The Strategic Guide to Tax Consultancy in the UAE

The UAE is no longer a country where tax planning means checking that there is no tax. Corporate tax applies, VAT applies, and the record-keeping expected behind both is substantial. Anyone still describing the UAE as tax-free is describing the position before Federal Decree-Law No. 47 of 2022, and businesses that took that description at face value are the ones now doing several years of work at once.

This guide sets out what actually falls within a UAE tax engagement today, what has been withdrawn, and where the free zones do and do not make a difference. It is written for owners and finance directors deciding what to ask for, not as a technical manual.

What the UAE actually taxes

Corporate tax. Federal Decree-Law No. 47 of 2022 applies for financial years starting on or after 1 June 2023. Taxable income up to AED 375,000 is taxed at 0%, and 9% applies above that. The registration and filing obligations are separate from whether any tax is payable — a company below the threshold still has to register with the Federal Tax Authority and file.

VAT. Charged at 5% under Federal Decree-Law No. 8 of 2017, as amended by Federal Decree-Law No. 18 of 2022, with its own registration test, invoicing rules and return cycle. VAT and corporate tax are administered by the same authority but are entirely separate regimes: being registered for one says nothing about the other.

Excise tax applies to a defined category of goods and concerns importers, producers and stockpilers of those goods rather than businesses generally.

There is no federal tax on employment income. That does not make employment costs a tax-free area — end-of-service entitlements, wage protection and contract form are governed by employment law rather than tax law, and our employment law advisory covers those obligations, which are frequently mistaken for a payroll tax question.

What has been withdrawn

The Economic Substance Regulations were cancelled by Cabinet Decision No. 98 of 2024 for financial years ending after 31 December 2022. Obligations remain only for the FY2019 to FY2022 period.

What is left is therefore historic work rather than a recurring obligation. Any budget still set aside for a yearly substance exercise can be released, and the attention belongs instead to those earlier years, where notifications and reports that were missed, or filed on a basis that would not hold up, are still outstanding. Cancellation ended the obligation going forward; it settled nothing that was already owed. Closing that period out — establishing what was filed, for which entities, and on what basis — is a finite job, and one better done as a decision than discovered by a buyer during due diligence.

Free zones, DIFC and ADGM: less tax difference than most people expect

This is where advice is most often oversold, so it is worth being direct.

Corporate tax is federal, and a free zone licence is not an exemption from it. An entity established in a free zone, the DIFC and the ADGM included, registers and files like any other. What the centres offer is a relief for free zone persons, and a relief is a claim: it is made by the taxpayer, on conditions set out in the legislation and the decisions issued under it, and it has to be capable of being supported by what the entity genuinely does, where it does it and who its customers are. Treating it as an attribute of the address is the most expensive misunderstanding in this area.

The DIFC and the ADGM are common law jurisdictions with their own courts, their own companies legislation and their own financial regulators. Those are real advantages for governance, for financing and for dispute resolution. They are not a separate corporate tax regime. If an adviser's pitch for a DIFC or ADGM entity is primarily a tax rate, ask what conditions attach to it and how they will be evidenced each year.

What a tax engagement should actually cover

An engagement worth paying for goes well beyond preparing a return. The parts that change outcomes are these.

• Registration and scope. Which entities in the group must register, on what basis, and whether any grouping or consolidation is available and appropriate.
• Structure. Which entity signs contracts with customers, where activity is genuinely carried on, and whether the structure that made sense before the corporate tax law still makes sense now. Restructuring after the fact is far more expensive than deciding correctly at the outset.
• Related-party dealings. A charge passing between two entities in the same group has to be one an unconnected party would have accepted, and it has to be capable of being explained to somebody with no interest in the answer. Where management charges, licence fees or intercompany loans have run for years on nothing more than a ledger entry, the arrangement has to be created as an agreement before anyone can sensibly price it, which makes this legal work as much as accounting work.
• Contracts. Intercompany agreements, service agreements and a properly drafted consultancy agreement are the evidence that a charge reflects something real. An invoice with no agreement behind it is the weakest position in any review.
• Foreign groups. Whether activity in the UAE creates a taxable presence for a non-resident entity, and how any applicable double tax treaty affects the position.
• Records. What has to be kept, in what form, and for how long the legislation requires it — decided in advance rather than reconstructed when a question arrives.

If the authority disagrees with you

Tax disputes follow a federal route, and it is not the route people expect from commercial litigation here. A decision of the Federal Tax Authority may be challenged first by asking the authority itself to reconsider, and beyond that through the challenge route the tax legislation provides.

Two points follow. First, this path runs on procedural requirements and on the strength of the file as it stands when the challenge is made, which is why contemporaneous documentation matters so much. Second, the DIFC and ADGM Courts are not part of it — they hear contractual and corporate disputes chosen into their jurisdiction, and their procedure, which our DIFC Courts practice handles, is a separate subject entirely. A DIFC-registered company still takes its tax dispute down the federal path.

Where an error is found before the authority finds it, the legislation provides routes for correcting a return or a disclosure. Correcting voluntarily is a materially better position than being assessed, and the decision on how and when to do it is worth taking with advice.

Choosing who advises you

Tax work in the UAE is split between accountants and tax agents on one side and lawyers on the other, and the division is not always obvious to clients. Filing, computation and dealings with the authority in the capacity of a registered tax agent sit naturally with the first group. Questions of structure, contract, group reorganisation, treaty position and dispute strategy are legal questions, and they are usually where the money is.

Three practical tests when appointing an adviser. Ask what conditions attach to any relief being promised, and how compliance with them will be evidenced each year. Ask who will actually do the work and whether they have dealt with the authority before. And treat any confident, unqualified statement that a structure will be taxed at nothing as a reason to ask more questions rather than fewer. Clients comparing firms often start by looking for the best lawyers in Dubai and then narrow by who has done the specific work; among the law firms in Dubai handling tax, the relevant question is how many of these positions they have defended, not how many they have designed.

A short order of work

1. List every entity in the group, its licence, and its financial year.
2. Confirm registration status for corporate tax and VAT for each.
3. Close out the FY2019 to FY2022 economic substance position, then stop any filing that is no longer required.
4. Paper the intercompany arrangements that exist in practice but not on file.
5. Test any free zone relief being relied on against the conditions, in writing, and repeat that test each year.

None of this is exotic. It is the ordinary consequence of a jurisdiction that now has a corporate tax system, and businesses that treat it as ordinary — a recurring compliance obligation with a legal file behind it — spend far less on it than those who treat each filing as an emergency. Our tax consultancy team works with groups on exactly that basis.

Related Services: Explore our UAE tax advisory and tax structuring services for practical legal support in this area.

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.

Nour Attorneys Team

Additional Resources

• Resolving Tax Consultancy Disputes Effectively
• Common Tax Consultancy Mistakes to Avoid in Dubai
• How Proper Tax Consultancy Structuring Saves Millions
• UAE Corporate Tax: Complete Guide for Businesses in 2025