The UAE corporate tax filing deadline of 30 September 2025 is approaching fast for most businesses. Companies need to prepare their financial records, calculate taxable income, and ensure that their returns are submitted correctly to avoid penalties. This is the first major deadline since the introduction of corporate tax in the UAE, making it important for businesses to act early and avoid last-minute errors.
Following is a list of the top ten avenues which you can utilise to legally reduce your corporate tax liability:
1. Claim Small-Business Relief
If your UAE company’s annual revenue is ≤ AED 3 million and it is not part of a multinational group, you can elect Small Business Relief. This treats your taxable profit as zero for that year. For example, a shop with AED 2.8M revenue and AED 1M profit would normally owe AED 56,250 (9% on profit above AED 375K); with relief, it pays 0 AED. To get this, elect for the relief option in your return by the deadline of 30th September, 2025.
2. Use Free Zone 0% Tax (if eligible):
Free zone businesses that meet Article 18 conditions (like sufficient local staff, qualifying income sources, etc.) are taxed at 0% on their “qualifying income”. In practice, if your free-zone company satisfies the rules, its free-zone income is fully tax-exempt. For instance, a free-zone exporter with AED 1M profit will pay 0% instead of the 9% mainland rate. Make sure you maintain the required substance (office, employees) and fulfill other conditions so the 0% rate stays in effect.
3. Use the Participation Exemption:
If your company owns at least 5% of another UAE or foreign taxed company (with the intent to hold at least 12 months), dividends and capital gains from that stake are exempt. For example, a Dubai business receiving dividends from a qualified UAE subsidiary will not include those dividends in taxable income. This means the usual 9% tax on that income is avoided. (Conditions apply: the subsidiary must itself be subject to tax, and you must meet the ownership/time tests.)
4. Offset and Share Losses:
Keep track of any business loss. Losses after the corporate-tax start date can be carried forward indefinitely, offsetting up to 75% of future profits. In a group (two UAE companies with more than 75% common ownership), you can even transfer unused losses between them under group rules. That means a loss in one company can cut the taxable profit of its sister company, subject to conditions like residency and common year-end.
5. Claim All Legitimate Deductions (and Avoid Banned Expenses):
Make sure to deduct every genuine business cost (rent, salaries, equipment, etc.). However, do not claim forbidden items. The law explicitly disallows deductions for things like fines, penalties, bribes, or gifts to entities that aren’t approved public-benefit charities. For example, a fine or personal gift expense is not deductible. If you do donate, give only to registered public-benefit organizations (so it qualifies). Accurate bookkeeping ensures you don’t miss any valid expenses and don’t accidentally include a non-deductible item.
6. Manage Interest and Financing:
Interest on loans is deductible only up to AED 12 million. If it is in excess of AED 12 million, only 30% of your EBITDA (earnings before interest, tax, depreciation, and amortization) will be allowed. Any excess interest above that limit (or interest on some related-party loans) is not deductible and can be carried forward to the next 10 years.
7. Use the Foreign-PE Exemption:
If your UAE company has a foreign permanent establishment (PE), you can elect to exclude that foreign PE’s income and losses from UAE tax. In effect, you only pay UAE tax on UAE-sourced profit. This is useful when the foreign PE is already taxed abroad at a rate equal to or more than 9%. By electing this, you avoid having the foreign profit (or loss) alter your UAE tax. For example, a UAE retailer with a branch in India (where it pays tax) can ignore the Indian profit when filing UAE tax, so only the UAE revenue is taxed.
8. Depreciate Investment Property:
For properties held as investments (not owner-occupied) using fair-value accounting, a new rule allows an annual notional depreciation deduction of 4% of original cost. To use it, your company must file under the “realization basis” (tax only on sold gains). For example, a warehouse bought for AED 1M can claim AED 40,000 per year in tax depreciation, reducing taxable profit. You must elect this in the first tax return you hold the property; if you miss that, the deduction is lost.
9. Group Transfer Relief:
If you control two UAE companies (each more than 75% owned by you or a common parent, same year-end), you can move assets and liabilities between them at book value with no immediate tax gain or loss. This is useful in reorganizations. For example, transferring a machine from one company to its sister company won’t trigger a taxable gain – the new company inherits the original cost basis. (Be aware: if the asset leaves the group within 2 years, a clawback may apply.)
10. Claim Foreign Tax Credits:
If you paid corporate tax abroad on income, you can credit that against your UAE tax (up to the UAE tax liability). This avoids double taxation on the same income. Be sure to keep records of the foreign tax paid to claim this credit.
Our team helps businesses in the UAE file accurate corporate tax returns on time while ensuring full compliance with the law. We also assist in reviewing your structure and transactions to identify legitimate tax reliefs, deductions, and planning opportunities that reduce your overall liability. By working with us, you can meet your filing obligations with confidence and achieve tax efficiency tailored to your business. Email us at furqan@fiscalandfintech.com.
