Japan corporate tax rate, filing deadline, tax incentives, and exemptions explained

Why expand to Dubai?

Dubai, the second largest emirate in the United Arab Emirates, is widely known as a global business hub. Once a humble fishing village, it is now one of the fastest growing economies not only in the UAE but also globally.

The flow of foreign investment into Dubai has expanded multifold since its economic diversification in the 1970s, when it took a deliberate step away from oil to transition into a knowledge-based economy. Today, less than 1% of Dubai's GDP comes from oil and the emirate has transformed into a global centre of trade, financial services, logistics, tourism, and technology.²

Dubai-based businesses gain from its strategic location. Not only is it flanked by Abu Dhabi in the south and Sharjah in the northeast, it also connects West Asia to Africa, Asia, and Europe. Extensive port facilities, advanced infrastructure, and the presence of the world's busiest airport give it a logistical edge in the region.³

In its multi-disciplinary free zones, Dubai offers foreign companies what few other countries do – 100% foreign ownership. And despite its luxurious towers and glamorous reputation, it is welcoming of small businesses. With Dubai aiming to get half of its energy from renewable sources by 2050 and moving ahead with its plan to build the UAE's first coal power plant, global businesses engaged in the energy sector have a compelling reason to eye a Dubai expansion.⁴

Dubai corporate tax

Until about three years ago, Dubai and the wider United Arab Emirates did not tax corporate earnings. However, in a major move to align itself with international markets, the UAE introduced its first ever corporate tax regime, effective from the financial years starting on or after June 1, 2023.

The UAE corporate tax – which is also called Business Profits Tax and covers all seven emirates, including Dubai – is a direct tax levied on the net income or profit of corporations. Both domestic and foreign companies are subject to this federal corporate tax. However, under corporate tax law, certain business entities are exempt from corporate tax. These include but are not limited to UAE government entities or government-controlled entities, businesses engaged in extractive or non-extractive natural resources activities, qualifying public benefit entities, and qualifying investment funds.

Furthermore, the law provides for certain exempt income that does not attract corporate tax, including:

• Dividends and capital gains earned by resident persons from qualifying shareholders
  
• Foreign investor's earnings from dividends, interest, royalties, capital gains, and other investment income.
  

The Dubai corporate income tax is levied at two rates. A third higher rate might apply to certain large corporations under special rules aimed at establishing a fair and transparent tax system aligned with global standards. Called a Domestic Minimum Top-up Tax (DMTT), this tax is applicable on MNCs with annual consolidated global revenues exceeding EUR 750 million for financial years starting on or after January 1, 2025.

The Federal Tax Authority is responsible for tax administration, assessment, and collection in Dubai and the rest of the UAE.

Tax rates and structures in Dubai

The corporate tax rate in Dubai is based on taxable income thresholds. Annual taxable profits exceeding AED 375,000 attract a corporate tax (CT) rate of 9% while those under AED 375,000 incur corporate tax at the rate of 0%.

Certain types of businesses are taxed under emirate-level specialised taxes instead of the corporate tax system. Branches of foreign banks pay tax at a flat rate of 20% while businesses engaged in oil, gas, and petrochemical activities are taxed at varying rates under these older provisions.

Dubai is also known for its free zones, and the corporate tax structure is slightly different for free zone businesses:

• Qualifying income of businesses recognised as Qualifying Free Zone Persons (QFZPs) are subject to corporate tax at 0%
  
• Non-qualifying income is subject to corporate tax at 9%
  

To be a Qualifying Free Zone Person, a business must:

• Maintain adequate substance (premises and personnel) in the UAE
  
• Earn qualifying income (from compliant free zone business activities)
  
• Elect to not be part of the regular corporate tax regime
  
• Keep its non-qualifying income below 5% of total revenue or AED 5 million, whichever is lower
  
• Prepare audited financial statements compliant with International Financial Reporting Standards
  
• Meet any additional conditions of the free zone authority.
  

Large MNCs out of the purview of the Dubai corporate tax system are required to pay a 15% Domestic Minimum Top-up Tax (DMTT) on their business profits.

What is considered taxable income in Dubai?

Calculating taxable income in Dubai starts with accounting income, which is a company's net profit (or loss) for the relevant tax period based on its financial statements. This net profit is then adjusted for the following:

• Unrealised gains or losses
  
• Exempt income, such as dividends and other profit distributions
  
• Applicable tax reliefs and incentives
  
• Non-deductible expenditure, such as expenses not wholly or exclusively incurred for trade or business, capital expenditure, disallowed entertainment costs, etc.
  

In the calculation of taxable income, the following expenses are deductible for tax purposes:

• Operating expenses
  
• Start-up expenses
  
• Interest on business loans
  
• Marketing and advertising costs
  
• Professional services fees
  
• Donations to approved charities
  
• Up to 50% of entertainment expenses
  
• Depreciation costs (with limitations).
  

Historical corporate tax rates and recent reforms in Dubai

The UAE corporate tax rate of 9% was introduced in 2023, the first time corporate income came under taxation in the Emirates.

Following the introduction of the 9% federal corporate tax rate on taxable income exceeding AED 375,000, the 15% Domestic Minimum Top-up Tax (DMTT) was the next big reform to be introduced in 2025. This was followed by the announcement of tax incentives for high-value activities, such as research and development.

Among other recent reforms, the UAE made it mandatory for all tax filings to be based on audited financial statements prepared as per International Financial Reporting Standards.

Tax incentives and exemptions

Business entities can avail of various incentives in Dubai, including:

• Small business relief: Till December, resident companies with revenue less than or equal to AED 3 million in a tax period may elect to be treated as not having any taxable income. This means they will not be subject to corporate tax and also benefit from simplified tax filing and record-keeping.
  
• Free Zone tax regime: As previously mentioned, free zone persons benefit from a corporate tax rate of 0% on qualifying income if they meet the conditions to be a Qualifying Free Zone Person.
  
• Foreign tax credit: Companies in Dubai are entitled to tax credit on any foreign tax paid on business profits that are taxable in the UAE. This credit is limited to the corporate tax liability in Dubai.
  
• Innovation-driven incentives: Starting this year, Dubai is expected to roll out expenditure-based tax credits for innovation-driven businesses. These include a 30-50% tax credit on qualifying R&D expenses and refundable tax credits for high-value employment.
  

When to file corporate tax returns in Dubai

The tax period in Dubai aligns with the calendar year. However, companies are free to opt for a different tax period starting on or after June 1, 2023.

Only one annual corporate tax return must be filed. This is due within nine months after the end of the relevant tax period. Returns must be filed electronically on the Federal Tax Authority's Emara tax portal. This deadline applies to the payment of corporate tax too.

Reducing tax burden with double taxation agreements

Companies in Dubai can avail of additional tax relief under the 193-odd double taxation agreements the UAE has signed, one of which is with Singapore. These tax treaties exist to prevent dual taxation, ensure fair and transparent taxation, and put an end to harmful tax practices.

The Singapore-UAE treaty, which dates back to 1995, protects businesses against double taxation in two ways – resident persons in the UAE receive tax deductions on taxes paid in Singapore while Singapore resident companies receive tax credits to offset taxes paid in the UAE.

Furthermore, under the treaty provisions, companies in the two contracting states benefit from reduced withholding tax rates on dividends, interest, and royalties. Withholding tax on dividends and interest payments between the two countries has been eliminated while royalty payments are taxed at 5%.

Tax treatment of dividends

Dubai currently charges withholding tax at the rate of 0% on dividends paid to both domestic and foreign shareholders.

For foreign entities that aren't tax residents of the UAE, income from dividends attracts a 0% withholding tax, as long as the income cannot be attributed to its UAE permanent establishment.

Income from royalties and professional services fees also attract 0% withholding tax.

Other taxes in Dubai

Value added tax (VAT)

This is an indirect tax on goods and services. The standard VAT rate in Dubai is 5%. However, certain supplies (international transportation, crude oil and natural gas, healthcare, education, exports) are subject to 0% VAT while others (domestic transportation, certain financial services) are exempt.

Municipality property tax

The UAE imposes a municipality tax on property based on its annual rental value, the rate for which varies across the Emirates. In Dubai, the tax rate is 2.5% for commercial properties (paid by property owners) and 5% for residential properties (paid by tenants or owners if not rented).

Additionally, transfer of ownership of land or real property may attract a registration fee at the rate of 4% of the property's fair market value in Dubai.

Customs and excise duty

Customs duty is imposed on specific imports at the standard rate of 5%. Higher duty rates apply to imports such as alcohol (50%) and tobacco (100%). Additionally, goods considered harmful to human health and the environment are subject to excise duty at rates of 50% and 100%.

Tax compliance and registration

Companies conducting trade or business in Dubai are expected to fulfil certain tax obligations:

• Registration: It is mandatory for all taxable persons in Dubai to complete their corporate tax registration and obtain a Corporate Tax Registration Number from the Federal Tax Authority. Even exempt persons may be required to register.
  
• Tax filing and payment: The annual corporate tax return submission deadline is within nine months of the end of the relevant tax period. Corporate tax payments must also be completed by this date.
  
• Record-keeping: Taxable persons are required to prepare financial statements compatible with International Financial reporting Standards. Companies or UAE permanent establishments with taxable revenue exceeding AED 50 million must get their statements audited.
  
• Fees and penalties: Tax compliance failures such as delayed registration and filing, inaccurate returns, and tax payment delays can attract fines and penalties.
  

How Aspire can help your expansion into Dubai

Expanding one's business globally means working with global suppliers/clients and dealing in frequent cross-border transactions. It requires an efficient, reliable, and secure financial services platform that supports business and drives growth. Aspire can help with its wide range of useful products:

• A multi-currency business account that allows you to receive and make payments in 30+ currencies across more than 130 countries. It comes with market-leading FX rates, low and transparent pricing, and attractive cash back offers that lead to authentic savings.
  
• Fast and easy global payments with same-day transfers in 15+ currencies. Currency conversions are revealed up-front, so you know exactly how much you are paying.
  

FAQs

Is there corporate tax in Dubai?

Yes, Dubai has been imposing corporate tax at the rates of 9% and 0% since 2023.

Who pays 9% tax in Dubai?

Businesses – including resident persons, non-resident persons, and free zone persons – are subject to 9% corporate tax in Dubai if their annual taxable income exceeds AED 375,000.

How much tax does a company pay in Dubai?

Dubai-based companies pay corporate tax at the rate of 0% on taxable income below AED 375,000 and 9% if the income crosses this threshold. Large MNCs with annual consolidated global revenues of more than EUR 750 million pay a 15% minimum top-up tax instead.

How to save corporate tax in Dubai?

Ways to save on corporate tax in Dubai include leveraging incentives such as small business relief and free zone benefits, claiming all deductible expenses, and strictly fulfilling tax obligations to save on fines and penalties.

What was the corporate tax in Dubai 2025?

The corporate tax rate in Dubai in 2025 stood at 9% and 0%.

Is Dubai a tax haven?

While not a traditional tax haven, Dubai is a low-tax jurisdiction with low corporate tax and VAT rates, 0% withholding tax, and no personal income tax and capital gains tax.