Corporate tax in GCC has been evolving fast in recent years. As a business owner in this region, it’s crucial to stay up-to-date with these changes so you can avoid penalties and make smart decisions for your business. Here’s a breakdown of the key updates on corporate tax in the GCC, focusing on the UAE, Saudi Arabia, and Oman.
Who Is Subject to Corporate Tax in the UAE?
If you’re a business owner in the UAE, you might be wondering if your company is subject to corporate tax in Dubai or the broader UAE. The short answer is: Yes, since the UAE government introduced corporate tax laws in 2023, businesses are required to pay corporate tax, but not all businesses are in the same boat.
What You Need to Know:
- Small businesses with income below a certain threshold are generally exempt from corporate tax.
- Free zone businesses might be eligible for tax exemptions if they meet certain criteria.
- Foreign companies and businesses involved in the oil and gas industry will be taxed as well, but at different rates.
For a lot of companies, corporate tax registration will be required if your business falls under the taxable category. It’s vital to check with the UAE corporate tax authority to see if your company needs to register.
What Is Corporate Tax in GCC?
The corporate tax in the GCC varies from country to country, but it’s becoming more standardized, especially in places like the UAE and Saudi Arabia. Here’s a quick overview of corporate tax rates across the region:
- UAE: Introduced a 9% corporate tax rate for businesses making over AED 375,000 in profits.
- Saudi Arabia: Corporate tax here is 20% for most businesses, though special rates apply to oil and gas firms.
- Oman: Oman recently restructured its tax system to apply corporate tax rates ranging from 10% to 15%, depending on the size of the company.
Countries like Bahrain and Qatar still have low or no corporate taxes, but with the changes happening across the region, it’s a good idea to keep an eye on potential tax reforms.
What Is Corporate Tax in Saudi Arabia?
Saudi Arabia has been one of the leaders in the Gulf when it comes to introducing corporate taxes. Corporate tax in Saudi Arabia applies to both Saudi and foreign companies that generate income within the country.
Key Points:
- The standard corporate income tax in Saudi Arabia is 20%, with some exceptions depending on the industry.
- Foreign businesses might also have to pay a withholding tax on dividends, royalties, and other income.
- Tax-free zones in Saudi Arabia provide exemptions, but these are specific to certain conditions and industries.
It’s a good idea to register your business with the Saudi tax authority to ensure compliance and avoid fines.
What Is the Latest on UAE Corporate Tax?
Since 2023, the UAE has introduced several changes to its corporate tax framework. These changes are designed to align the country with international standards while also supporting the local business environment.
Here’s a quick guide on the latest updates:
Corporate Tax Business Guide in 2025
- Corporate tax in the UAE is set to apply to companies that generate significant income. As of 2024, businesses with profits above AED 375,000 will be taxed at a 9% rate. This is a huge step toward modernizing the tax system in the UAE.
- If you own a business, corporate tax registration is now mandatory if you’re earning taxable income. The corporate tax registration deadline is essential to avoid fines.
Economic Substance Regulations (ESR) Abolished
In a significant move, the UAE government has decided to abolish the Economic Substance Regulations (ESR). This was a regulation that required companies in certain sectors to prove they had enough business activity in the UAE to justify their tax exemption.
Without these regulations, businesses can breathe a little easier, knowing they won’t have to go through the complex process of proving economic substance anymore.
Taxes for Residents
For residents of the UAE, it’s important to know that corporate tax doesn’t impact personal income. UAE residents will continue to enjoy tax-free personal income, but businesses will need to stay updated with changes related to corporate taxes.
Taxes for Non-Residents
If you’re a non-resident with a business in the UAE, there are a few things to keep in mind:
- Non-residents will still be subject to corporate taxes on any income generated in the UAE.
- Tax exemptions may be available for foreign businesses under certain conditions, especially for companies operating in free zones.
- The corporate tax in Dubai might also apply to non-residents, but the rates and conditions vary, so make sure to check the official government guidelines.
Deadline for Submitting a Tax Registration Application
You need to submit your tax registration application before the deadline to avoid any fines or penalties. The UAE government has set clear deadlines for tax registration, and failing to register on time could lead to serious consequences for your business.
So, mark your calendar and make sure you don’t miss the corporate tax registration deadline!
Qualifying Free Zone Persons
Businesses operating in qualifying free zones may be eligible for corporate tax exemptions, but there are specific requirements you need to meet. These zones offer various incentives, such as no corporate tax for a limited time or reduced rates.
Check if your business qualifies for these benefits and ensure you’re meeting the necessary criteria to continue enjoying tax exemptions.
Filing of Corporate Tax
Once your business is registered, you will need to file corporate tax returns annually. This process can be complicated, so it’s recommended to work with a tax advisor to ensure all information is correctly filed.
The UAE has implemented an online tax filing system, making the process smoother and more efficient. Make sure you’re ready to file on time and avoid penalties.
Corporate Tax in Oman
Oman is another country in the GCC that’s making changes to its corporate tax laws. The corporate tax in Oman is slightly different from the UAE and Saudi Arabia, so business owners in Oman should stay aware of these updates.
Key Changes:
- Oman recently introduced corporate income tax rates that range from 10% to 15%, depending on the size of the business.
- The Oman tax authority has been actively working to streamline tax processes, making it easier for businesses to comply.
- Small businesses in Oman may benefit from tax relief, so make sure to check the latest updates on this.
Keeping up with corporate tax in the GCC is essential for every business owner in the region. Whether you’re based in the UAE, Saudi Arabia, or Oman, staying informed about the latest updates can help you avoid costly mistakes and keep your business running smoothly.
Here’s what you can do:
- Make sure to register for corporate tax if your business is subject to it.
- Stay on top of the corporate tax registration deadline to avoid penalties.
- Consider consulting with a tax advisor to ensure you’re filing correctly and taking advantage of any available exemptions.
By staying proactive, you can ensure your business remains compliant with corporate tax laws across the GCC. Stay informed and keep your business moving forward!
Understanding corporate tax in the GCC is a must for any business owner looking to stay compliant and thrive in a competitive market. From registration deadlines to filing tips, staying informed can save you time, money, and stress.
If you’re feeling overwhelmed or unsure about managing your corporate tax obligations, Freezoner is here to help. Our expert team specializes in making tax compliance simple, guiding businesses through corporate tax registration, filing, and more.
Let Freezoner handle the complexities while you focus on growing your business. Contact us today and take the first step toward hassle-free corporate tax management!