UAE corporate tax is new enough that founders still trade myths about it: that free zones are automatically tax-free, that small companies do not need to register, that the threshold is about revenue. This guide explains how the regime actually works, in plain English, with the official sources linked.
What You Need to Know First
The UAE levies corporate tax at 9 percent on taxable income above AED 375,000 per tax period, and 0 percent on taxable income up to that amount. Qualifying Free Zone Persons can access a 0 percent rate on qualifying income if they meet strict conditions. Small Business Relief may treat businesses with revenue up to AED 3 million as having no taxable income for periods ending on or before 31 December 2026. Companies are generally required to register with the Federal Tax Authority even if they expect to pay nothing. This page is general information, not tax advice.
What UAE corporate tax is
Corporate tax is a federal tax on business profits introduced by Federal Decree-Law No. 47 of 2022, applying to financial years starting on or after 1 June 2023. It is administered by the Federal Tax Authority through the EmaraTax portal. It taxes taxable income, which starts from accounting profit and is adjusted under the law, and it is separate from VAT, which taxes transactions. If you are also dealing with VAT, the UAE VAT registration guide covers that side.
Rates and thresholds
| Band or regime | Rate | Applies to |
|---|---|---|
| Taxable income up to AED 375,000 | 0% | All taxable persons |
| Taxable income above AED 375,000 | 9% | Standard rate on the excess |
| Qualifying income of a Qualifying Free Zone Person | 0% | Free zone entities meeting all QFZP conditions |
| Non-qualifying income of a QFZP | 9% | Above de minimis limits |
| Large multinational groups (DMTT) | 15% top-up | Groups with global revenue of EUR 750 million or more, from 2025 |
Who is in scope
Mainland companies
UAE-incorporated companies are taxable persons on their worldwide income, with reliefs and exemptions defined by the law. Most operating mainland companies simply apply the 0 and 9 percent bands to taxable income.
Free zone companies
Free zone entities are inside the regime, not outside it. A Qualifying Free Zone Person can access 0 percent on qualifying income if it maintains adequate substance in the zone, earns qualifying income as defined, stays within de minimis limits for other income, does not elect into the standard regime, complies with transfer pricing rules and prepares audited financial statements. Failing a condition means the standard rates apply. How structure choice interacts with tax is part of the bigger decision covered in Mainland vs Free Zone vs Offshore in the UAE.
Freelancers and natural persons
Individuals conducting business in the UAE fall in scope when their business turnover exceeds AED 1 million in a calendar year. Employment income, personal investment income and personal real estate income are generally out of scope.
Exempt persons
Government entities, certain government-controlled entities, qualifying public benefit entities, qualifying investment funds and some natural resource businesses can be exempt, subject to conditions and, in some cases, approval.
Small Business Relief
Small Business Relief lets an eligible resident business elect to be treated as having no taxable income for a tax period when its revenue is AED 3 million or less in that period and all previous periods ending on or before 31 December 2026.
| Aspect | How it works |
|---|---|
| Revenue ceiling | AED 3,000,000 per relevant tax period |
| Availability | Tax periods ending on or before 31 December 2026 |
| Who cannot use it | Qualifying Free Zone Persons and members of large multinational groups |
| Trade-offs | No deduction of net interest expense and no carry-forward of losses generated in relief periods |
| How to claim | Election in the tax return; registration and filing still required |
The relief reduces the tax to zero for eligible periods, but it does not remove the registration and filing duty, and the sunset date means growing businesses should plan for the standard bands.
Do you need to register for corporate tax?
Generally yes. Juridical persons, including free zone companies, are required to register with the FTA and obtain a corporate tax registration number regardless of income level. Natural persons register once their business turnover crosses the AED 1 million threshold. The FTA has issued deadlines tied to licence issuance dates and has applied administrative penalties for late registration, commonly cited at AED 10,000; check the current deadline table on the FTA site for your case.
After registration, each taxable person files a corporate tax return within nine months of the end of its tax period and pays any tax due in the same window. If you would rather have the registration handled for you, you can compare corporate tax registration support from verified consultants.
Corporate tax vs VAT
| Aspect | Corporate tax | VAT |
|---|---|---|
| What is taxed | Business profits (taxable income) | Taxable supplies of goods and services |
| Standard rate | 9% above AED 375,000 taxable income | 5% on most supplies |
| Registration trigger | Generally required for companies; AED 1m turnover for individuals | Mandatory at AED 375,000 taxable supplies; voluntary from AED 187,500 |
| Filing rhythm | Annual return, 9 months after period end | Periodic returns, usually quarterly or monthly |
| Administered by | Federal Tax Authority | Federal Tax Authority |
The two registrations are independent: many companies need both, some need only corporate tax registration in year one. The VAT side, thresholds and process are covered step by step in the UAE VAT registration guide.
What new founders should do
- Register for corporate tax on EmaraTax after licensing; do not wait for revenue.
- Keep proper accounting records from day one; returns are built on financial statements.
- Check whether Small Business Relief fits your first periods and note its sunset date.
- If you are in a free zone and expect 0 percent, confirm the QFZP conditions honestly, especially substance and audited accounts.
- Budget for compliance: registration help, bookkeeping and the annual return. Indicative costs are in the Dubai setup cost breakdown, and you can estimate your UAE business setup cost including tax registrations.
- Confirm current rates, thresholds and deadlines against the FTA and Ministry of Finance pages linked below; rules evolve.
FAQ
What is the UAE corporate tax rate?
The standard rate is 9 percent on taxable income above AED 375,000 per tax period, with 0 percent on taxable income up to that amount. Qualifying Free Zone Persons can access 0 percent on qualifying income, and large multinational groups may face a 15 percent top-up under the domestic minimum tax rules.
Is the AED 375,000 threshold based on revenue or profit?
Taxable income, which starts from accounting profit adjusted under the law, not revenue. A company with high revenue but taxable income below AED 375,000 sits in the 0 percent band, though it still needs to register and file a return.
Do free zone companies pay corporate tax in the UAE?
Free zone companies are inside the regime and must register. A Qualifying Free Zone Person can benefit from 0 percent on qualifying income if it meets all conditions, including adequate substance, the de minimis test and audited financial statements. Income that does not qualify is taxed at the standard rate.
Does every UAE company have to register for corporate tax?
Generally yes. Juridical persons, including free zone entities, are required to register with the Federal Tax Authority regardless of profit level, and the FTA has applied late registration penalties. Registration is done through the EmaraTax portal.
What is Small Business Relief and who can use it?
An election that treats an eligible resident business as having no taxable income for a tax period when revenue is AED 3 million or less, for periods ending on or before 31 December 2026. Qualifying Free Zone Persons and members of large multinational groups cannot use it, and using it limits interest deductions and loss carry-forward for those periods.
Are salaries taxed under UAE corporate tax?
No. Employment income remains out of scope for individuals. Corporate tax applies to business profits. An individual only enters the regime when conducting business with turnover above AED 1 million per calendar year.
Do freelancers pay corporate tax in the UAE?
A freelancer conducting business in the UAE falls in scope when annual business turnover exceeds AED 1 million. Below that, there is no corporate tax registration duty for the individual. Above it, the same bands apply: 0 percent up to AED 375,000 of taxable income and 9 percent beyond.
When do I file a corporate tax return and pay?
Within nine months of the end of your tax period, filing the return and paying any tax due through EmaraTax. A company with a January to December financial year therefore generally files by the end of September of the following year.
What happens if I register late for corporate tax?
The FTA has applied an administrative penalty for late registration, commonly cited at AED 10,000, alongside other penalties for late filing or payment. Deadlines have depended on licence issuance dates, so check the current FTA guidance for your specific situation.
Are dividends taxed under UAE corporate tax?
Dividends and certain other income can be exempt, for example domestic dividends and participation-related income meeting the participation exemption conditions. The details are technical, so treatment of investment income is a point worth confirming with a qualified adviser.
Is corporate tax the same as VAT?
No. Corporate tax is an annual tax on business profits; VAT is a 5 percent transaction tax on taxable supplies with its own registration thresholds. Many companies need both registrations, and the records, returns and deadlines are separate.
Where can I check the official corporate tax rules?
The Federal Tax Authority publishes the law, executive decisions, guides and deadline tables at tax.gov.ae, and the Ministry of Finance covers policy at mof.gov.ae. Rates, thresholds and deadlines described here reflect those sources as of mid-2026 and can change.
Need Help With Corporate Tax Readiness
If your case involves free zone qualification, group structures or simply getting registered and compliant without drama, a verified tax-focused consultant can settle it faster than forum threads. Emirae.Pro is a marketplace, not a tax adviser, and this page is general information rather than advice.
You can compare UAE business consultants on Emirae.Pro, submit a request, or estimate your UAE business setup cost including tax registration support.
Sources
UAE Business Setup Specialist
Krystyna Sokolovska is a UAE business setup specialist who helps founders, independent professionals, and growing companies navigate business launch decisions in the Emirates with more clarity and less risk. Her work focuses on the practical side of entry into the UAE market — choosing the right setup path, understanding licensing options, preparing for banking, planning visa steps, and avoiding common mistakes that slow companies down.
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