UAE Corporate Tax applies to all UAE businesses and commercial activities except for the extraction of natural resources, which remains subject to Emirate-level taxation. This includes entities incorporated in the UAE, foreign entities with a permanent establishment in the UAE, and individuals conducting business activities that require a commercial license. Free Zone businesses that meet certain conditions may qualify for preferential tax treatment. Government entities, pension funds, investment funds, and public benefit organizations may be exempt subject to meeting specific criteria. Consult with the best corporate tax consultants Dubai to know more about this.

Free Zone businesses that comply with all regulatory requirements and that do not conduct business with mainland UAE can benefit from a 0% Corporate Tax rate on qualifying income. However, income from mainland UAE or from non-qualifying activities will be subject to the standard Corporate Tax rate of 9%. Free Zone businesses must meet substance requirements, comply with transfer pricing rules, and file corporate tax returns to qualify for the preferential tax treatment. The specific conditions and qualifying activities may vary by Free Zone.

Businesses must maintain financial statements, records of assets and liabilities, revenue and expense documentation, inventory records, and other documents that support the tax return and tax position taken. These records must be kept for a minimum period of 7 years following the end of the tax period. Records can be maintained in physical or electronic format but must be readily accessible and provided to the tax authorities upon request. Proper record-keeping is essential for supporting corporate tax return filings and defending tax positions during audits.