What’s New? An Overview of the UAE’s Corporate Tax System Now in Effect for 2025
The UAE’s corporate tax regime, introduced through Federal Decree-Law No. 47 of 2022, has brought significant changes for businesses operating in the country. As of 2025, the UAE corporate tax regime is fully operational. Key changes include the enforcement of registration deadlines for natural persons based on turnover thresholds, expanded compliance obligations for free zone companies, and stricter penalties for late registration. Partnering with a corporate tax consultancy Dubai can help businesses manage these new requirements smoothly.
The Federal Tax Authority (FTA) set structured compliance deadlines, including the recent March 31, 2025, registration cutoff for natural persons, which has now passed. Non-compliance carries a heavy administrative penalty of AED 10,000 (approximately US$2,722).
Below, we unpack the tax registration timelines, highlights compliance challenges, and outlines the steps businesses must take to meet their obligations under the new law.
Who Needs to Register and By When?
Individuals engaged in business or professional activities who exceeded AED 1 million (US$272,225) in annual turnover during 2024 were required to complete their corporate tax registration by March 31, 2025. Since that deadline has now passed, those who have not yet registered are already subject to penalties. Working with a corporate tax consultancy in Dubai can ensure that future deadlines are not missed, avoiding unnecessary financial setbacks.
Moving forward, natural persons exceeding the turnover threshold in 2025 or beyond must register by March 31 of the following year.
- UAE resident juridical persons established before March 1, 2024
Companies incorporated before March 1, 2024, are subject to staggered registration deadlines based on the month their commercial license was issued. Entities with licenses issued in January or February were required to register by May 31, 2024. Those with later issuance months follow subsequent monthly deadlines throughout 2024, with final deadlines extending into early 2025. Businesses that have not met their respective deadlines risk financial penalties.
- Non-resident juridical persons
Non-resident businesses operating through a Permanent Establishment (PE) in the UAE, or those with their Place of Effective Management (POEM) in the UAE, are also subject to mandatory registration. A PE established before March 1, 2024, must be registered within nine months of its creation. Those formed after March 1, 2024, have six months from the creation date. Companies falling under POEM guidelines must complete registration within three months of the end of their financial year.
Compliance Challenges
Despite clear regulations, many businesses remain confused about compliance. A common misconception is that VAT registration automatically covers corporate tax, but the FTA has clarified that separate registration is mandatory. Free zone companies, despite often benefiting from a 0% tax rate, are still required to register and file annual returns.
Many small and medium-sized businesses in free zones mistakenly believe they are exempt, risking penalties through non-registration. Engaging a corporate tax consultancy Dubai can help clarify these technical areas and prevent costly mistakes.
Foreign companies with their Place of Effective Management (POEM) in the UAE also face complexities, as decision-making authority in the UAE can trigger registration obligations even without a local license. Additionally, businesses must update the FTA on changes to ownership, licenses, or activities within 20 days.
Looking Ahead
Looking ahead, businesses must stay proactive in meeting corporate tax obligations under Federal Decree-Law No. 47 of 2022. Companies, especially those in free zones or with foreign operations, should closely monitor FTA guidance and seek professional advice from trusted corporate tax consultancy Dubai t to avoid costly penalties. on compliance complexities and avoid costly penalties.
This is where partnering with expert advisors like Bizilance Consultants becomes invaluable. With a deep understanding of UAE’s corporate tax framework, Bizilance offers end-to-end tax compliance solutions, ensuring that businesses not only meet their registration deadlines but also maintain ongoing compliance with evolving regulations.
