UAE Tax Updates 2025: A Practical Guide to What Changed and What It Means for Your Business
The year 2025 was a consolidation and clarification year for UAE taxation. Rather than introducing an entirely new tax, the Federal Tax Authority (FTA) and the Ministry of Finance focused on tightening rules, closing ambiguities, and strengthening compliance frameworks, particularly under Corporate Tax (CT).
This blog explains each major 2025 tax update, why it was issued, and how it practically affects UAE businesses, Free Zone entities, investors, and finance teams.
1. Free Zone Corporate Tax Rules: Clearer but Stricter
What changed in 2025?
The government issued Ministerial Decision No. 229 of 2025, which replaced and refined the list of “Qualifying Activities” and “Excluded Activities” for Qualifying Free Zone Persons (QFZP).
Why this matters
Free Zone companies can continue to benefit from 0% Corporate Tax, but only if:
- They conduct qualifying activities
- They do not earn income from excluded activities
- They comply with substance, segregation, and reporting rules
Key clarifications
- Qualifying activities include:
- Manufacturing and processing
- Logistics and distribution
- Headquarters services to related parties
- Treasury and financing services to group companies
- Trading in qualifying commodities (subject to pricing benchmarks)
- Excluded activities still include:
- Most banking and insurance activities
- Certain real estate activities
- Transactions with natural persons (with limited exceptions)
Practical impact
Many Free Zone entities that assumed automatic 0% tax must now:
- Re-evaluate revenue streams
- Segregate qualifying vs non-qualifying income
- Review contracts with mainland customers and individuals
Action point:
Every Free Zone company should perform a QFZP eligibility review for FY 2024 and FY 2025.
2. Commodity Trading: Pricing Rules Formalised
What changed?
Through Ministerial Decision No. 230 of 2025, the UAE specified approved price reporting agencies (e.g., Platts, Argus, ICIS) for commodities trading.
Why this matters
Free Zone entities trading commodities can qualify for 0% tax only if transactions are priced using recognised market benchmarks.
Practical impact
- Internal pricing models without external benchmarks may be challenged
- Related-party commodity trades are under higher scrutiny
Action point:
Ensure commodity contracts reference recognised pricing indices and retain pricing documentation.
3. Investment Funds and REITs: Corporate Tax Framework Expanded
What changed?
Multiple 2025 decisions clarified Corporate Tax treatment for:
- Qualifying Investment Funds (QIFs)
- Real Estate Investment Trusts (REITs)
- Investors in these structures
Key takeaways
- Certain funds and REITs can be exempt from Corporate Tax
- Conditions include:
- Regulatory oversight
- Investor diversification
- Distribution requirements
- Specific timelines were introduced for:
- Registration
- Filing
- Investor disclosures
Practical impact
Fund managers and holding companies must now:
- Actively assess exemption eligibility
- Coordinate compliance at both fund and investor level
Action point:
Do not assume exemption—formal eligibility confirmation and filings are mandatory.
4. Audit Requirements Tightened (Especially for Groups)
What changed?
2025 decisions strengthened the audit framework for:
- Tax Groups
- Large entities
- Certain Free Zone companies
Key clarifications
- Tax Groups may be required to submit special-purpose aggregated financial statements
- Audits must comply with International Standards on Auditing (ISA)
- Not all companies can rely on unaudited accounts
Practical impact
- More entities now require statutory-quality audits
- Poor-quality bookkeeping increases compliance risk
Action point:
Plan audits early and align accounting systems with CT reporting needs.
5. Family Offices and Wealth Structures Clarified
What changed?
The FTA issued clarification on family wealth management structures, including:
- Single Family Offices
- Holding and investment vehicles
Why this matters
Not all family offices are automatically exempt from Corporate Tax.
Practical impact
- Income classification (business vs investment) is critical
- Substance and activity tests apply
Action point:
Family groups should restructure before assessment rather than after FTA queries.
6. Real Estate Developers: Transitional Relief Explained
What changed?
The FTA clarified how transitional rules and property valuations apply to real estate developers holding properties before CT introduction.
Practical impact
- Incorrect valuation methodology can inflate taxable gains
- Developers must justify valuation methods used
Action point:
Maintain valuation reports and apply transitional relief correctly.
7. VAT Update: Imported Services (“Concerned Services”)
What changed?
VAT Public Clarification clarified VAT treatment on services imported from outside the UAE.
Key points
- Reverse charge applies where place of supply is UAE
- Output VAT must be self-accounted
- Input VAT recovery depends on usage
Practical impact
- Many businesses under-report reverse charge VAT
- High risk area during VAT audits
Action point:
Review overseas consultancy, software, marketing, and management fees.
8. Penalties and Tax Procedures: Enforcement Focus
What changed?
Administrative penalty rules were updated to:
- Standardise penalty application
- Reduce discretion in repeated non-compliance
Practical impact
- Late registration and late filing penalties are increasingly enforced
- Reconsideration still possible—but documentation is key
Action point:
Move from reactive to calendar-based compliance.
9. Excise Tax: Legislative Update
What changed?
Excise rules were updated for:
- Tax rates
- Price calculation methods
- Goods classification
Practical impact
Relevant for businesses dealing in:
- Tobacco
- Vapes
- Soft drinks
- Energy drinks
Action point:
Recheck excise calculations and pricing structures.
Final Thoughts: What 2025 Signals for UAE Businesses
2025 made one thing clear:
The UAE tax system has moved from “introduction” to “enforcement and precision.”
Businesses must now focus on:
- Correct classification
- Strong documentation
- Proactive advisory, not just bookkeeping
How ProfiTrack Can Help
At ProfiTrack Accounting & Management Co., we assist clients with:
- Free Zone eligibility reviews
- Corporate Tax structuring
- Audit readiness
- VAT risk assessments
- Ongoing advisory support
