Key takeaways
- A foreign company with a branch in the UAE is subject to UAE corporate tax on the income attributable to that branch, because the branch counts as a permanent establishment under Article 14 of Federal Decree-Law No. 47 of 2022.
- The UAE corporate tax rate on a branch's taxable income is 0% up to AED 375,000 and 9% on the portion above it (as of November 2026, under Cabinet Decision No. 116 of 2022).
- A foreign company must register its UAE permanent establishment for corporate tax within six months of the date the branch came into existence, if the branch was set up on or after 1 March 2024 (FTA Decision No. 3 of 2024).
- Failing to register for corporate tax carries a fixed AED 10,000 administrative penalty, and a late return costs AED 500 for each month or part of a month in the first 12 months.
- Withholding tax on UAE-sourced income paid to a non-resident is 0% under Article 45, but that rate does not cover income attributable to a permanent establishment, which goes into the branch's taxable income instead.
Is a UAE branch of a foreign company subject to corporate tax?
Yes. A foreign company is a non-resident person for UAE corporate tax purposes, and a non-resident person is a taxable person if it has a permanent establishment in the UAE (Article 11 of Federal Decree-Law No. 47 of 2022). Article 14 lists a branch among the places that create one.
The charge applies to the taxable income attributable to the branch, not to the foreign company's worldwide profit (Article 12). That is the main difference from a UAE subsidiary, which is a separate resident person because it is incorporated under UAE law. Your head office abroad stays outside UAE corporate tax on income that has nothing to do with the branch.
One edge case: a company incorporated abroad but effectively managed and controlled from the UAE is treated as a resident person, not as a branch owner. The registration deadline for that situation differs, as the table below shows.
What tax rate and threshold apply to a foreign company's UAE branch?
The branch pays 0% on taxable income up to AED 375,000 and 9% on the portion above it. Article 3 of the Federal Decree-Law sets the two rates, and Cabinet Decision No. 116 of 2022, dated 30 December 2022, fixes the threshold at AED 375,000.
Small Business Relief is not an option for a branch. Article 21 lets only a taxable person that is a resident person elect to be treated as having no taxable income, so a non-resident with a permanent establishment falls outside it.
If the branch sits in a free zone, the FTA's Free Zone Persons guide (CTGFZP1) is the document to read, because a free zone branch can only reach the 0% rate on qualifying income if it meets every qualifying free zone person condition. Income from a permanent establishment outside the free zone is taxed at 9%, per the FTA's own announcement of that guide.
AED 375,000: taxable income of a UAE branch above which the 9% corporate tax rate applies; the first AED 375,000 is taxed at 0%. Source: Cabinet Decision No. 116 of 2022, checked 03 November 2026.
When must a foreign company register its UAE branch for corporate tax?
A foreign company must register its UAE permanent establishment within six months of the date it came into existence, if that date falls on or after 1 March 2024. FTA Decision No. 3 of 2024 sets the timelines, and registration is done on EmaraTax, the FTA's portal.
| Situation | Registration deadline |
|---|---|
| Permanent establishment that existed before 1 March 2024 | Within nine months of the date it came into existence |
| Permanent establishment created on or after 1 March 2024 | Within six months of the date it came into existence |
| Nexus (other than a permanent establishment) created on or after 1 March 2024 | Within three months of creating the nexus |
| Foreign-incorporated company effectively managed and controlled in the UAE, from 1 March 2024 | Within three months of the end of its financial year |
Accurate as of 03 November 2026. Source: FTA announcement of Decision No. 3 of 2024.
The registration penalty is AED 10,000 (Cabinet Decision No. 75 of 2023, as amended by Cabinet Decision No. 10 of 2024, applicable from 1 March 2024). If you'd rather not track these dates by hand, the free UAE compliance calendar lists them for your company.
How do you register and file for corporate tax as a foreign company?
You register the permanent establishment on EmaraTax, then file a corporate tax return within nine months of the end of each tax period. Article 51 of the Federal Decree-Law requires every taxable person to register and obtain a Tax Registration Number; Article 53 sets the nine-month filing window.
- Confirm the branch is a permanent establishment and note the date it came into existence, because the six-month clock starts there.
- Create or log in to your EmaraTax account on the FTA portal (tax.gov.ae).
- Submit the corporate tax registration for the branch and attach the supporting documents the portal asks for.
- Receive the Tax Registration Number and confirm your tax period (normally the financial year).
- Keep the books and records for the branch, because the FTA can ask for them.
- File the return and pay any tax due on EmaraTax within nine months of the end of the tax period. A 31 December year end gives you until 30 September of the following year.
What are the penalties for getting it wrong?
The main penalties are AED 10,000 for failing to register, AED 500 per month for a late return, and 14% a year on tax paid late. The schedule sits in Cabinet Decision No. 75 of 2023 as amended.
| Violation | Administrative penalty (AED) |
|---|---|
| Failure to submit a tax registration application | 10,000 |
| Failure to file a tax return on time | 500 per month or part of a month for the first 12 months; 1,000 per month from the 13th month |
| Late payment of payable tax | 14% per annum, charged monthly on the unpaid amount |
| Failure to keep required records | 10,000 per violation; 20,000 for a repeat within 24 months |
Accurate as of 03 November 2026. Source: Ministry of Finance consolidated text of Cabinet Decision No. 75 of 2023. Check the current schedule before relying on any figure.
What most guides don't tell you
The six months run from when the branch exists, not from when you decide to register. The licence date and the first invoice date are not the test. The rule uses the date the permanent establishment came into existence, so an office that was in use before the licence arrived can start the clock earlier. Date it carefully, and keep the evidence.
A branch can create a taxable presence even when it earns little. Article 14 asks whether a fixed place is used to carry on the business; it sets no minimum profit. A branch with losses still needs a Tax Registration Number, and the penalty for skipping registration does not depend on profit.
Audit thresholds count only UAE revenue for non-residents. Under Ministerial Decision No. 84 of 2025, which applies to tax periods starting on or after 1 January 2025, a non-resident measuring itself against the AED 50 million audit threshold counts only revenue derived through its permanent establishment or nexus. A group with large revenue abroad and a small UAE branch is therefore tested on the branch figure alone. Read the decision for the full conditions before you decide an audit is not needed.
Nexus is a separate test from a permanent establishment. Cabinet Decision No. 35 of 2025, which replaced Cabinet Decision No. 56 of 2023, deals with nexus for non-resident investors in qualifying investment funds and real estate investment trusts. A branch does not need nexus to be taxable; the permanent establishment test alone does the work.
Which UAE deadlines apply to your company?
Registration, return and payment dates all depend on when your branch came into existence and when its tax period ends. The free UAE compliance calendar turns a few questions about your company into a PDF and calendar file of your UAE tax and compliance deadlines.
Frequently asked questions
What is a permanent establishment in the UAE? A permanent establishment is a fixed or permanent place in the UAE through which a non-resident runs its business, or a person who habitually exercises authority to conduct business for it. Article 14 of Federal Decree-Law No. 47 of 2022 lists a branch as one, and places used only for preparatory or auxiliary activities such as storage are excluded.
Can working from Dubai for a foreign employer create a permanent establishment? It can, depending on the facts: Article 14 asks whether a fixed place is used to carry on the employer's business, or whether you habitually exercise authority to conduct its business in the UAE. Because the outcome turns on your role and the employer's activities, get advice on your specific situation before assuming either answer.
Are capital gains from selling shares taxable for UAE companies? Gains on shares are taxable unless the participation exemption applies. Under Article 23, gains on a participating interest of at least 5%, held for an uninterrupted 12 months, in a company taxed at a rate of at least 9%, are exempt, subject to the other conditions in the article.
What is the participation exemption? The participation exemption is Article 23 of Federal Decree-Law No. 47 of 2022, which exempts dividends and gains from a participating interest of 5% or more. The holding must last at least 12 months, the investee must be subject to a similar tax at not less than 9%, and an asset test in the article must also be met.
Does the UAE have withholding tax? The UAE withholding tax rate on state-sourced income paid to non-residents is 0% under Article 45 of Federal Decree-Law No. 47 of 2022. That rate does not apply to income attributable to a permanent establishment, which falls under normal corporate tax rules.
About Qawi · Qawi is a corporate services firm licensed in the Sharjah Media City (SHAMS) free zone, handling company formation, visas and PRO, bookkeeping, VAT and corporate tax for UAE businesses. Guides are researched from FTA, Ministry of Finance and free zone sources. Qawi on LinkedIn
Sources
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, and its amendments (Ministry of Finance)
- Cabinet Decision No. 116 of 2022 on the annual Taxable Income subject to Corporate Tax (Ministry of Finance)
- Cabinet Decision No. 75 of 2023 and its amendments on Administrative Penalties (Ministry of Finance)
- FTA announcement of Decision No. 3 of 2024 on corporate tax registration timeframes (tax.gov.ae)
- FTA announcement of the Corporate Tax Guide on Free Zone Persons (tax.gov.ae)
- Corporate Tax in the UAE (Ministry of Finance)
- Gulf News: Ministry of Finance announces Cabinet Decision on non-resident nexus
- Deloitte Middle East: Ministerial Decision No. 84 of 2025 (interpretation; read the decision on mof.gov.ae)
Last checked: 03 November 2026
This is general information, not tax or legal advice for your specific situation.