Introduction

The UAE has long been known as a tax-friendly business hub, but things are shifting. With the introduction of corporate tax in 2023, 2025 brings new updates that business owners need to know. Whether you’re a startup, SME, or multinational, it’s time to get your books in order and stay compliant.

TL;DR: Starting 2025, there are new thresholds, filing rules, and exemptions—don’t get caught off guard.

📅 A Quick Recap: UAE Corporate Tax So Far

• Introduced: June 1, 2023

• Standard Rate: 9% on net profits over AED 375,000

• Who it applies to: Most UAE businesses, including those in free zones (with exceptions)

⚖️ What’s Changing in 2025?

Here’s a breakdown of the key changes expected or already announced for 2025:

1. Clarification on Free Zone Businesses

• Some free zone entities will now be subject to partial or full taxation, depending on the nature of their activity.

• Qualifying income remains taxed at 0%, but stricter definitions and compliance checks apply.

• Businesses must maintain adequate substance (real operations, real staff).

2. Transfer Pricing Documentation

• All businesses above certain revenue thresholds must comply with OECD-style transfer pricing rules.

• Required documents:

  • Master File

  • Local File

  • TP Disclosure Form (mandatory for many starting 2025)

3. Expanded Filing & Audit Requirements

• Larger companies may face mandatory audits and stricter record-keeping rules.

• Penalties for late or incorrect filings have increased (up to AED 50,000 in some cases).

4. Digital Economy & E-Commerce Regulations

• New reporting standards for e-commerce revenue and digital businesses.

• Thresholds: Businesses earning over AED X from online sources must declare digital revenue separately (exact amount TBD).

5. Updates to Tax Grouping Rules

• More clarity on forming tax groups (parent-subsidiary structures).

• Must meet control and ownership conditions.

• New joint liability provisions introduced for tax group members.

🧠 Who Needs to Pay Attention?

• Free Zone entities (especially in tech, logistics, or consulting)

• Multinational businesses with cross-border transactions

• E-commerce & influencers

• Professional services firms

• Startups approaching or surpassing the AED 375,000 profit mark