Understanding 0% Tax Rate in UAE: Main Conditions for Companies
UAE gives top benefits to businesses with its modern rules and strong growth. Many global companies pick UAE because they want world-class facilities and a famous business address. UAE shines not only in big buildings but also in its friendly policies for business owners. One special rule is the new Corporate Tax (CT) regime. UAE started this in 2023 to help more companies grow. Some companies can use a 0% CT rate, but they must follow clear rules.
This article explains the 0% tax threshold, shows which companies can get it, and helps you see the steps for keeping your business ready. Mubarak Al Ketbi (MAK) Auditing always helps you understand every tax step, so you don’t miss a thing.
All About the 0% Corporate Tax Threshold in UAE
UAE sets a standard CT rate of 9% for most companies who must register for corporate tax. This rule also covers free zone companies. But if a free zone company meets the Qualifying Freezone Person (QFZP) conditions, it can use the 0% CT rate. There are some special cases where this tax break works. Knowing these cases lets your business plan better.
Main Benefits of UAE 0% Corporate Tax Rate
Let’s look at the main points for getting the 0% CT rate:
- Income from Headquarter Services:
When a headquarters gives services to related parties, the money earned can use the 0% CT rate. These services can include business planning, management, admin help, or support jobs for related companies. - Keeping Adequate Substance:
If your company is a QFZP, you need to show you have real business activities in UAE. This means:- Running your core business in UAE,
- Having a real office,
- Hiring full-time workers,
- Showing real income and expenses.
- Trading Qualifying Commodities:
Companies can get the 0% CT rate for income made by trading metals, minerals, energy, or farm goods. These trades must happen on a recognized exchange in UAE or overseas and follow the official rules.
If your business plans to use the 0% rate, always check if you meet all these points. Missing any rule can mean you lose the tax break.
Conditions to Qualify for UAE 0% CT Rate
Businesses must pass all tests before getting the 0% corporate tax. Here are the main conditions:
- Your company must be a QFZP.
- Your business must do its key income activities in UAE.
- You must keep a real office and hire people, not just have a license.
- You must show that your money comes from real business, not only from holding investments.
- All records must stay up-to-date and easy to check.
If a business misses a requirement, it could lose the 0% CT rate and pay the regular 9% tax.
Who Should Use the UAE 0% Tax Rule?
The 0% tax rule fits best for:
- Headquarter offices serving related companies,
- Freezone companies trading approved commodities,
- Firms with strong business substance in UAE.
If you want to lower your tax and stay compliant, you must always review your company’s activities and check for new updates.
Steps to Keep Your Company Eligible
Mubarak Al Ketbi (MAK) Auditing suggests these easy steps for businesses:
- Review all your company documents every year,
- Keep clear records of business activities,
- Hire enough full-time staff,
- Rent or own a physical office in UAE,
- Plan regular audits to spot mistakes early.
Doing these things helps your company keep the 0% rate and avoid tax trouble.
What Can Help? – Mubarak Al Ketbi (MAK) Auditing
When you need a smart partner for tax, Mubarak Al Ketbi (MAK) Auditing stands by you. Our expert team:
- Checks if your business fits the 0% tax rule,
- Helps with audits and compliance work,
- Gives easy advice about corporate tax planning,
- Handles tax paperwork and talks with authorities,
- Offers custom training for your finance team.
You can “hit the ground running” with our guidance, making your UAE business both safe and successful!
For more information:
- Visit our office: Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates
- Contact/WhatsApp: +971 50 276 2132
