Corporate Tax Reliefs and Exemptions: What Your Business Can Claim

The UAE Corporate Tax system is designed to be business-friendly, offering several reliefs and exemptions to reduce tax liability. Knowing which reliefs your business can claim is essential for maximising savings and ensuring compliance.

What Are Corporate Tax Reliefs and Exemptions?

Corporate Tax reliefs and exemptions are provisions in UAE tax law that reduce your taxable income or exempt certain income from tax. They help businesses:

• Pay less Corporate Tax.

• Reinvest savings into growth.

• Ensure compliance while benefiting from government incentives.

Common Corporate Tax Reliefs

Small Business Relief

• Businesses with taxable profits up to AED 375,000 pay 0% Corporate Tax.

• Encourages startups and SMEs to grow without being overburdened by tax.

Charitable Contributions

• Donations to approved charitable organizations may be deductible.

• Ensure documentation and eligibility to claim the relief.

Research and Development (R&D) Incentives

• Some expenses related to innovation and R&D may qualify for deductions.

• Helps businesses investing in technology and growth reduce taxable income.

Loss Carryforward

• Losses from previous years can often be carried forward to offset future profits, reducing taxable income.

Corporate Tax Exemptions

Free Zone Income

• Qualifying Free Zone Persons (QFZPs) may benefit from 0% Corporate Tax on qualifying income.

• Conditions include substance requirements and limited mainland UAE transactions.

Government and Public Entities

• Certain government entities and public institutions are fully exempt from Corporate Tax.

Dividend and Capital Gains Exemptions

• Profits from dividends or qualifying capital gains may be partially or fully exempt, depending on the nature of the investment.

How to Claim Reliefs and Exemptions

Maintain Accurate Records

Keep detailed documentation for all expenses, donations, and qualifying activities.

File Corporate Tax Returns Correctly

Ensure that all reliefs and exemptions are properly reported on your CT return.

Consult a Tax Advisor

Complex reliefs, like free zone benefits or R&D deductions, may require professional guidance to maximize eligibility.