UAE Tax & Accounting Glossary

Short, plain-English explanations of the words you meet in UAE tax, accounting and audit, from Corporate Tax and VAT to IFRS and free zone rules.

Last reviewed: October 2026. Includes the Domestic Minimum Top-up Tax, e-invoicing and the R&D tax credit.

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A

Arm's Length Principle
When two related companies trade with each other, they have to use the price that two independent companies would agree in the same situation. This rule is in Article 34 of the Corporate Tax Law. The FTA uses it to check whether a group has moved profit from one company to another just to pay less tax.
Audit
A licensed auditor from outside the company checks its financial statements and records. The auditor then confirms whether they give a true and fair picture under the accounting rules that apply (usually IFRS in the UAE). Under Article 27 of the Commercial Companies Law (Federal Decree-Law No. 32 of 2021), every limited liability company and joint stock company must appoint an auditor. Free zones, DIFC and ADGM have their own audit rules. The Corporate Tax rules also ask for audited financial statements in some cases, for example when revenue is above AED 50 million, and from every Qualifying Free Zone Person.

B

Base Erosion and Profit Shifting (BEPS)
An OECD project against tax planning that uses gaps between countries' rules to move profit to places with low or no tax. The UAE Corporate Tax Law has several rules of this kind, such as transfer pricing rules, a cap on how much interest you can deduct and the General Anti-Abuse Rule (GAAR). Country-by-country reporting, where large groups report their figures country by country, is a separate set of rules under Cabinet Decision No. 44 of 2020.
Bookkeeping
Recording every money movement of a business (invoices, receipts, bank statements, payroll) in an accounting system, day by day or month by month. Bookkeeping is one part of accounting. The bookkeeper records the figures, and the accountant then analyses them, prepares reports and makes sure the business meets its tax and legal duties.

C

Cabinet Decision
A rule issued by the UAE Cabinet of Ministers, usually to put a federal law into practice or explain parts of it. Many VAT and Corporate Tax rules come as Cabinet Decisions, for example the VAT Executive Regulation (Cabinet Decision No. 52 of 2017) and the Corporate Tax rate bands (Cabinet Decision No. 116 of 2022). Some details sit one level lower, in Ministerial Decisions. Examples are the thresholds for transfer pricing documents and the conditions for Small Business Relief.
Corporate Tax (CT)
A federal tax on the profit of UAE businesses. You pay 9% on taxable income above AED 375,000 per tax period and 0% up to that amount. It was introduced by Federal Decree-Law No. 47 of 2022 and applies to financial years starting on or after 1 June 2023. Free zone companies that meet the Qualifying Free Zone Person (QFZP) conditions can pay 0% on qualifying income.

D

DIFC (Dubai International Financial Centre)
A financial free zone in Dubai with its own courts and its own written civil and commercial laws. These laws follow common law ideas, and English law fills any gaps. Financial services firms in DIFC are supervised by the Dubai Financial Services Authority (DFSA). Other DIFC companies register with the DIFC Registrar of Companies.
Domestic Minimum Top-up Tax (DMTT)
An extra tax under Cabinet Decision No. 142 of 2024 that brings the UAE in line with the OECD's Pillar Two global minimum tax. It covers UAE companies in multinational groups with combined revenue of at least EUR 750 million in at least two of the four previous financial years, for financial years starting on or after 1 January 2025. If the tax the group actually pays on its UAE profits is below 15%, the DMTT tops it up to 15%. This also applies to companies that would otherwise pay 9% or use free zone benefits.

E

E-Invoicing
The UAE system that makes electronic invoices mandatory for sales to other businesses (B2B) and to government (B2G). It was set up under Ministerial Decisions No. 243 and 244 of 2025 (amended by Ministerial Decision No. 66 of 2026). Invoices use PINT AE, a format based on the Peppol network, and pass through approved providers on both sides before the data reaches the tax authority (the five-corner model). A pilot has run since 1 July 2026. Businesses with annual revenue of AED 50 million or more must start on 1 January 2027 and appoint an Accredited Service Provider by 30 October 2026. Smaller businesses start on 1 July 2027.
Economic Substance Regulations (ESR)
Rules under Cabinet Resolution No. 57 of 2020. Mainland and free zone companies with income from certain 'Relevant Activities' (banking, insurance, fund management, intellectual property, holding companies and others) had to show real business activity in the UAE, such as staff, offices and spending. Cabinet Decision No. 98 of 2024 ended the rules for financial years ending after 31 December 2022.
Emirate
One of the seven states that make up the United Arab Emirates: Abu Dhabi, Dubai, Sharjah, Ajman, Ras Al Khaimah, Fujairah and Umm Al Quwain. Each emirate has its own government. It issues its own business licenses and can add its own rules on top of federal law.
Excise Tax
A UAE federal tax on certain goods that harm health or the environment. Tobacco products, electronic smoking devices and their liquids, and energy drinks are taxed at 100%. Since 1 January 2026, sweetened drinks are taxed per litre based on how much sugar they contain. Before that, carbonated and sweetened drinks paid a flat 50%. Excise Tax started on 1 October 2017 under Federal Decree-Law No. 7 of 2017, and the FTA collects it.

F

Federal Decree-Law
A law issued by the UAE President together with the Cabinet under Article 113 of the UAE Constitution. This route is used when a law is needed urgently between sessions of the Federal Supreme Council. It counts as a full federal law and goes to the Supreme Council afterwards. The UAE VAT Law (Federal Decree-Law No. 8 of 2017) and the Corporate Tax Law (Federal Decree-Law No. 47 of 2022) were both made this way.
Federal Tax Authority (FTA)
The UAE government body that runs federal taxes, collects them and checks that businesses pay. Today that means VAT, Excise Tax and Corporate Tax. The FTA keeps a register of everyone registered for tax and a register of licensed tax agents. Official website: tax.gov.ae
Free Zone
An area inside an emirate with its own licensing authority and rules. Free zones usually allow 100% foreign ownership, charge 0% import and export duties and can come with special tax treatment. The UAE has over 40 free zones, including JAFZA, DAFZA, DMCC, DIFC, ADGM, RAKEZ and Meydan.

G

GAAR (General Anti-Abuse Rule)
Article 50 of the UAE Corporate Tax Law. It lets the FTA ignore or reclassify a deal or structure that has no real business purpose and was set up mainly to save tax. It is aimed at artificial set-ups, not at normal business decisions that happen to save tax.

I

IFRS (International Financial Reporting Standards)
The international accounting rules written by the International Accounting Standards Board (IASB). They are used widely in the UAE. Ministerial Decision No. 114 of 2023 requires businesses that pay Corporate Tax to prepare their financial statements under IFRS. If revenue is no more than AED 50 million, the simpler IFRS for SMEs is allowed. The Commercial Companies Law also requires international accounting standards. Standards that come up often in the UAE are IFRS 9 (financial instruments), IFRS 15 (revenue) and IFRS 16 (leases).
Input Tax
The VAT a business pays on its own purchases and expenses. If you are registered for VAT, you can subtract the input tax on business costs from your output tax, the VAT you charged your customers. You pay the difference to the FTA, or the FTA refunds it if your input tax is higher.

M

MoET (Ministry of Economy and Tourism)
The UAE federal ministry in charge of economic policy and trade rules. It was called the Ministry of Economy until June 2025. Under Federal Decree-Law No. 41 of 2023 it licenses auditors, and nobody may work as an auditor in the UAE without its professional licence.
MOHRE (Ministry of Human Resources and Emiratisation)
The UAE federal ministry that oversees employment at mainland businesses. It handles labour contracts, work permits, Emiratisation quotas (the share of UAE nationals a company must employ, supported by the Nafis programme) and employee rights under the UAE Labour Law (Federal Decree-Law No. 33 of 2021).

O

Output Tax
The VAT a registered business adds to what it sells, at the standard rate of 5% or the zero rate of 0%. You collect it from your customers. Then you take off the input tax you can claim and pay the rest to the FTA.

P

Pillar Two (Global Minimum Tax)
The OECD's global minimum tax. Multinational groups with combined revenue of at least EUR 750 million in at least two of the four previous years should pay tax of at least 15% on their profits in each country. The UAE brought this in through its Domestic Minimum Top-up Tax (DMTT) under Cabinet Decision No. 142 of 2024, for financial years starting on or after 1 January 2025.

Q

Qualifying Free Zone Person (QFZP)
A free zone company that meets the conditions in the UAE Corporate Tax Law to pay 0% Corporate Tax on qualifying income. It needs real business activity in the UAE (staff, premises, spending), its income must come from qualifying activities, and its other income has to stay under the de minimis limit.

R

R&D Tax Incentive
A tax credit for research and development spending, introduced at the same time as the Pillar Two rules (Cabinet Decision No. 215 of 2025 and Ministerial Decision No. 24 of 2026). It reduces Corporate Tax and Top-up Tax. It is non-refundable, so you get no cash back if the credit is larger than your tax. Published summaries give credit rates of 15%, 35% or 50%, depending on how much you spend. It applies to tax periods starting on or after 1 January 2026 and is meant to bring more research work to the UAE.
Related Party
Under the UAE Corporate Tax Law, people and companies are related when one owns or controls 50%+ of the other, when they are family members of an individual taxpayer, or when the same owner controls both. Deals between related parties have to follow the arm's length principle, so the price must match what strangers would agree.

S

Small Business Relief
A Corporate Tax relief that a UAE resident business can choose if its revenue was no more than AED 3 million in the current tax period and every earlier one. The business is then treated as having no taxable income. It is available for tax periods ending on or before 31 December 2029 (Ministerial Decision No. 73 of 2023 as amended by Ministerial Decision No. 131 of 2026). Qualifying Free Zone Persons can't use it, and neither can members of multinational groups with combined revenue of AED 3.15 billion or more.

T

Tax Agent (FTA-Registered)
A person or firm registered with the FTA to handle tax matters for others. A tax agent files returns, writes to the FTA and represents clients in tax disputes. Only people on the FTA register of tax agents may do this work. You don't have to appoint one: a business can also deal with the FTA itself or through its legal representative.
Tax Group
Two or more UAE resident companies with the same owner (95%+) that choose to be treated as one taxpayer for Corporate Tax. The group files one combined return. Deals between the group's own companies are usually ignored for Corporate Tax.
Tax Period
The period a Corporate Tax return covers. It is usually 12 months and matches the company's financial year. Your first tax period began on the first day of your first financial year starting on or after 1 June 2023.
Transfer Pricing
The rules in the UAE Corporate Tax Law on how related companies price what they sell to each other. The price must be at arm's length, the same as between strangers. You need two documents, a Master File about the group and a Local File about the UAE business, if your revenue is AED 200 million or more or you belong to a multinational group with combined revenue of AED 3.15 billion or more (Ministerial Decision No. 97 of 2023). You must send them within 30 days when the FTA asks.
Troncmaster / Payroll Management
In UAE hotels, restaurants and other service businesses, this is how service charges and tips are shared out among staff. Payroll itself has to follow the Wage Protection System (WPS), so salaries are paid through approved banks or exchange houses.

V

VAT (Value Added Tax)
A 5% tax on most goods and services in the UAE, paid in the end by the consumer. It started on 1 January 2018 under Federal Decree-Law No. 8 of 2017. A business must register with the FTA once its taxable sales and imports went above AED 375,000 in the previous 12 months, or are expected to go above it in the next 30 days. Some sales are zero-rated (exports, international transport, some healthcare and education), and some are exempt (bare land, residential property).

W

Wage Protection System (WPS)
A government system for paying salaries electronically. Mainland businesses must pay their staff through approved banks, exchange houses or other financial institutions by a set date each month. MOHRE runs it. Businesses that don't follow it can be fined and may be blocked from applying for new work permits.
Withholding Tax
Tax that a payer keeps back from a payment and passes to the tax office. UAE businesses don't have to do this on payments to non-residents, because the UAE rate is currently 0%. The Corporate Tax Law does allow a Cabinet Decision to introduce withholding tax later.

Z

Zero-Rated Supply (VAT)
A sale that falls under VAT but at a rate of 0%. The business charges 0% VAT and can still claim back the input tax on its related costs. In the UAE this covers exports of goods and services, international passenger transport, some healthcare services, educational services and investment-grade precious metals.

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