Setting up in the UAE remains attractive to financial services firms due to 0% personal income tax, competitive corporate tax rules, and modernising VAT and compliance frameworks. However, UAE tax obligations have evolved significantly in recent years, and new entrants should be aware of both the corporate and individual tax considerations.

Does my UAE entity need to register for UAE Corporate Tax?

All UAE entities must register and file under the federal Corporate Tax regime, even if profits fall within the 0% band. Core rates remain 0% up to AED 375,000 and 9% above that, applied on a slice (marginal) basis.

What is QFZP status and how do I keep the Free Zone 0%?

A Qualifying Free Zone Person (QFZP) can access 0% corporate tax rate on qualifying income, provided it meets economic substance, keeps audited financial statements, and stays within the de‑minimis threshold for non‑qualifying income.

What if we earn some non‑qualifying income?

You can still retain QFZP status if non‑qualifying income stays below or equal to the lower of 5% of total revenue or AED 5m. If you breach this de‑minimis, you lose QFZP status and the entire profit is taxed at 9% for the current and next four tax periods (five years total).

Insufficient UAE substance (people, premises, and core functions performed in the Free Zone) can also disqualify a firm from the QFZP regime resulting in profits being taxed at 9% for five years.

When is my first Corporate Tax return due?

Corporate tax returns and payments are generally due 9 months after your financial year‑end.

What transfer pricing documentation do we need?

The UAE follows OECD transfer pricing rules. If UAE revenue exceeds AED 200m, a Master File and Local File will need to be prepared.

For large multinational enterprise groups with global consolidated revenue of at least €750m, the UAE imposes a Domestic Minimum Top‑Up Tax ensuring a 15% effective tax rate in line with OECD Pillar Two rules.

Will I need to register for VAT in UAE?

You must register for VAT in the UAE once your taxable turnover exceeds AED 375,000 in any rolling 12‑month period.

The UAE also allows a business to register voluntarily for VAT if its taxable supplies, imports, or taxable expenses exceed AED 187,500 in the previous 12 months (or are expected to exceed that amount in the next 30 days).

What is the rate of VAT in UAE?

The standard rate of VAT in the UAE is 5%.

What are the Tax Procedure Law and VAT changes from 1 January 2026?

The updated Tax Procedures Law sets a strict five‑year window for refund claims. There is also a five-year deadline for VAT reclaims.

There are also expanded Federal Tax Authority (FTA) audit powers in specific cases (e.g. late refund requests), stronger anti-evasion rules (in respect of input VAT recovery) and the FTA can issue binding directions for consistent application of the law.

Reverse‑charge self‑invoicing has also been removed, so firms must make sure they receive and keep supplier invoices instead.

Will the UAE be rolling out e‑invoicing?

There is a pilot in the UAE that starts from 1 July 2026 and mandatory phases run from 2027, with large businesses adopting this first.

Do individuals relocating to DIFC pay personal income tax?

There is no personal income tax in the UAE. For treaty benefits, individuals should secure a Tax Residency Certificate (TRC), which can be obtained from the FTA once the residency conditions have been met (183 days in the UAE or 90 days with a permanent home).

Do individuals need to register for corporate tax?

If annual turnover of a freelancer or sole practitioner exceeds AED 1m, corporation tax registration is mandatory, and a late‑registration penalty of AED 10,000 can apply.

What if I have set up a branch rather than an entity?

A foreign company with a Permanent Establishment (branch) in the UAE is taxable on UAE‑source profits attributable to the branch and must register and file UAE corporate tax returns just like an entity.

Branches can qualify for QFZP status if they meet the substance and qualifying‑income rules of the Free Zone. However, some Free Zone rules are easier for entities to meet because the rules are written assuming a standalone entity.

Buzzacott tax support

We specialise in financial services tax compliance and advice and regularly support businesses with their international expansion plans to ensure they have a full understanding of the tax implications.

If you are considering setting up in the DIFC, we would be pleased to discuss your requirements and share more about our team and expertise in the sector.