UAE Corporate Tax 2026: Key legal and regulatory developments for businesses

Since introducing federal corporate tax in 2023, the UAE has moved from a jurisdiction defined by the absence of income taxation to a transparent, rules-based tax environment aligned with international standards. This UAE chapter of the Chambers Global Practice Guide, Corporate Tax 2026, prepared by Hourani & Partners, combines practical “Law and Practice” guidance with a forward-looking “Trends and Developments” overview of the rules and reforms shaping the regime in 2026.

On the legal side, the guide explains how corporate tax applies across the structures most commonly used in the UAE, from LLCs, branches, and permanent establishments to transparent vehicles such as partnerships and family foundations in ADGM and DIFC. It walks through tax residence tests, the 9% rate on taxable income above AED375,000, loss relief, tax grouping, the participation exemption, and the incentives available for technology and innovation, including planned R&D tax credits and the 0% rate on qualifying intellectual property income.

From a trends perspective, the chapter captures a regime entering its enforcement phase. 2026 marks the first full compliance cycle under federal corporate tax and the first year in which multinational groups must perform full OECD Pillar Two calculations under the UAE’s Domestic Minimum Top-up Tax. It also examines the continued refinement of the free zone regime, growing scrutiny of transfer pricing and economic substance, and a series of 2025 ministerial and Cabinet decisions reshaping financial reporting, penalties, and dispute resolution.

Highlights of the guide include:

• Overview of the corporate tax regime, including the 9% rate on taxable income above AED375,000, the 0% band below it, and the absence of withholding taxes on dividends, interest, and royalties, supported by a treaty network spanning more than 90 jurisdictions.
• Practical guidance on entity selection and tax residence, covering LLCs, branches and permanent establishments, partnerships, and family foundations in ADGM and DIFC.
• The refined free zone framework, including Qualifying Free Zone Person conditions and the 2025 updates to qualifying and excluded activities under Ministerial Decision No. 229 of 2025.
• Pillar Two in practice: how the Domestic Minimum Top-up Tax interacts with the 9% headline rate, and what full effective tax rate calculations mean for multinational groups in 2026.
• Transfer pricing and substance requirements as the Federal Tax Authority moves from documentation review to audit readiness, with OECD-aligned rules applying across related-party arrangements.
• New financial reporting requirements for tax groups, including audited aggregated financial statements under Ministerial Decision No. 84 of 2025 and FTA Decision No. 7 of 2025.
• Procedural developments affecting disputes and penalties, including the amended administrative penalties framework and the UAE’s first Mutual Agreement Procedure guidance for resolving treaty disputes.

Click here to view the full guide on the Chambers website.

Hourani is proud to be the contributing firm for the UAE chapter of the Chambers Global Practice Guides – Corporate Tax 2026. The chapter is authored by Chadi Hourani, Aakriti Sharma, and Myriam Fellag.