United Arab Emirates International Tax and Transfer Pricing Review
Information current to: 27 September 2026
Currency and tax year: UAE dirham; tax periods follow the taxpayer's financial year, subject to the Corporate Tax rules.
Executive summary
The UAE corporate tax framework is centred on Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. The local archive contains the current consolidated Arabic text, the authoritative language, together with the relevant nexus and transfer-pricing documentation decisions. The principal business issues are taxable status and nexus, eligibility for free-zone or exemption regimes, treatment of cross-border income and transactions, and transfer-pricing documentation for related-party dealings.
1. Legal framework and scope
The decree-law introduced federal corporate tax from 1 June 2023. The country dossier records a 0 percent rate on taxable income up to AED 375,000 and 9 percent above that threshold. It also identifies a 15 percent rate for qualifying multinational groups within the Pillar Two / domestic minimum top-up tax regime from 2025. The decree-law addresses resident and non-resident taxable persons, permanent establishments and UAE nexus, qualifying free-zone persons, tax groups, participation and foreign permanent-establishment relief, foreign tax credit and a general anti-abuse rule. Cabinet Resolution No. 35 of 2025 replaces Cabinet Resolution No. 56 of 2023 for tax periods beginning on or after 1 January 2025 in relation to non-resident nexus.
2. Permanent establishment and taxable nexus
A non-resident requires a focused nexus analysis. The practical review should identify whether the business has a UAE permanent establishment, UAE nexus or UAE-source income and then test the relevant statutory conditions and any treaty protection. The current nexus resolution is particularly relevant to income connected with UAE immovable assets. A local office, people performing core revenue-generating activity, contract authority, long-running projects and a stable operating base should all be reviewed. The legal character of the activities, not merely the contractual label, drives the result.
3. Withholding tax and cross border payments
| Payment | Domestic position | Practical point |
|---|---|---|
| Dividends | The domestic corporate-tax withholding rate is 0%. | Review source and treaty consequences in the recipient jurisdiction. |
| Interest | The domestic corporate-tax withholding rate is 0%. | Consider related-party pricing, interest-limitation and foreign tax consequences. |
| Royalties | The domestic corporate-tax withholding rate is 0%. | Classify rights and test transfer-pricing support for related-party payments. |
| Services | No general domestic withholding charge is identified for ordinary service payments. | Assess nexus, VAT and whether the payment includes intellectual-property rights. |
4. Royalties software and services
A contract involving software, data, hosting, cloud capacity, technical support or access to a platform should be separated into its legal and economic components. The UAE domestic withholding rate does not remove the need to assess corporate-tax deductibility, related-party pricing, VAT and foreign-country withholding. For cross-border structures, retain the agreement, description of licensed rights or services, evidence of benefit received, allocation keys and pricing support. The same record should explain whether the arrangement is a royalty, a service, a mixed contract or a financing-related payment.
5. Treaties and double tax relief
Treaties should be analysed in parallel with the domestic corporate-tax position, particularly for a non-resident's permanent establishment or nexus and for relief claimed outside the UAE. The decree-law also provides a foreign tax credit mechanism, subject to the law's limits. Tax groups, free-zone status, participation exemption and foreign permanent-establishment elections should be assessed before a transaction is implemented because conditions and documentary requirements determine the result.
6. Transfer pricing
Articles 34-36 and 55 of Federal Decree-Law No. 47 of 2022 form the core UAE transfer-pricing regime. They apply the arm's-length principle to related-party and connected-person arrangements. The methods listed in the source pack are CUP, resale price, cost plus, TNMM and profit split, with another appropriate method available where the listed methods cannot reasonably be applied. The analysis should identify related parties and connected persons, map each relevant transaction and select the most reliable method based on comparability, functions, assets and risks. Material areas include management and technical services, financing, guarantees, cash pooling, intangibles, free-zone arrangements and intra-group restructurings. Article 55 and Ministerial Decision No. 97 of 2023 govern transfer-pricing documentation. The country dossier records Local File and Master File requirements for taxpayers with revenue of AED 200 million or more, or members of a multinational group with consolidated revenue of AED 3.15 billion or more. Controlled transactions must also be disclosed in the tax return. Maintain contracts, a benefit analysis for services, financial calculations and contemporaneous pricing support.
7. Priority actions
- Confirm taxable status, permanent establishment or nexus before starting UAE activity or receiving UAE-linked income.
- Test free-zone and group-relief conditions against actual operations, accounting and documentation.
- Prepare transfer-pricing disclosure and documentation early for related-party and connected-person arrangements.
Sources reviewed
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, current consolidated Arabic text from UAE Legislation.
- Cabinet Resolution No. 35 of 2025 on non-resident nexus.
- Ministerial Decision No. 97 of 2023 on transfer-pricing documentation.
- UAE country legislation dossier and consolidation cards in 08_UAE.