Corporate Changes in the UAE. Tax and Reporting in 2025–2026

For many years, the UAE was perceived as a jurisdiction with minimal tax obligations and a simplified business environment. In recent years, however, the country has entered a new phase: aligning itself with international standards of transparency and financial regulation. The introduction of corporate tax, expanded reporting obligations, and stricter compliance rules are transforming the UAE into a jurisdiction where investor confidence is reinforced by modern governance mechanisms. The years 2025–2026 will be decisive, as businesses must adapt to a regulatory landscape that is very different from what they have known before.

Corporate tax, introduced in 2023, has already been refined through practice and new clarifications. The standard rate is set at 9% on profits exceeding AED 375,000, with income below this threshold exempt from taxation. Free zone companies may continue to benefit from the Qualifying Free Zone Person regime, which allows a 0% tax rate on “qualifying income,” provided they meet substance requirements, limitations on mainland transactions, and the de-minimis rule. By 2025, the Federal Tax Authority (FTA) has tightened its approach: criteria are stricter, and penalties for non-compliance are higher. At the same time, the UAE is introducing a domestic minimum top-up tax of 15% for multinational groups with turnover above €750 million, aligning with the OECD’s Pillar Two initiative.

Equally significant are changes in financial reporting. An increasing number of free zones, including IFZA and DMCC, now require companies to submit audited annual financial statements. These filings are no longer limited to the internal rules of free zones but are also linked to FTA requirements. Even small companies must therefore prepare to comply with international accounting standards such as IFRS.

Transfer pricing rules are also expanding. Companies that belong to multinational groups must prepare transfer pricing documentation and, in certain cases, file Country-by-Country Reports (CbCR). These requirements bring transparency to intra-group transactions and demand a higher level of preparation. In parallel, the UAE is intensifying the exchange of tax information with other jurisdictions, closing the door on outdated “grey” tax structures.

Global trends are also shaping the local agenda. ESG and non-financial reporting are gaining importance. Although this area is still developing in the UAE, regulators in DIFC and ADGM have already launched pilot projects that focus on ESG disclosures. Over the coming years, companies and investors will need to pay greater attention to sustainability, corporate governance, and supply chain transparency.

At the same time, existing compliance obligations remain firmly in place. Economic Substance Regulations (ESR) continue to be closely monitored, requiring companies to prove genuine business activity in the UAE. AML/CTF and KYC procedures are becoming stricter, while penalties for failing to disclose Ultimate Beneficial Owners (UBO) are increasingly severe. All of this pushes businesses toward adopting a structured and proactive approach to corporate governance.

Together, these changes reflect the UAE’s strategic direction: moving away from the image of a tax haven and evolving into a fully recognized international jurisdiction with robust, modern rules. This transformation strengthens the country’s position on the global stage and enhances investor confidence. But for businesses, it also means that the old simplified models no longer work. To avoid risks, companies need partners who can provide timely guidance and ensure compliance with the new system.

At Garant Business Consultancy, we guide our clients through every stage: from company formation and choosing the right structure to preparing financial statements and completing audits. With over 10 years of experience in corporate and tax law in the region, we ensure transparency and reliability for your business. https://garant.ae/en/accounting-services/tax-consultancy