The United Arab Emirates has long established itself as one of the most attractive destinations for international business. Among the key reasons are a stable economy, a favorable tax environment, simple company registration procedures, the prestige of the jurisdiction, and broad opportunities for scaling. That is why many Ukrainian entrepreneurs choose to register their business in the UAE. Business all inclusive in the UAE, especially in sectors such as IT, e-commerce, consulting, and educational services.
However, after the introduction of corporate tax in 2023, taxation and banking operations in the Emirates require special attention. Despite the fact that the corporate tax rate remains one of the lowest in the world, 9%, access to tax benefits and banking services depends on the correct choice of legal structure, type of zone (designated / non-designated), substance, and the nature of the activity.
This guide article is based on current legislation and the real-life experiences of our clients. At Finevolution, we continuously support businesses in UAE free zones and provide consultations on how to run a business in the UAE smoothly and most profitably.
Corporate tax in the UAE: who pays 9% and who pays 0%
In 2023, the UAE introduced the Corporate Tax Law. The base rate is 9% and applies to the profits of companies registered both in Designated Zones and Non-Designated Zones. This means that for most IT companies that do not conduct a qualifying activity, the 0% preferential rate does not apply automatically – even if the company is registered in a free zone.
What types of activities are considered qualifying?
According to Cabinet Decision No. 265 dated 27.10.2023, the 0% preferential rate is only available for companies conducting so-called “Qualifying Activity.”
- manufacturing and processing of goods,
- fund management,
- aircraft financing and leasing,
- logistics,
- wholesale distribution within the free zone,
- head office services to related parties,
- other activities with clear economic substance.
Consulting, IT, and online educational services are not included in these categories. Therefore, if a company provides IT services or engages in online education, the corporate tax rate is 9% – regardless of the free zone in which it is registered.
When is tax exemption possible – Small Business Relief
If a company is registered in a Non-Designated Zone (for example, Meydan) and its annual revenue does not exceed AED 3 million (approximately EUR 748,596), it may qualify for the Small Business Relief regime – and pay 0% corporate tax.
The benefit is valid until the reporting period ending in 2026, but to apply it, a number of conditions must be met, including:
- confirming the existence of economic substance in the UAE (a physical office, employees),
- registering with the tax authority within 90 days of company formation.
At Finevolution, we support clients with both company registration and obtaining tax numbers and filing reports, including checking eligibility for this relief.
VAT in the UAE for service exporters: when the 0% rate applies
Although the UAE has a standard VAT rate of 5%, companies that export services outside the country may qualify for a 0% VAT rate. This rule also applies to IT services and educational products (courses, consultations) provided to non-residents of the UAE.
- confirm that services are provided to clients outside the UAE;
- ensure that the services are not used directly within the territory of the UAE;
- comply with requirements regarding contracts, payments, and methods of service delivery (remotely, online).
If these conditions are met, the services are considered exports, and the company has the right not to charge VAT to clients – the rate is 0%.
- register as a VAT payer once the annual turnover reaches AED 375,000 (approximately EUR 93,575),
- submit quarterly reports from the moment of registration,
- maintain accounting records using certified software (Zoho, QuickBooks, First Bit, Tally, etc.).
Note: Even at the 0% VAT rate, tax reporting remains mandatory.
