UAE tax and accounting glossary

Short, plain definitions of the terms you meet in UAE VAT, corporate tax, payroll and company setup, with links to the matching calculators and guides.

VAT

Accredited Service Provider (ASP): An Accredited Service Provider is a company approved by the Ministry of Finance to send and receive e-invoices for UAE businesses on the Peppol network and report invoice data to the FTA.
Designated zone: A designated zone is a free zone listed by Cabinet Decision that is treated as outside the UAE for VAT on certain movements of goods, provided strict customs controls are met.
EmaraTax: EmaraTax is the Federal Tax Authority's online portal, used to register for VAT, corporate tax and excise tax, file returns, pay tax and manage a business's tax account.
Exempt supply: An exempt supply carries no VAT and the supplier cannot recover the VAT on costs related to it.
Federal Tax Authority (FTA): The Federal Tax Authority (FTA) is the UAE government body that administers and collects VAT, corporate tax and excise tax, and enforces tax compliance.
Input tax (input VAT): Input tax is the VAT a registered business pays on its purchases and expenses, which it can usually recover in its VAT return if it holds a valid tax invoice.
Output tax (output VAT): Output tax is the 5% VAT a registered business charges on its taxable sales and pays to the FTA, after deducting recoverable input tax.
Reverse charge: The reverse charge is a VAT mechanism where the buyer, not the supplier, accounts for the VAT: it declares 5% output VAT and recovers it as input VAT in the same return.
Tax invoice: A tax invoice is the document a VAT-registered supplier must issue within 14 days of a taxable supply, showing its TRN, the VAT rate and the VAT amount in AED.
Tax Registration Number (TRN): A Tax Registration Number (TRN) is the 15-digit number the UAE Federal Tax Authority gives a business when it registers for VAT or corporate tax. It starts with 100 and must appear on every tax invoice.
Value Added Tax (VAT): UAE VAT is a 5% tax on most goods and services, collected by VAT-registered businesses at each stage of supply and paid to the FTA, with businesses reclaiming the VAT on their own costs.
Voluntary disclosure: A voluntary disclosure is a correction a taxpayer files on EmaraTax when it finds an error in a submitted return; it is required when the error changes the tax by more than AED 10,000.
Zero-rated supply: A zero-rated supply is taxable at 0% VAT, so no VAT is charged to the customer but the supplier can still recover the VAT on its related costs.

Corporate tax

Corporate tax: UAE corporate tax is a federal tax on business profits: 0% on taxable income up to AED 375,000 and 9% above it, for financial years starting on or after 1 June 2023.
De minimis test: The de minimis test requires a Qualifying Free Zone Person's non-qualifying revenue to be no more than 5% of total revenue or AED 5 million, whichever is lower.
Domestic Minimum Top-up Tax (DMTT): The Domestic Minimum Top-up Tax brings the UAE effective tax rate of multinational groups with EUR 750 million or more in revenue up to 15%, from 1 January 2025.
Participation exemption: The participation exemption exempts dividends and capital gains from a shareholding of at least 5% (or AED 4 million cost) held for 12 months in a company taxed at 9% or more.
Permanent establishment: A permanent establishment is a fixed place of business, or a dependent agent, through which a foreign company carries on business in the UAE and becomes liable to UAE corporate tax on the profits linked to it.
Qualifying Free Zone Person (QFZP): A Qualifying Free Zone Person is a free zone company that meets the substance, qualifying income, de minimis, audit and transfer pricing conditions, and so pays 0% corporate tax on its qualifying income.
Small Business Relief (SBR): Small Business Relief is a UAE corporate tax election that treats taxable income as nil for resident businesses with revenue of AED 3 million or less in every tax period, for periods ending by 31 December 2029.
Tax group: A corporate tax group is two or more UAE resident companies, at least 95% commonly owned, that the FTA treats as a single taxable person filing one return.
Tax period: A tax period is the period a tax return covers: for corporate tax, usually the company's 12-month financial year; for VAT, usually a quarter assigned by the FTA.
Taxable income: Taxable income is the accounting profit in IFRS financial statements adjusted for UAE corporate tax rules, such as adding back 50% of client entertainment and deducting exempt dividends.
Transfer pricing: Transfer pricing rules require transactions between related parties and with connected persons to be priced as if they were between independent parties (the arm's length principle).

Payroll & employment

End-of-service gratuity: End-of-service gratuity is the lump sum a UAE employer pays an employee with at least one year of service: 21 days' basic salary per year for the first 5 years and 30 days per year after, capped at 2 years' pay.
Wage Protection System (WPS): The Wage Protection System is the UAE's electronic salary system: mainland employers must pay salaries through approved banks or exchange houses so MoHRE can confirm wages are paid on time.

Accounting & finance

IFRS for SMEs: IFRS for SMEs is a simplified version of International Financial Reporting Standards that UAE businesses with revenue of AED 50 million or less may use for the financial statements behind their corporate tax return.

Company formation

Tax Residency Certificate (TRC): A Tax Residency Certificate is issued by the FTA to confirm that an individual or company is UAE tax resident, usually to claim reduced tax under a double tax treaty.
Ultimate beneficial owner (UBO): An ultimate beneficial owner is an individual who owns or controls 25% or more of a UAE company's shares or voting rights, directly or indirectly, or otherwise controls it.

R&D tax credit

R&D tax credit: The UAE R&D tax credit reduces corporate tax by 15%, 35% or 50% of slices of qualifying R&D spend, up to AED 2 million a year, for tax periods starting on or after 1 January 2026.

Property & personal

Excise tax: UAE excise tax is charged on goods considered harmful: 100% on tobacco, energy drinks and vaping products, and a sugar-based per-litre tax on sweetened drinks from 2026.