Corporate Tax
Corporate Tax for Architectural Firms in the UAE
UAE corporate tax for architects: staged fees, variations, WIP on long designs, consultant coordination and fee disputes.
corporate tax architectural firm uae
UAE architectural firms pay 0% corporate tax on taxable income up to AED 375,000 and 9% above it under Article 3 of Federal Decree-Law No. 47 of 2022. Design fees are taxed by RIBA-style work stage as delivered, variations are recognised when approved and delivered, and long projects need work-in-progress accruals at the year-end.
Basis: UAE Federal Tax Authority
- Corporate tax rates
- 0% on taxable income up to AED 375,000; 9% above
- Article 3, Federal Decree-Law No. 47 of 2022
- Stage recognition
- Fees recognised as each design stage is delivered
- Article 20, Federal Decree-Law No. 47 of 2022
- Competition costs
- Deductible business development whether won or lost
- Article 28, Federal Decree-Law No. 47 of 2022
- Small Business Relief
- Revenue up to AED 3,000,000; tax periods ending on or before 31 December 2029
- Article 21; Ministerial Decision No. 73 of 2023
# How corporate tax works for architectural firms
Architectural practices earn staged fees across long design programmes: taxable income is fee revenue by stage delivered less architect payroll, software and overheads, taxed at the standard bands. Concept to site supervision can span years, making stage-of-completion the central discipline.
Variations and additional services are recognised when instructed and delivered. Competition work is deductible business development whether won or lost; the prize, where won, is income when awarded.
# Computing taxable income for architectural firms
Unbilled design work at the year-end is accrued by stage with matched costs. Sub-consultant engineers' fees are deductible where the architect is principal to the client; where the client engages them directly, the architect has no revenue or cost.
Professional firms compute taxable income as fee income less people costs and overheads, adjusted under Article 20 of Federal Decree-Law No. 47 of 2022, at the standard 0%/9% bands. Revenue timing follows delivery: time billed as worked, fixed fees by stage of completion, retainers as the service months pass, and success fees when the outcome is achieved.
Work in progress is the year-end discipline: unbilled time and costs on incomplete engagements are accrued as revenue and matched costs. Disbursements paid on clients' behalf, court fees, filing fees, expert costs, are the clients' costs passing through unless the firm is principal; recharged at cost they are neither revenue nor deduction.
Deductions that matter most for architectural firms:
- Architect salaries, visas and professional registrations are deductible.
- BIM and design software licences are deductible.
- Model-making, renders and competition costs are deductible.
| Expense | Treatment |
|---|---|
| Partner and staff salaries | Deductible |
| Professional indemnity insurance | Deductible |
| Research databases and subscriptions | Deductible |
| Subcontractor specialists | Deductible with engagement evidence |
| Client disbursements as agent | Not revenue; not deductible |
| Business development (evidenced) | Deductible |
| Regulatory fines | Not deductible (Article 33) |
| Partner personal expenses | Not deductible |
# Stages, variations and the long project
Stage-based billing, concept, developed design, technical, construction, supervision, maps naturally to revenue recognition: each stage's fee is recognised as that stage is delivered. Do not recognise the full appointment value on signing; the client has not received the later stages yet.
Supervision fees during construction accrue as the site months pass, distinct from the design stages. Aborted projects are recognised to the stage reached, with the abort fee, where the appointment provides one, recognised when the right to it is established.
Professional firms stumble on partner drawings disguised as salary, related-party referrals without substance, and WIP ignored at the year-end. Firms in free zones often assume 0% tax, but services to natural persons and mainland clients are taxed at 9%; only B2B services to other free zone persons can be qualifying income. Cash fees with no invoice are the fastest route to an understated return.
# Free zone vs mainland for architectural firms
Professional services sit in the most commonly misunderstood free zone position. Services supplied to other free zone persons can be qualifying income at 0% for a Qualifying Free Zone Person; services to mainland clients, government entities and natural persons are taxed at 9% (Ministerial Decision No. 229 of 2025 treats transactions with natural persons as excluded activities).
Most UAE professional firms serve mainland clients, which makes them 9% taxpayers in substance whatever the licence says. The firms that genuinely benefit are those with real free zone client bases. Tag revenue by client type from the first invoice, because reconstructing it later is unreliable.
Architectural services for other free zone persons can be qualifying income at 0% for a Qualifying Free Zone Person; design for mainland developments is taxed at 9%.
# Worked example: architectural firms tax computation
A practice recognises AED 5 million of staged fees. Architect payroll is AED 2.6 million, sub-consultants AED 600,000, software AED 200,000 and overheads AED 800,000:
The stage-of-completion method is what puts AED 5 million in this period rather than the appointment's full value. Timesheets by stage are the evidence behind the WIP.
For help applying these rules to your own business, including registration, computations and filing, contact us for a quote.
| Item | Amount |
|---|---|
| Fee revenue by stage delivered | AED 5,000,000 |
| Less: architect payroll | (AED 2,600,000) |
| Less: sub-consultants | (AED 600,000) |
| Less: software | (AED 200,000) |
| Less: overheads | (AED 800,000) |
| Taxable income | AED 800,000 |
| Tax: 0% on first AED 375,000 | AED 0 |
| Tax: 9% on AED 425,000 | AED 38,250 |
Sources and legal basis
Legislation and decisions2
- Federal Decree-Law No. 47 of 2022
- Ministerial Decision No. 229 of 2025
Authorities, systems and registers3
- UAE Federal Tax Authority
- UAE Ministry of Finance
- EmaraTax
- Corporate Tax – Federal Tax AuthorityUAE Federal Tax Authority
- Corporate Tax – Ministry of FinanceUAE Ministry of Finance
Rates, thresholds and deadlines change. Every figure above is linked to the authority that publishes it — if the two ever disagree, the authority is right and this page is out of date. Tell us and we will fix it.
Frequently asked questions
Are we taxed differently for interior design versus architecture?
No. Both are design services in the same company's computation at the standard bands. The licensing categories differ, but corporate tax aggregates the fee income. Segment them for management insight, not for the tax return.
What if the project is cancelled mid-design?
Recognise fees to the stage reached plus any abort fee the appointment provides, when the right to it is established. Costs incurred are deductible as usual. A cancelled project does not erase the revenue for work already delivered.
Do partners' drawings count as deductible salary?
Only genuine remuneration for work performed, processed through payroll at a defensible level, is deductible. Drawings taken as an owner, profit shares and dividends are distributions of after-tax profit, never deductions (Article 33). In partnerships and owner-managed firms the line between salary and profit share must be documented; Article 36 allows scrutiny of connected-person payments.
When is the firm's tax return due?
Within nine months of the end of the tax period (Articles 53(1) and 48 of Federal Decree-Law No. 47 of 2022), with any tax payable by the same date. Work in progress must be accrued before the return, because unbilled time is still revenue of the period. Late filing attracts administrative penalties.