This guide is educational. Tax rules change and depend on your facts. Confirm details with the UAE Federal Tax Authority or a qualified adviser.
UAE Corporate Tax Basics
- The standard rate is 9% on taxable profit above AED 375,000.
- Profit up to AED 375,000 is taxed at 0%.
- Most companies must register for corporate tax, even when no tax is due.
- You must keep proper accounting records.
Small business relief may apply to companies with low revenue for certain tax periods. Check the current rules and your tax period dates before you rely on it.
Free Zone Companies and 0% Tax
A qualifying free zone person can pay 0% on qualifying income. Income that does not qualify can be taxed at 9%. Meeting the conditions needs the right activity, enough substance and clean records.
Do not assume that every freezone company pays no tax. Get advice before you plan your structure. Our guide to Dubai freezone vs mainland explains the license side.
VAT Basics
| Item | Rule |
|---|---|
| VAT rate | 5% on most goods and services |
| Mandatory registration | When taxable supplies exceed AED 375,000 in 12 months |
| Voluntary registration | Possible when supplies or expenses exceed AED 187,500 |
| Returns | Filed with the Federal Tax Authority on a regular schedule |
Use our UAE VAT calculator to work out VAT on your invoices.
How to Register With the Federal Tax Authority
- Create an account on the Federal Tax Authority EmaraTax portal.
- Prepare your trade license, passport copies and company details.
- Submit the corporate tax registration.
- Submit the VAT registration if you pass the threshold or choose to register.
- Save your registration numbers and certificates.
Registration deadlines can apply. Check the current dates on the Federal Tax Authority website.
Records You Must Keep
- Sales and purchase invoices.
- Contracts with customers and suppliers.
- Bank statements for the company account.
- Payroll and visa documents.
- Accounting books that match your financial statements.
Good records protect you in an audit. They also help your bank review your account with less delay.
Common Mistakes Pakistani Founders Make
- Assuming a freezone company pays no tax at all.
- Forgetting corporate tax registration.
- Missing the VAT registration threshold.
- Mixing personal and company expenses.
- Ignoring Pakistan tax duties on worldwide income.
Example: A Year in the Life of a Lahore-Owned Service Company
This is an illustrative example, not a client result. A Lahore founder runs a freezone company that serves overseas clients. In January the founder reviews last year records. In spring the founder files returns and checks the VAT position. During the year the founder keeps invoices and bank statements in one folder. Before the license expires, the founder renews it and confirms the tax registration details.
This steady routine avoids late fees and keeps banking smooth. You can follow the same pattern with a calendar and a trusted adviser.
Annual Tax Checklist for a UAE Company
- Register for corporate tax with the Federal Tax Authority.
- Register for VAT if you pass the threshold.
- Keep invoices, contracts and bank statements.
- File VAT returns on time.
- File your corporate tax return after your tax period ends.
- Renew your license before it expires.
Do You Still Owe Tax in Pakistan?
A Pakistan tax resident may still owe tax in Pakistan on worldwide income. Rules depend on your residency and income type. Speak with a Pakistan tax adviser. You can start with our PK tax calculator.
Frequently Asked Questions
Do I pay corporate tax if my company made a loss?
You usually still need to register and file. The tax due may be zero.
Is a freezone company exempt from VAT?
No. VAT rules apply based on your supplies. Some freezone areas have special rules, so check your case.
When must I register for VAT?
You must register when your taxable supplies pass AED 375,000 in a 12-month period.
Can your Lahore team help with setup?
Yes. Visit 16 Chohan Tower, Jail Road, Shadman II, Lahore, or book a call.
Official Sources
Always confirm fees and rules on the official websites.