Website Last updated:

May 15, 2026

This clarification addresses the determination of the first Corporate Tax period for juridical persons. For entities governed by the Commercial Companies Law, the first financial year can be between 6 and 18 months. This variable-length period is accepted as the first tax period if it starts on or after 1 June 2023. Importantly, statutory thresholds like the AED 3 million revenue for Small Business Relief are not pro-rated for these shorter or longer initial periods. The document also outlines rules for non-residents with a Permanent Establishment and the procedure for tax deregistration upon business cessation.

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Corporate Tax Public Clarification

First Tax Period of a juridical person

Issue

The Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Business, and its amendments ("Corporate Tax Law") applies to Tax Periods commencing on or after 1 June 2023.

Under the Corporate Tax Law, a Taxable Person's Tax Period is the Financial Year or part thereof for which a Tax Return is required to be filed.

The Financial Year of a Taxable Person shall be the Gregorian calendar year, or the 12-month period for which the Taxable Person prepares financial statements.

The Corporate Tax Law does not provide a specific provision for the first Financial Year of a juridical person that is a Taxable Person.

This Public Clarification is intended to clarify the first Tax Period under the Corporate Tax Law for:

a juridical person that is a Taxable Person and is subject to the provisions of the Commercial Companies Law.
a Non-Resident Person who is a juridical person who has a Permanent Establishment.
a Resident Person that is incorporated or otherwise established or recognised under the applicable legislation of a foreign jurisdiction that is effectively managed and controlled in the UAE.

In addition, the Public Clarification addresses the timeline for Tax Deregistration in case of the cessation of Business or Business Activities before or during the first Tax Period.

Summary

Juridical persons which are incorporated, formed or established under the Commercial Companies Law.

The Federal Decree-Law No. 32 of 2021 on Commercial Companies ("Commercial Companies Law") applies to commercial companies established in the UAE (including a Joint Liability Company, Limited Partnership Company, Limited Liability Company, Public Joint Stock Company, Private Joint Stock Company) and to foreign incorporated companies that establish their head office or a branch or representative office in the UAE.

The first Financial Year under the Commercial Companies Law may not necessarily be a 12- month period, but instead can be a period between 6 months and 18 months.

Where a juridical person which is a Taxable Person is formed under other legislation, such as Free Zone regulations, which nonetheless has the same requirements for the first Financial Year as the Commercial Companies Law, the same analysis provided by this Public Clarification shall apply.