On this page 6 sections
Nine per cent, above AED 375,000 of taxable income. Below that, zero. If revenue is at or under AED 3,000,000 you can elect Small Business Relief and be treated as having no taxable income at all – but you must elect it, every tax period, and electing it switches off every other relief.
Those three sentences are the whole regime for most small UAE companies. The rest of this page is the detail behind them, with a source for every figure, checked 6 August 2026.
| Taxable income | Rate |
|---|---|
| up to AED 375,000 | 0% |
| above AED 375,000 | 9% |
Source: u.ae, corporate tax, checked 6 August 2026.
The threshold applies to taxable income, not revenue. A company turning over AED 2 million with AED 300,000 of taxable profit pays nothing at the 9% rate, because the profit is under the threshold.
When it applies from
The regime applies to financial years beginning on or after 1 June 2023 (u.ae, checked 6 August 2026). The date the law itself was signed is deliberately not stated here: it is quoted freely elsewhere but it is not on the Ministry of Finance announcement page or on the FTA corporate tax page, both checked the same day. The date that governs anything practical is the effective date, and that one is sourced.
Who it applies to
| Category | In scope |
|---|---|
| Businesses and individuals under a commercial licence in the UAE | yes |
| Free zone businesses | yes, see below |
| Foreign entities conducting trade in the UAE | yes |
| Banking operations | yes |
| Real estate businesses | yes |
Source: u.ae, corporate tax, checked 6 August 2026.
Small Business Relief, and its two traps
| Condition | What the FTA states |
|---|---|
| Revenue test | equal to or less than AED 3,000,000 in the current and all previous tax periods |
| Effect if elected | treated as “not having derived any Taxable Income in the Tax Period” |
| Election | required, for each tax period – it is not automatic |
| Qualifying Free Zone Person | cannot elect |
| Member of a multinational group | cannot elect where consolidated group revenue exceeds AED 3.15 billion |
| Cost of electing | “Other exemptions, reliefs and deductions are not available” |
| End date of the relief | not stated on the FTA page |
Source: FTA, Small Business Relief, checked 6 August 2026. Statutory basis: Article 21 of the Corporate Tax Law and Ministerial Decision No. 73 of 2023.
The first trap: the revenue test looks back. “In both the current and all previous Tax Periods” means a single earlier year above AED 3 million disqualifies you afterwards, not only for that year.
The second trap: electing switches off everything else. If a company has losses to carry forward or other deductions worth more than the tax it would otherwise pay, electing can cost more than it saves. That arithmetic is per-company, and it is why this decision belongs with an accountant rather than a checkbox.
Free zone companies
The regime keeps a 0% rate for Qualifying Free Zone Persons. Per u.ae, checked 6 August 2026, it “will continue to honour the CT incentives currently being offered to free zone businesses that comply with all regulatory requirements and that do not conduct business set up in the UAE’s mainland.”
Two consequences worth stating plainly. Being in a free zone is not the same as being a Qualifying Free Zone Person – the qualification depends on the income and the activity, not the address. And a Qualifying Free Zone Person cannot elect Small Business Relief: the two routes are alternatives, not a stack. See what makes a Qualifying Free Zone Person, and the FTA’s own guide on free zone persons.
What this page does not tell you
| Question | Status |
|---|---|
| The registration deadline | not on the u.ae corporate tax page. The FTA publishes deadlines by licence issue date – check the FTA directly rather than a summary. |
| The penalty for late registration | not on the u.ae page, and not stated here rather than guessed |
| When Small Business Relief ends | not stated on the FTA relief page |
Once the decision is made, registration is a separate process.
It also does not cover excise tax, which is a separate regime with its own registration and goods list.
Who handles corporate tax here
From the Emirae directory, measured 6 August 2026.
| Measure | Count |
|---|---|
| Active consultants in the directory | 69 |
| Cover corporate tax | 50, the widest coverage of any category |
| Also cover accounting | 49 |
| Also cover VAT and tax registration | 36 |
| Work in Arabic as well as English | 19 |
Corporate tax is the best-covered service in this directory, which matters to anyone deciding whether it is worth shopping around: there is a real bench here, not two firms. Corporate tax is the service this sits under.
Filing is the duty downstream of registration: see the corporate tax return.
Frequently asked questions
What is the UAE corporate tax rate?
0% on taxable income up to AED 375,000 and 9% above it (u.ae, checked 6 August 2026).
Is the AED 375,000 threshold on revenue or profit?
Taxable income, not revenue.
When did UAE corporate tax start?
It applies to financial years beginning on or after 1 June 2023.
What is Small Business Relief?
An election available where revenue is AED 3,000,000 or less in the current and all previous tax periods. The person is then treated as having derived no taxable income for that period.
Is Small Business Relief automatic?
No. It must be elected, for each tax period.
What does electing Small Business Relief cost me?
Other exemptions, reliefs and deductions are not available for that period, so it can cost more than it saves where losses or deductions are large.
Can a free zone company elect Small Business Relief?
A Qualifying Free Zone Person cannot.
Do free zone companies pay corporate tax?
A Qualifying Free Zone Person keeps a 0% rate, subject to the regulatory conditions. Being located in a free zone is not sufficient on its own.
What is the penalty for registering late?
Not published on the u.ae corporate tax page. Check the Federal Tax Authority directly rather than a consultancy summary.
Not sure whether electing Small Business Relief helps or costs you? Describe your case and compare offers from consultants.
Official references used for context in this article.
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