Question 1

Is there tax in Dubai?

Accepted Answer

Yes. UAE has corporate tax (9%) and VAT (5%).

Question 2

What is corporate tax in UAE?

Accepted Answer

A federal tax on business profits above AED 375,000.

Question 3

When did corporate tax start in UAE?

Accepted Answer

1 June 2023 onwards.

Question 4

What is the corporate tax rate?

Accepted Answer

0% up to AED 375,000
9% beyond AED 375,000.

Question 5

Who must register for corporate tax?

Accepted Answer

All UAE companies, mainland or Free Zone.

Question 6

Do Free Zone companies pay corporate tax?

Accepted Answer

Yes — 9% on non-qualifying income.

Question 7

What is qualifying income in Free Zones?

Accepted Answer

Income from Free Zone-to-Free Zone deals, exports, and passive income.

Question 8

Who must register for VAT?

Accepted Answer

Businesses above AED 375,000 revenue threshold.

Question 9

What is VAT rate in UAE?

Accepted Answer

5% on most goods/services.

Question 10

How often is VAT filed?

Accepted Answer

Every quarter or month, depending on FTA assignment.

Question 11

Do small businesses pay corporate tax?

Accepted Answer

Below AED 375,000 profit → 0% tax.

Question 12

Is bookkeeping mandatory?

Accepted Answer

Yes — every UAE registered business must maintain records for 5 years.

Question 13

Is audit required?

Accepted Answer

Most Free Zones require annual audits.
Check Free Zone authority website.

Question 14

What is ESR?

Accepted Answer

Economic Substance Regulations for real economic activity.

Question 15

Who must file ESR?

Accepted Answer

Companies doing HQ, distribution, service center, and holding company activities.

Question 16

What is WPS in UAE?

Accepted Answer

Wage Protection System — mandatory salary system.

Question 17

Is WPS mandatory?

Accepted Answer

Yes — for all mainland entities.

Question 18

Can salaries be paid in cash?

Accepted Answer

No — violates WPS rules.

Question 19

Do freelancers pay corporate tax?

Accepted Answer

If their profit exceeds AED 375,000.

Question 20

Why do banks freeze accounts?

Accepted Answer

Due to AML non-compliance, missing documentation, or suspicious transactions.

Question 21

Can a company claim VAT refund?

Accepted Answer

Yes — if input VAT > output VAT.

Question 22

Are exports taxed?

Accepted Answer

Exports are usually 0% VAT.

Question 23

Are medicines taxed?

Accepted Answer

Many medicines are 0% VAT depending on FTA listing.

Question 24

What is EmaraTax?

Accepted Answer

FTA's online tax portal.

Question 25

What is reverse charge mechanism?

Accepted Answer

Customer pays VAT instead of supplier for imports/services.

Question 26

What documents are required for corporate tax filing?

Accepted Answer

You must maintain:
• Income statements
• Expense records
• Bank statements
• Trial balance
• General ledger
• Financial statements

Question 27

What is considered taxable income?

Accepted Answer

Taxable income is your net profit after deducting allowable expenses as per accounting standards and MoF rules.

Question 28

Are salaries to owners deductible?

Accepted Answer

Yes — if they are reasonable and match market rates.

Question 29

Are entertainment expenses deductible?

Accepted Answer

Only 50% of business entertainment is deductible.

Question 30

Are donations deductible?

Accepted Answer

Only if given to approved charities or government bodies.

Question 31

Are fines deductible?

Accepted Answer

No. Government fines and penalties are not deductible.

Question 32

Can tax losses be carried forward?

Accepted Answer

Yes — losses can be carried forward indefinitely if ownership continuity is maintained.

Question 33

What is arm's length principle under transfer pricing?

Accepted Answer

Related-party transactions must match normal market pricing.

Question 34

Do I need transfer pricing documentation?

Accepted Answer

Yes — companies with related-party transactions must maintain:
• Master file
• Local file

Question 35

Are dividends exempt from tax?

Accepted Answer

Yes — if participation exemption conditions are met.

Question 36

Are capital gains taxed?

Accepted Answer

Capital gains on qualifying shareholdings are exempt.

Question 37

How does corporate tax apply to real estate?

Accepted Answer

Real estate developers pay tax; individuals renting out property personally do not.

Question 38

Do e-commerce businesses pay tax?

Accepted Answer

Yes — online sales count as taxable business income.

Question 39

Do foreign branches pay tax?

Accepted Answer

You can elect for foreign branch profits to be exempt.

Question 40

How does small business relief work?

Accepted Answer

Businesses with revenue under AED 3 million can elect for 0% tax, but Free Zone companies cannot elect.

Question 41

Can Free Zone companies lose 0% tax?

Accepted Answer

Yes — if they earn mainland income or fail ESR/audit requirements.

Question 42

What expenses are disallowed?

Accepted Answer

• Personal expenses
• Non-business expenses
• Fines & penalties

Question 43

Are interest expenses deductible?

Accepted Answer

Capped at 30% of EBITDA, unless exception applies.

Question 44

Do I need audited financial statements for corporate tax?

Accepted Answer

Most Free Zone companies must submit audited accounts to remain a Qualifying Free Zone Person.

Question 45

How does VAT apply to Free Zones?

Accepted Answer

Most Free Zones follow regular VAT, except Designated Zones.

Question 46

What is a Designated Zone?

Accepted Answer

A VAT-free area with strict customs controls.

Question 47

Are importers required to pay VAT?

Accepted Answer

Yes — through reverse charge or customs payment.

Question 48

Do businesses need a tax agent?

Accepted Answer

Not mandatory but recommended for compliance.

Question 49

What happens if VAT return is wrong?

Accepted Answer

You must file a Voluntary Disclosure, and penalties may apply.

Question 50

How long must accounting records be kept?

Accepted Answer

Minimum 5 years, longer for property developers.

Question 51

What are the penalties for incorrect VAT filing?

Accepted Answer

Penalties apply for incorrect, late, or incomplete VAT filings, including administrative fines starting from AED 1,000 and increasing on repetition.

Question 52

Can I correct a VAT return mistake?

Accepted Answer

Yes. You must submit a Voluntary Disclosure (Form 211).

Question 53

What is a Tax Audit in UAE?

Accepted Answer

An FTA inspection of your records to verify VAT, Corporate Tax, and compliance.

Question 54

What triggers an FTA audit?

Accepted Answer

Irregular filings, mismatched invoices, large refunds, or suspicious transactions.

Question 55

How long does an FTA audit take?

Accepted Answer

Usually 1–5 working days, but can extend depending on findings.

Question 56

Are foreign income and dividends taxable?

Accepted Answer

Foreign dividends and gains are usually exempt under Participation Exemption.

Question 57

What is a Permanent Establishment (PE)?

Accepted Answer

A fixed place or dependent agent through which a foreign company operates in UAE.

Question 58

Does a foreign company with a UAE agent pay tax?

Accepted Answer

If the agent habitually concludes contracts → Yes (PE rules apply).

Question 59

Are branches taxed separately?

Accepted Answer

No. Branch income is combined into the parent company's tax return.

Question 60

What is Corporate Tax Grouping?

Accepted Answer

Two or more UAE companies can file one tax return as a group if conditions are met.

Question 61

Can Free Zone companies form tax groups?

Accepted Answer

No — Free Zone entities cannot form corporate tax groups.

Question 62

Is intercompany revenue taxable?

Accepted Answer

Yes, unless exempt under participation exemption or qualifying income.

Question 63

What are Related Party Transactions?

Accepted Answer

Transactions between companies with common ownership/control (TP rules apply).

Question 64

Are intercompany loans taxable?

Accepted Answer

Interest must follow arm's length pricing under transfer pricing rules.

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