement Readiness 

• Prepare audited (or IFRS-compliant) financial statements for the tax period. 

• Ensure they reflect all tax adjustments, such as non-deductible expenses or exempt income. 

C. Supporting Documents 

• Invoices, contracts, and bank statements. 

• Records of related-party transactions for transfer pricing compliance. 

• Proof for exemptions (e.g., qualifying investment income). 

D. Transfer Pricing Disclosures 

• If your business transacts with related parties or connected persons: 

• Prepare the Transfer Pricing Disclosure Form for submission with your return. 

• Maintain Local File and Master File documentation if applicable thresholds are met. 

Practical Tips for Your First Corporate Tax Return Filing in the UAE 

• Start Early: Leaving filing to the last week increases error risk and may delay FTA portal acceptance. 

• Use the EmaraTax Portal Efficiently: Familiarize yourself with its navigation and upload requirements in advance. 

• Plan for Tax Payment: Have funds ready to pay any tax due at the time of filing to avoid interest charges. 

• Seek Professional Support: A qualified tax partner can ensure your return is accurate, compliant, and penalty-free. 

How Can MS Help in the First Corporate Tax Return Filing in the UAE? 

Your first corporate tax return filing in the UAE is a chance to set the right compliance standards. MS handles it end-to-end: preparing accurate financials, managing EmaraTax submissions, meeting deadlines, and identifying savings opportunities. Our expertise ensures full compliance, reduces risk, and keeps you penalty-free. 

The UAE Ministry of Finance (MoF) has enacted a pivotal Ministerial Decision, introducing new guidelines for tax depreciation in the UAE on investment properties held at fair value. The decision aims to align the treatment of investment properties with Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses, providing clarity and parity for property owners under the corporate tax regime. 

Tax Depreciation in the UAE for Fair Value Investment Properties: Key Highlights of the Decision 

1. Eligibility for Tax Depreciation: 
   Taxpayers who hold investment properties (excluding land) on a fair value basis, and who opt for the “realisation basis,” can now elect to deduct tax depreciation in the UAE from their taxable income. This deduction was previously only available to those using a historical cost basis. 

2. Calculation of Depreciation Deduction: 
   The annual tax depreciation allowance is set as the lower of: 

• The tax written down value of the investment property at the beginning of the Tax Period, or 

• 4% of the original cost of the investment property, 

• Calculated for each 12-month tax period, with pro-rata adjustments where applicable for partial periods. 

3. Application Across Timeframes: 
   The deduction is open to taxpayers who held investment properties before or after the introduction of corporate tax. This ensures inclusivity across different tax years, promoting continuity and fairness. 

Election Requirements and Process for Tax Depreciation in the UAE 

• Irrevocable Election Needed: 
  Taxpayers wanting to benefit from this provision must make an irrevocable election in their first tax period beginning on or after January 1, 2025, in which they hold investment property. This election will then apply to all investment properties held by the taxpayer going forward. 

• Realisation Basis Election Window: 
  Recognizing that the realisation basis is usually chosen at the start of a taxpayer’s interaction with the regime, the Decision provides an exceptional opportunity for those who have not yet opted in to do so during their initial relevant tax period. 

Tax Depreciation in the UAE for Fair Value Investment Properties: Clarity and Guidance for Property Transfers and Construction 

The Decision clarifies the precise value upon which tax depreciation in the UAE claims may be based, including scenarios where: 

• Investment property is transferred between related or unrelated (third) parties. 

• Future acquisitions of investment property not currently held by the taxpayer are also covered under the Decision. 

This explicit guidance helps ensure all taxpayers can accurately assess compliance obligations and fairly benefit from the regime. 

Ensuring Parity and Tax Neutrality 

With these changes, parity is established between: 

• Taxpayers who use historical cost and can already deduct accounting depreciation, and 

• Those using fair value accounting, who are now similarly permitted tax depreciation. 

This promotes the principles of tax neutrality and equity, ensuring a level playing field in line with international best practices in corporate taxation. 

Provisions for Claw-back and Compliance  

The new rules also define when a reversal of tax depreciation in the UAE might occur, including circumstances beyond the simple disposal of an investment property. This ensures taxpayers remain aware of potential liabilities and maintain sound records for compliance purposes. 

The Ministry’s commitment is clear: to foster an equitable and transparent tax climate in the UAE, offering certainty for investment property owners and enhancing the country’s appeal for both local and international investors. 

If your company’s first corporate tax period ended on 31 December 2024 and you missed the registration deadline, there’s still time to avoid penalties, but you must act fast. 

Under the UAE Corporate Tax Penalty Waiver initiative, the Federal Tax Authority (FTA) has confirmed that eligible businesses can still qualify for a full waiver of administrative penalties, only if they file their corporate tax return or annual statement within 7 months from the end of their first tax period. This 7-month window from the end of your first tax period is critical. Filing after this deadline means the penalties will apply, even if you’ve since registered. 

Understanding the UAE Corporate Tax Penalty Waiver Initiative 

The UAE corporate tax penalty waiver initiative aimed at assisting businesses that either missed the corporate tax registration deadline or were previously fined for late compliance. This initiative offers a structured opportunity for businesses to resolve their tax obligations without facing additional financial penalties, reflecting the FTA’s efforts to promote voluntary compliance during the initial phase of the new tax regime. 

For many businesses, this presents a much-needed chance to reduce financial pressure and transition into the UAE’s tax system with greater ease and clarity. 

Who Can Take Advantage of the UAE Corporate Tax Penalty Waiver? 

The waiver is designed to accommodate various non-compliance scenarios. You may be eligible if: 

• You were fined for late registration but haven’t yet paid the penalty 

• You haven’t registered for corporate tax at all 

• You already paid the fine but now meet the criteria for a refund 

This inclusive approach of UAE corporate tax penalty waiver ensures that both late filers and those seeking to rectify their compliance status still have a clear path forward, provided they act promptly. 

The Core Condition: The 7-Month Filing Rule 

To benefit from this UAE corporate tax penalty waiver, either through avoiding a pending penalty or reclaiming one already paid, you must adhere to a 7-month compliance window: 

• Taxable persons must submit their Corporate Tax Return within 7 months from the end of their first tax period 

• Exempt persons must file their Annual Declaration within the same timeframe 

Meeting this condition is essential for accessing relief under the FTA’s initiative. 

Why the UAE Corporate Tax Penalty Waiver Initiative Matters:

Beyond penalty relief, this initiative serves a broader purpose:

• Encourages early and voluntary compliance in the first year of the new regime 

• Reduces the initial compliance burden for businesses still adapting 

• Supports smoother integration into the corporate tax framework 

• Boosts confidence in the UAE’s business environment by making the transition supportive and fair 

Don’t Miss This Second Chance! 

This is a one-time opportunity for businesses to correct their course without facing penalties. If your first tax period ended in December 2024 and you haven’t registered yet, the clock is ticking. 

File by 31 July 2025. Avoid penalties. Protect your compliance standing. 

Missed the Deadline? MS Helps You Qualify, Comply, and Claim Relief 

At MS, we offer end-to-end support to help businesses take full advantage of the UAE Corporate Tax penalty waiver. Whether you’ve missed the registration deadline, already paid a penalty, or are unsure about your eligibility, our team assesses your specific situation and guides you through the necessary steps. We ensure your Corporate Tax Return or Annual Declaration is filed accurately within the required 7-month window, enabling you to qualify for the waiver or initiate a refund. For those still unregistered, we handle late registration and bring your compliance status up to date.  

The UAE Federal Tax Authority (FTA) has rolled out a significant Corporate Tax penalty waiver initiative to support businesses that missed the corporate tax registration deadline or have already been penalized for late compliance. This initiative aims to support businesses that may have missed the corporate tax registration deadline or have already been penalized for late compliance. By providing a clear path to penalty relief, the FTA is encouraging businesses to regularize their tax status without the burden of additional fines. 

This is a valuable opportunity for affected entities to avoid further financial strain and align with the UAE’s evolving tax requirements smoothly. 

In this article, we’ll break down the key aspects of this initiative, explain who is eligible, and walk you through the important steps you need to take to benefit from the penalty waiver or refund. 

Why This Corporate Tax Penalty Waiver Initiative Matters? 

• Enhance voluntary compliance 

• Support businesses adjusting to the new tax regime 

• Promote timely filing and accurate reporting practices 

With corporate tax now a core feature of the UAE’s economic framework, such measures are essential to ensure a smooth transition for entities across all sectors. 

Who Can Benefit from This Corporate Tax Penalty Waiver? 

This targeted penalty waiver applies to a range of situations. You may qualify if: 

• You incurred a penalty for late registration but haven’t paid it yet 

• You haven’t registered for corporate tax at all 

• You already paid a penalty but now meet the filing and submission criteria 

This makes the initiative inclusive of both proactive and late-responding entities, provided they now take timely action. 

The Key Requirement: 7-Month Rule 

To qualify for either a waiver (if you haven’t paid the penalty yet) or a refund (if you have) under this corporate tax penalty waiver, you must meet one of the following requirements: 

• Taxable persons must file the Corporate Tax Return within 7 months from the end of their first tax period 

• Exempt persons must submit their Annual Declaration within the same timeframe 

Practical Scenarios and Outcomes 

Scenario 1: Penalty Issued but Not Paid 

The taxpayer completed the registration process and was issued a penalty for late registration, which has not yet been paid. The taxpayer then submitted the tax return within seven (7) months from the end of the first tax period. The individual will be exempted from the penalty. 

Scenario 2: Penalty Issued, Not Paid, Return Pending 

The taxpayer completed the registration and was issued a penalty for late registration, which has not yet been paid. The taxpayer has not yet submitted the tax return for the first tax period. In this case, the taxpayer must submit the tax return or the annual declaration within seven (7) months from the end of the first tax period, and the penalty will be waived. 

Scenario 3: Penalty Paid, Return Pending 

The taxpayer completed the registration and was issued a penalty for late registration, which has already been paid. However, the tax return for the first tax period has not yet been submitted. In this case, the taxpayer must submit the tax return or the annual declaration within seven (7) months from the end of the first tax period. The amount paid will be refunded to their tax account. 

Scenario 4: Penalty Paid, Return Submitted 

The taxpayer completed the registration, was issued a penalty for late registration, and has already paid the penalty. The taxpayer also submitted the tax return within seven (7) months from the end of the first tax period. In this case, the amount paid will be refunded to their tax account. 

Scenario 5: Registration Not Yet Completed 

The taxpayer has not submitted a corporate tax registration application. In this case, the taxpayer must complete the registration and submit the tax return or the annual declaration within seven (7) months from the end of the first tax period. The penalty will be waived if it is imposed. 

How to Comply?  

All tax-related actions, including registrations, corporate tax return submissions, and annual declarations, must be completed via the EmaraTax platform. This is a time-sensitive opportunity. Ensure your submissions are completed within 7 months from the end of your first tax period to benefit from the corporate tax penalty waiver or refund. 

Not sure if you qualify for the corporate tax penalty waiver or refund? 

MS can help you get clarity and results. We provide end-to-end support to help you benefit from the Corporate Tax penalty waiver in the UAE: 

• Determine your eligibility 

• Handle your registration and filings via EmaraTax 

• Secure waivers or refunds before the deadline lapses 

With MS, you stay compliant, avoid penalties, and reclaim what’s yours on time and with confidence. 

In a landmark move to support businesses during the initial phase of the UAE’s corporate tax regime, the Ministry of Finance (MoF) and the Federal Tax Authority (FTA) have jointly announced a UAE corporate tax penalty waiver initiative that offers relief to corporate taxpayers and certain exempt entities. This decision, implemented via a Cabinet Decision, waives administrative penalties for entities that missed the deadline to register for corporate tax provided they meet a key condition: they must file their tax return or annual statements within a period not exceeding 7 months from the end of their first tax period. 

UAE Corporate Tax Penalty Waiver: What the Initiative Entails? 

The newly launched initiative waives administrative penalties for companies and certain exempt persons that failed to register for corporate tax within the prescribed timeframe. To qualify for this waiver, eligible parties must file their corporate tax returns or annual statements within seven (7) months from the end of their first tax period, in alignment with the UAE Corporate Tax Law. 

Notably, under this UAE corporate tax penalty waiver, the FTA has confirmed that fines already paid by qualifying entities will also be refunded, offering welcome financial relief for businesses that have already settled penalties but now meet the waiver conditions. 

The Broader Objective of UAE Corporate Tax Penalty Waiver 

This initiative is not just about waiving penalties but part of a broader national effort to foster a robust tax compliance culture in the UAE. The MoF and FTA emphasized that the UAE corporate tax penalty waiver is designed to: 

• Encourage early and voluntary compliance during the first year of corporate tax implementation 

• Ease the administrative and financial burden on businesses adapting to the new regime 

• Simplify tax registration procedures for companies and exempt entities alike 

• Support the UAE’s economic competitiveness and investor confidence by ensuring a fair and business-friendly regulatory environment 

UAE Corporate Tax Penalty Waiver: Supporting Transition CT Era and Enhancing Global Competitiveness 

This initiative of UAE corporate tax penalty waiver sends a strong and positive signal from the UAE government: that it is fully committed to enabling a smooth and supportive transition into the corporate tax era. By reducing the penalties for non-compliance, the initiative reflects a proactive and business-friendly policy approach. 

It also aligns with the UAE’s wider ambition of reinforcing its position in global competitiveness indices, which consider ease of doing business and regulatory efficiency as key metrics. 

Businesses are encouraged to act swiftly to qualify for this UAE corporate tax penalty waiver: ensure timely filing within the prescribed seven-month period and take full advantage of this waiver to start their corporate tax journey on the right foot. 

For more information, reach out to MS today! 

In its continued effort to refine the corporate tax landscape and align with international standards, the UAE Ministry of Finance has introduced a new compliance milestone: Ministerial Decision No. 84 of 2025. This Decision reshapes the requirements around audited financial statements under the UAE Corporate Tax Law and replaces the earlier Ministerial Decision No. 82 of 2023 for tax periods beginning on or after 1 January 2025. 

The key change? All tax groups must now prepare audited special purpose financial statements, a notable departure from the previous AED 50 million threshold. The Decision also offers important clarifications for non-resident businesses and maintains the audit requirements for standalone entities claiming Qualifying Free Zone Person (QFZP) status or crossing the revenue threshold. 

As the UAE moves closer to full implementation of its corporate tax regime, this UAE corporate tax update on audited financial statements marks a significant step toward ensuring financial transparency, standardized reporting, and better tax compliance across all business structures. 

Let’s unpack the key changes brought by the new Decision, what they mean for your business, and what actions you should consider now to stay compliant in the 2025 financial year and beyond. 

UAE Corporate Tax Update on Audited Financial Statements: Key Highlights of Ministerial Decision No. 84 of 2025 

1. Mandatory Audited Financial Statements for All Tax Groups 

One of the most notable updates is the removal of the AED 50 million consolidated revenue threshold for tax groups. Under the previous rule, only tax groups with consolidated revenue above AED 50 million were required to prepare audited financial statements. 

This marks a significant shift in compliance expectations. The intention behind this change seems to be greater transparency and consistency in financial reporting among tax groups. Further guidance is expected from the FTA on how these special purpose FS should be prepared, especially in light of practical implementation challenges taxpayers faced under the earlier decision. 

2. Clarification on Existing Requirements for Other Taxpayers 

For individual taxpayers not part of a tax group, the Decision maintains the existing requirements. These taxpayers must maintain audited financial statements if: 

• Their revenue exceeds AED 50 million, or 

• They are claiming Qualifying Free Zone Person (QFZP) status. 

This reiteration helps ensure continued compliance for a wide range of business structures, particularly those operating within UAE Free Zones and claiming the 0% corporate tax rate. 

3. Additional Procedures for Free Zone Distribution Activities 

The UAE corporate tax update on audited financial statements hints at upcoming procedures tailored specifically for QFZPs engaged in distribution of goods or materials in or from a Designated zone. These activities are considered as Qualifying Activities under UAE Corporate Tax Law.

While details are yet to be released, businesses involved in importing and storing goods in or from a Designated zone in the UAE for resale should keep an eye out for this guidance, as it may affect both their tax status and reporting obligations. 

4. Revenue Threshold for Non-Resident Persons: UAE Nexus Clarified 

For non-resident entities, the UAE corporate tax update on audited financial statements makes an important clarification: only revenue derived through a UAE nexus or permanent establishment shall be taken into account when determining whether the AED 50 million threshold has been exceeded.  

Implications for Businesses Operating with the UAE Corporate Tax Update on Audited Financial Statements 

The issuance of Decision No. 84 of 2025 signals a more structured and detailed compliance landscape for corporate tax in the UAE. Businesses, especially those part of Tax Groups, must reassess their current financial reporting frameworks and engage with their tax advisors to ensure alignment with the new requirements. 

Taxpayers can expect further updates from the Ministry of Finance, especially regarding: 

• Format and standards for special purpose FS 

• Additional conditions for QFZPs, engaged in distribution activities.

UAE Corporate Tax Update on Audited Financial Statements: Next Steps for Taxpayers 

If your business falls into any of the categories outlined in the new UAE corporate tax update on audited financial statements, now is the time to: 

• Review your financial reporting processes to ensure audit readiness. 

• Assess whether your current audit scope meets the new special purpose requirements. 

• Stay alert for upcoming guidance, especially for Free Zone entities and tax groups. 

• Engage early with your advisors to plan for compliance in your 2025 financial year. 

As the UAE Corporate Tax Law continues to evolve, Ministerial Decision No. 84 of 2025 represents a move toward more rigorous, transparent, and standardized financial reporting. While the UAE corporate tax update on audited financial statements may pose additional compliance efforts for some taxpayers, it also underscores the country’s commitment to aligning with global best practices in tax administration. 

Corporate restructuring is often seen as a smart way to streamline operations, optimize tax efficiency, and position a business for long-term success. But beneath the surface, financial and tax complexities can turn a well-intentioned strategy into an expensive miscalculation. 

One such hidden trap is bargain purchase gain, a scenario where acquiring a company for less than its fair market value unexpectedly triggers taxable income. Without careful planning, what seems like a routine transaction can result in significant, unforeseen tax liabilities, creating financial strain instead of the intended benefits. 

Understanding the interplay between accounting standards and tax regulations is critical for businesses undergoing corporate restructuring in the UAE. A misstep in structuring a deal could mean turning non-cash gains into real tax expenses, impacting cash flow and overall financial health. A proactive approach, involving both tax and accounting expertise, can help companies avoid costly surprises and structure deals in the most efficient way possible. 

Let’s explore this through a hypothetical case study. 

Case Study on Corporate Restructuring in the UAE: The Unintended Tax Bill 

In 2023, XYZ Group, a UAE-based conglomerate, restructured its operations in preparation for the new Corporate Tax regime. Their plan was to consolidate subsidiaries under a newly created holding company, DEF Holdings LLC, with the expectation of simplifying compliance and improving tax efficiency. Prior to the company’s corporate restructuring in the UAE, the group consisted of: 

• ABC Manufacturing LLC: A company with substantial assets but struggling financially, holding AED 10 million in retained earnings. 

• DEF Holdings LLC: A newly formed entity intended to serve as the parent company. 

XYZ Group’s tax consultants advised that the consolidation would streamline operations. However, the restructuring involved DEF Holdings acquiring ABC Manufacturing for AED 3 million even though ABC’s net assets were valued at AED 10 million. 

The Problem: Unexpected Tax on Negative Goodwill 

This acquisition created what is known as a bargain purchase, where the acquired company is bought for less than its fair market value. According to International Financial Reporting Standards (IFRS), the difference between the purchase price and the fair value of net assets (AED 7 million in this case) must be recorded as a bargain purchase gain (or negative goodwill) in the Profit & Loss statement. Under the UAE Corporate Tax regulations, this AED 7 million gain is treated as taxable income. At a 9% tax rate, XYZ Group suddenly faced a tax bill of AED 630,000, an expense that could have been avoided with better planning. 

Avoiding the Trap in Corporate Restructuring in the UAE: Alternative Strategies 

To prevent similar costly mistakes, companies should take a holistic approach to corporate restructuring in the UAE, carefully evaluating both the tax and accounting impacts. Here are several strategies that could have helped XYZ Group: 

1. Asset Transfer Instead of Share Acquisition 

• Strategy: Instead of acquiring the entire company, DEF Holdings could have purchased specific assets (such as equipment or intellectual property) while leaving behind tax-sensitive items like high retained earnings. 

• Benefit: This approach would have avoided triggering a bargain purchase gain and the associated taxable income. 

2. Partial Ownership Transfer 

• Strategy: Structure the deal as a gradual acquisition, where the parent company first takes a minority stake in the target company, gradually increasing its ownership over time. 

• Benefit: This method spreads out the financial impact, reducing the immediate tax burden and avoiding a sudden taxable gain. 

3. Group Tax Planning Before Restructuring 

• Strategy: Engage both tax and IFRS experts during the planning phase to analyze the treatment of retained earnings and other financial statement impacts. 

• Benefit: Early and thorough planning could help carry forward losses or adjust the purchase price, preventing the creation of artificial taxable gains. 

Key Considerations for Corporate Restructuring in the UAE 

• Engage Experts Who Understand Both Tax & Accounting: 
  Rely on professionals with expertise in both areas to ensure that the plans of corporate restructuring in the UAE are aligned with tax regulations and accounting standards. 

• Analyze All Financial Statement Impacts Before Execution: 
  Understand the effects on the balance sheet, profit & loss statement, and overall tax liability before finalizing any restructuring deal. 

• Avoid Creating Taxable Gains from Non-Cash Transactions: 
  Be cautious when companies opt for corporate restructuring in the UAE with significant retained earnings to prevent generating taxable income without any corresponding cash flow benefits. 

• Explore Alternative Legal Structures: 
  Consider mergers, joint ventures, or asset purchase agreements as potentially more tax-efficient options compared to establishing a new holding company. 

Smart Corporate Restructuring in the UAE: Minimize Tax Risks & Optimize Your Business with MS 

At MS, we specialize in Corporate Tax (CT) impact assessments and advising on optimal incorporation structures to ensure tax efficiency and regulatory compliance. Our experts help businesses navigate restructuring with tailored strategies that minimize tax risks, align with IFRS standards, and streamline incorporation procedures. Trust MS to structure your business for long-term success while avoiding costly tax surprises.