Corporate Tax for Mainland Companies

Introduction

The UAE introduced Federal Corporate Tax (CT) effective from 1 June 2023. This significant reform aligns with the country’s strategic objective to enhance global competitiveness and fiscal transparency. If you operate a mainland company in the UAE, it is essential to understand how Corporate Tax applies, what your obligations are, and how to remain compliant under the new law.

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🏢 What Is a Mainland Company?

A mainland company is a business registered under the Department of Economic Development (DED) in any emirate and can conduct business across the UAE and internationally without restrictions. These entities are distinct from Free Zone companies, which are subject to specific regulatory frameworks and may have different tax treatments.

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📚 Legal Framework

The Corporate Tax in the UAE is governed by:

• Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses

• Cabinet Decision No. 75 of 2023

• Ministerial Decision No. 114 of 2023

• Clarifications issued by the Federal Tax Authority (FTA)

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💼 Who Is Subject to Corporate Tax?

All mainland companies are taxable persons under the UAE Corporate Tax regime unless specifically exempted. This includes:

• LLCs (Limited Liability Companies)

• PSCs, PJSCs

• Sole establishments and partnerships (depending on structure)

• Foreign legal entities with a Permanent Establishment in the UAE

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💵 Corporate Tax Rates for Mainland Companies

Taxable Income Corporate Tax Rate

AED 0 – AED 375,000 0% (for SMEs or small business)

Above AED 375,000 9%

Qualifying Free Zone Income 0% (Not applicable to mainland)

Mainland companies are not eligible for the 0% tax rate for Free Zones unless they establish a Free Zone branch and meet the criteria for a Qualifying Free Zone Person.

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📆 Effective Dates and Tax Period

The CT regime applies to financial years starting on or after 1 June 2023. For example:

• If your company’s financial year is 1 January – 31 December, the first CT period will be 1 January 2024 – 31 December 2024, and the first return is due by 30 September 2025.

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📝 Corporate Tax Compliance Requirements for Mainland Companies

✅ 1. Corporate Tax Registration

All mainland companies must register for Corporate Tax through the EmaraTax portal and obtain a Corporate Tax Registration Number (TRN).

✅ 2. Maintain Proper Accounting Records

Maintain audited or professionally prepared financial statements in compliance with IFRS or IFRS for SMEs depending on revenue.

✅ 3. Prepare and File Corporate Tax Return

• Annually filed within 9 months of the end of the tax period.

• Self-assessment regime: taxpayer calculates its own taxable income and tax due.

✅ 4. Pay Corporate Tax Due

Pay any Corporate Tax liability before the return filing deadline.

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📉 What Can Be Deducted?

Mainland companies can deduct legitimate business expenses, including:

• Salaries and wages

• Rent and utilities

• Professional and legal fees

• Interest expenses (within limits)

• Depreciation on assets

However, capital expenditure, personal expenses, and non-business-related costs are not deductible.

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🚫 Penalties for Non-Compliance

FTA may impose administrative penalties for:

• Late registration (AED 10,000)

• Failure to file tax returns

• Inaccurate or incomplete filings

• Late payment of tax

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🧠 Why Choose Sheikh Anwar Accounting & Auditing LLC?

At Sheikh Anwar Accounting & Auditing LLC, we help UAE mainland companies:

• Register for Corporate Tax on time

• Understand their CT obligations and exemptions

• Maintain proper tax records

• Prepare and file Corporate Tax returns accurately

• Avoid unnecessary penalties

With extensive experience in UAE tax compliance, IFRS reporting, and corporate structuring, we provide tailored solutions that ensure your business stays compliant and optimized.

📞 Contact us today at

 www.sa-auditors.com

 call +971-XX-XXX-XXXX