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UAE Tax Agent (Federal Tax Authority) · Corporate Tax

UAE Tax CT Scope, taxable persons and registration: practice questions with answers

6 free exam-style questions on Scope, taxable persons and registration for UAE Tax CT Corporate Tax. Try each one, then open the answer to read the explanation. Fincora has 41 original questions on this syllabus area.

Question 1

Dunemark Logistics LLC, a UAE mainland company, has always prepared its financial statements for 12-month periods ending 31 May and has never applied to change its financial year. Which is Dunemark's first Tax Period for UAE Corporate Tax?

  1. A 1 June 2023 to 31 May 2024
  2. B 1 June 2024 to 31 May 2025
  3. C 1 January 2024 to 31 December 2024
  4. D 1 June 2023 to 31 December 2023
Show the answer

Answer: A. The CT Law (Federal Decree-Law No. 47 of 2022) applies to tax periods starting on or after 1 June 2023 (Article 69, which applies the law to tax periods commencing on or after that date), and under Article 57 a tax period is the financial year: the Gregorian calendar year or the 12-month period for which financial statements are prepared.

Dunemark's financial year 1 June 2023 to 31 May 2024 starts on 1 June 2023, so it is the first tax period. A company with a 31 May year-end therefore came into the regime earlier than a calendar-year company, whose first tax period is 1 January to 31 December 2024.

Question 2

Ms Noor owns 100% of two UAE mainland companies that are not in a tax group and claim no reliefs. For 2025, Pellar Design LLC has taxable income of AED 300,000 and Quayle Print LLC has taxable income of AED 500,000. What is the total Corporate Tax payable by the two companies for 2025?

  1. A AED 11,250
  2. B AED 38,250
  3. C AED 45,000
  4. D AED 72,000
Show the answer

Answer: A. The 0%/9% rates in Article 3 (threshold set by Cabinet Decision No. 116 of 2022) apply to the taxable income of each taxable person. Without a tax group, the two companies are assessed separately:

- Pellar: AED 300,000 is within the 0% slice: AED 0.
- Quayle: (500,000 - 375,000) x 9% = AED 11,250.

Total = AED 11,250. (Only if they formed a tax group under Article 40 would a single return, and a single AED 375,000 slice, apply.)

Question 3

Ms Hessa runs a licensed tailoring business as a sole establishment. Its turnover was AED 950,000 in 2024 and AED 1,050,000 in 2025. She has no other business activity. For which of these years is she subject to Corporate Tax?

  1. A Both 2024 and 2025, because her turnover for the two years together exceeds AED 1,000,000
  2. B Neither year, because her average turnover over the two years does not exceed AED 1,000,000
  3. C 2025 only, because that is the calendar year in which her turnover exceeds AED 1,000,000
  4. D Neither year, because she becomes taxable only from the year after the threshold is exceeded
Show the answer

Answer: C. A natural person conducting a business is a taxable person for a calendar year in which total business turnover exceeds AED 1,000,000 (Article 11(3)(c) and 11(6); Cabinet Decision No. 49 of 2023).

- 2024: AED 950,000, not above AED 1,000,000: not subject.
- 2025: AED 1,050,000, above AED 1,000,000: subject for 2025.

The test is not cumulative or averaged (the two-year average is exactly AED 1,000,000, which would not exceed the threshold anyway), and there is no one-year delay.

Question 4

Wrenhaven Trading LLC is incorporated in the UAE. Its owners and all its directors live in London, and every key management decision is taken there; the UAE office handles day-to-day sales. Ignoring any double tax agreement, what is Wrenhaven's status for UAE Corporate Tax?

  1. A A non-resident person with a UAE permanent establishment, because it is managed from abroad
  2. B A non-resident person, because it is effectively managed and controlled outside the UAE
  3. C A resident person only for the income earned by its UAE sales office
  4. D A resident person, because it is incorporated in the UAE
Show the answer

Answer: D. Article 11(3)(a) treats a juridical person incorporated or established under UAE law (including in a free zone) as a resident person. Effective management and control (Article 11(3)(b)) is an additional test that brings in foreign-incorporated companies; it does not take a UAE-incorporated company out of residence.

Wrenhaven is therefore resident and taxed on its worldwide income (Article 12(1)). Whether a treaty tie-breaker would give residence to another country is outside the question.

Question 5

Tarlow Fabrication LLC should have applied for Corporate Tax registration by its deadline but submitted its application seven months late. What administrative penalty applies for the late registration under Cabinet Decision No. 75 of 2023 as amended?

  1. A AED 3,500
  2. B AED 7,000
  3. C AED 10,000
  4. D AED 17,000
Show the answer

Answer: C. Under Cabinet Decision No. 75 of 2023, as amended by Cabinet Decision No. 10 of 2024 (from 1 March 2024), failure to submit a registration application within the timeline set by the FTA (registration duty in Article 51 of the CT Law) attracts a fixed penalty of AED 10,000. It does not depend on the number of months of delay.

Penalty = AED 10,000.

Question 6

Kindara Packaging LLC, a UAE mainland company with calendar-year tax periods, claims no reliefs or elections. Its Corporate Tax for 2025 was AED 87,750. Its taxable income for 2026 is expected to be 20% higher than its taxable income for 2025. Rates: 0% on taxable income up to AED 375,000 and 9% above. What will Kindara's Corporate Tax for 2026 be?

  1. A AED 71,550
  2. B AED 105,300
  3. C AED 112,050
  4. D AED 145,800
Show the answer

Answer: C. Article 3 of the CT Law and Cabinet Decision No. 116 of 2022: 0% on the first AED 375,000 of taxable income, 9% on the excess.

1. 2025 taxable income above the band = AED 87,750 ÷ 9% = AED 975,000, so total 2025 taxable income = AED 975,000 + AED 375,000 = AED 1,350,000.
2. 2026 taxable income = AED 1,350,000 × 1.2 = AED 1,620,000.
3. 2026 Corporate Tax = (AED 1,620,000 − AED 375,000) × 9% = AED 112,050.

Because the band is fixed, a 20% rise in taxable income raises the tax by more than 20% (here by about 27.7%).

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