UAE TAX LAW &
FISCAL FRAMEWORK.
A rigorous, statutory breakdown of Federal Decree-Law No. 47 of 2022 on Corporate Tax, Qualifying Free Zone Person (QFZP) 0% criteria, VAT Law No. 8 of 2017, and the Romania–UAE Double Tax Avoidance Convention.
0% on net profit up to AED 375,000; 9% on excess.
Cabinet Decision 49/2023: personal property exempt.
Mandatory threshold AED 375,000 annual taxable revenue.
Bilateral avoidance of double taxation on income & wealth (signed 11 April 1993).
UAE Corporate Tax (Federal Decree-Law No. 47 of 2022)
The UAE introduced a federal Corporate Tax regime applicable to financial years commencing on or after 1 June 2023. Designed to adhere to international tax transparency standards (including OECD BEPS Pillar Two), the tax is levied on taxable net business income derived by juridical persons (corporations) and certain natural persons conducting commercial business activities.
Tier 1: 0% Statutory Bracket
Taxable net profit up to AED 375,000 (approx. USD 102,110 / EUR 94,100) per financial year is taxed at a statutory 0% rate to foster SME growth and entrepreneurship.
Tier 2: 9% Standard Headline Rate
Taxable net profit exceeding AED 375,000 is taxed at 9%. This represents one of the lowest statutory headline corporate tax rates among major global financial centers.
Tax resident juridical and natural persons with gross revenue equal to or below AED 3,000,000 in a relevant tax period and all previous tax periods ending on or before 31 December 2026 can elect to be treated as having no taxable income for that period, effectively exempting them from paying corporate tax, subject to maintaining proper accounting records and annual tax return filing.
Qualifying Free Zone Person (QFZP) 0% Criteria
A common misconception is that any company registered in a Dubai Free Zone pays 0% corporate tax automatically. Under Cabinet Decision No. 55 of 2023 and Ministerial Decision No. 139 of 2023, a Free Zone company must actively qualify as a Qualifying Free Zone Person (QFZP) and derive Qualifying Income to maintain 0% tax. If conditions are breached, the company is taxed at 9% on all income for 5 subsequent tax periods.
The 5 Mandatory Conditions to Qualify as a QFZP:
Must maintain adequate physical assets (office or leased desk), adequate number of qualified employees in the free zone, and incur adequate operating expenditure.
Income from transactions with other Free Zone persons (unless excluded), or income from specified Qualifying Activities (e.g. software manufacturing, treasury services, ship operations, logistics) with non-free zone persons.
Non-qualifying revenue derived from mainland UAE customers must not exceed 5% of total revenue or AED 5,000,000 (whichever is lower).
Must prepare and maintain annual audited financial statements prepared under IFRS accounting standards, certified by an authorized auditor.
Natural Person Real Estate Tax Exemption (Cabinet Decision No. 49 of 2023)
Cabinet Decision No. 49 of 2023 specifies how Corporate Tax applies to Natural Persons (individual residents and foreign non-residents). Under Article 2 of the Decision:
Real estate investments conducted directly or through a trust/foundation by a natural person in their personal capacity are NOT considered a business activity subject to Corporate Tax.
Personal investment activity, including dividends, share profits, capital gains, and bank deposits conducted in a personal capacity, is exempt from Corporate Tax.
An individual conducting a trade or commercial business (e.g., freelance consulting) only triggers Corporate Tax registration if annual gross commercial turnover exceeds AED 1,000,000.
Value Added Tax (Federal Decree-Law No. 8 of 2017)
VAT Registration Thresholds
VAT Treatment of Dubai Real Estate
First sale/lease within 3 years of completion certificate.
No VAT charged to buyer or tenant.
Subject to standard 5% VAT on sales and commercial leases.
Romania – UAE Convention for Avoidance of Double Taxation (Law No. 74/1993)
Romania and the United Arab Emirates established their initial bilateral tax convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Wealth, signed in Abu Dhabi on 11 April 1993 and ratified in Romania by Law No. 74 of 3 November 1993 (published in Monitorul Oficial al României, Partea I, No. 262 of 9 November 1993), later updated under the modern bilateral agreement ratified by Law No. 26/2016 (Monitorul Oficial No. 225 of 25 March 2016).
Article 6 • Immovable Property (Real Estate)
Article 6 provides that income derived by a resident of a Contracting State from immovable property situated in the other Contracting State may be taxed in the State where the property is situated. Under UAE domestic law (Cabinet Decision No. 49/2023), real estate income derived by natural persons is not currently subject to UAE personal income tax.
Romanian Tax Residency & Declarația Unică
A tax treaty does not automatically eliminate filing obligations in Romania. Individuals who remain Romanian tax residents under Law 227/2015 (Codul Fiscal) are subject to worldwide income reporting via Declarația Unică (Form 212). The specific method for avoiding double taxation (credit or exemption) must be reviewed with an authorized tax advisor (consultant fiscal autorizat).
Statutory Educational Disclaimer & Professional Counsel Notice
This guide is prepared strictly for informational and educational purposes based on UAE Federal Decree-Law No. 47 of 2022, Federal Decree-Law No. 8 of 2017, Cabinet Decision No. 49 of 2023, the Romanian Fiscal Code (Law 227/2015), and the Romania–UAE Tax Convention (Law 74/1993). Nothing on this platform constitutes formal individual tax, legal, or financial advice. Investors must seek counsel from a licensed tax advisor (consultant fiscal CCF) and certified FTA tax agent to evaluate their specific domicile, residency questionnaires, and corporate structuring.