UAE Corporate Tax Compliance Checklist

Free Zone Entities - What You Must Comply With

A. Corporate Income Tax (CIT)

Free Zone companies can benefit from the 0% qualifying income regime, but only if they meet strict conditions.

Everything else is taxed at 9%.

• 0% on qualifying income

• 9% on non-qualifying income

B. Registration

• Must register for CIT within 3 months of incorporation.

• Late registration = AED 10,000 penalty.

C. Filing & Payment

• Annual CIT return due 9 months after financial year-end.

• NIL returns still mandatory.

D. Records & Audit

• Maintain financial records for 7 years.

• Audited financial statements are required.

E. Penalties

• AED 500/month (first 12 months) for late filing.

• AED 1,000/month thereafter.

• AED 10,000–20,000 for poor record-keeping.

VAT Compliance for Free Zones

VAT applies at 5%, even in Free Zones (except specific Designated Zones for goods).

• Registration threshold: AED 375,000 turnover.

• VAT returns: Monthly or quarterly.

• Deadline: 28th of the following month.

• Record-keeping: Minimum 5 years.

Penalties escalate up to 300% for unpaid VAT.

Economic Substance (ESR)

Separate ESR filings are no longer required, but Free Zone entities must still demonstrate substance through:

• Adequate staffing.

• Operating expenses.

• Physical presence.

• Documented core income-generating activities.

Transfer Pricing (TP)

Mandatory when dealing with Related Parties or Connected Persons.

• TP documentation required if:

  • Revenue exceeds AED 200 million, or

  • Related-party transactions exceed AED 40 million

• Non-compliance may lead to income adjustments and loss of 0% benefits

Mainland Companies - Compliance Requirements

A. Corporate Income Tax (CIT)

Mainland companies follow the UAE’s federal corporate tax regime:

• 0% on income up to AED 375,000

• 9% on income above AED 375,000

A.1 Registration

• Must register within 3 months of incorporation.

• Late registration = AED 10,000 penalty.

A.2 Filing & Payment

• CIT return due 9 months after financial year-end.

• Tax must be paid by the same deadline.

A.3 Records & Audit

• Maintain accounting records and supporting documents for 7 years.

A.4 Penalties

• AED 500–1,000 per month for late filing

• AED 10,000–20,000 for inadequate records

B. VAT Compliance (Mainland)

• Standard rate 5%

• Registration threshold: AED 375,000

• Returns filed monthly or quarterly

• Deadline: 28th of the following month

• Records must be kept for 5 years

Late compliance = escalating penalties.

C. Economic Substance (ESR)

ESR is integrated into CIT. Mainland companies must demonstrate:

• Real economic activity

• Adequate operations in the UAE

• Proper documentation of key functions

D. Transfer Pricing (TP)

Mainland entities must ensure related-party transactions meet the arm’s-length standard.

• TP documentation required when:

  • Annual revenue > AED 200 million, or

  • Related-party transactions > AED 40 million

Offshore Entities - Compliance Requirements

Offshore entities (RAK ICC, JAFZA Offshore, etc.) must register for corporate tax if they earn UAE-sourced income or are effectively managed from the UAE.

Corporate Income Tax (CIT)

• Standard rate: 9% (unless specific exemptions apply)

Registration

• Must register within 3 months of incorporation.

Filing & Payment

• Annual CIT return required

• Applies even if claiming exemption or earning no taxable income

Records

• Must retain financial and management records for 7 years.

VAT Compliance

Only required if the offshore company carries out taxable supplies within the UAE.

Economic Substance (ESR)

No standalone ESR filing, but substance documentation must be maintained for CIT review.

Transfer Pricing (TP)

• Offshore entities must comply with TP rules for related-party transactions.

• Documentation required for large or significant transactions.

Key Compliance Deadlines (2025)

• CIT Registration: Within 3 months of incorporation/threshold

• CIT Return Filing: 9 months after financial year-end

• VAT Registration: Upon crossing AED 375,000 turnover

• VAT Return Filing: Monthly/quarterly, by the 28th

Bottom Line

Compliance in the UAE isn’t complicated when you stay ahead of the deadlines and keep your records clean.

This checklist gives you a clear view of what Free Zone, Mainland, and Offshore entities must do; across Corporate Tax, VAT, ESR, and Transfer Pricing.

Let's jump right into it