Here are practical and compliant strategies to help businesses in the UAE legally minimize tax and improve their financial position, in line with the UAE Corporate Tax (CT) Law (Federal Decree-Law No. 47 of 2022) and FTA guidelines.

1. Structure Your Business Wisely

The way you structure your company determines your eligibility for exemptions.
Free Zone Entity (FZP): You can enjoy 0% CT on qualifying income if you meet conditions under Ministerial Decision 139 of 2023 such as maintaining adequate substance, not earning non-qualifying income above the 5% threshold, and transacting only with qualifying persons or overseas.
Mainland Entity: May benefit from group structuring (forming tax groups) to offset profits and losses between entities.
Review entity structure annually to ensure maximum efficiency and compliance with CT and ESR.

2. Claim Allowable Deductions Strategically

Under Article 28–33 of UAE CT Law, businesses can deduct expenses incurred wholly and exclusively for business purposes. Examples include employee salaries and benefits, office rent, utilities, professional fees, marketing, and travel.
Depreciation on fixed assets following IFRS and bad debts written off under proper documentation are also deductible.
Avoid claiming personal or non-business expenses as the FTA closely monitors related-party and shareholder transactions.

3. Utilize Managerial Remuneration Wisely

Managerial or partner remuneration is deductible provided it is reasonable and aligned with market value (Article 36).
Document your justification such as job description, experience, and comparable market salaries to avoid FTA challenges.
This helps reduce taxable profit while remaining compliant.

4. Leverage Free Zone Incentives

If you are in a Free Zone such as DMCC, DAFZA, JAFZA, or ADGM, ensure you maintain adequate economic substance, earn only qualifying income (e.g., trading with other FZ entities or foreign parties), and file ESR notification and CT return correctly to continue enjoying 0% CT.
Non-qualifying income will be taxed at 9%, hence proper segregation of income is key.

5. Manage Related-Party Transactions

For intra-group or shareholder transactions, ensure arm’s-length pricing as per OECD Transfer Pricing Guidelines.
Prepare Local File and Master File if thresholds are met, and obtain intercompany agreements for management fees, interest, or service charges.
This allows genuine related-party expenses to remain deductible while staying compliant.

6. Plan Capital Expenditure and Depreciation

Maximize tax savings by recording all capital assets under IFRS and claiming tax depreciation (per Article 32).
Buildings, IT equipment, and machinery qualify. Review useful life annually as accelerating depreciation increases deductible expenses.

7. Utilize Tax Loss Relief

If you have losses in early years, you can carry forward up to 75% of those losses to offset against future taxable income.
This provides long-term tax relief if ownership and business activity remain consistent.

8. Revisit Your Income Timing and Contract Terms

Smart timing of revenue and expenses helps control tax exposure.
Delay invoicing for services near year-end (if compliant with IFRS 15), pre-book eligible expenses before year-end, and review contracts to allocate income fairly between FZ and Mainland to preserve 0% FZ eligibility.

9. Manage Withholding and Foreign Tax Credits

If you earn foreign income, check Double Taxation Agreements (DTAs).
The UAE has over 140 treaties that help avoid double taxation.
You can claim foreign tax credit for taxes paid abroad, such as dividends received from Poland or other treaty countries.

10. Perform Regular Corporate Tax Health Checks

Conduct quarterly or annual tax reviews to identify non-deductible expenses, missed allowances, compliance gaps, and restructuring opportunities.
A tax health report from your advisor or auditor helps you stay proactive and avoid FTA penalties.

Bonus Tips for Forward-Thinking Businesses

– Use AI-driven tax dashboards to monitor real-time profits and tax exposure.
– Train your accounting staff on CT compliance as errors in return filings are costly.
– Combine VAT and CT planning to ensure alignment.
– Stay updated with new FTA Cabinet and Ministerial Decisions, especially on Free Zone eligibility and managerial remuneration.

For expert corporate tax planning, auditing services, and compliance support in the UAE, contact Hallmark International Auditors & Accountants today.
We help businesses stay compliant, reduce tax risks, and grow sustainably.