Corporate Tax Rate in UAE: The Complete 2026 Business Guide
If you run a business in the UAE, corporate tax is no longer a future concern — it is a live filing obligation with real deadlines and real penalties. Yet the rate structure remains one of the most competitive in the world, and most small businesses pay far less than they fear. This guide explains exactly what the UAE corporate tax rate is in 2026, who pays it, who qualifies for 0%, and what you need to do next.
Quick answer: The UAE corporate tax rate is 0% on taxable income up to AED 375,000 and 9% on taxable income above AED 375,000. Large multinational groups (global revenue of EUR 750 million or more) face a 15% minimum effective rate under the Domestic Minimum Top-up Tax. Everyone else — the vast majority of UAE businesses — operates under the 0%/9% regime.
What Is the Corporate Tax Rate in UAE?
Corporate tax (CT) is a federal direct tax on the net profit of businesses, introduced under Federal Decree-Law No. 47 of 2022 and administered by the Federal Tax Authority (FTA) through the EmaraTax portal. The rate structure in 2026 is tiered:
| Taxable income / entity type | Rate |
|---|---|
| Taxable income up to AED 375,000 | 0% |
| Taxable income above AED 375,000 | 9% (on the amount above the threshold) |
| Qualifying Free Zone Person — qualifying income | 0% |
| Qualifying Free Zone Person — non-qualifying income | 9% |
| Large multinationals (EUR 750M+ group revenue) | 15% minimum effective rate (DMTT) |
Two things trip up business owners most often. First, the 9% applies only to the slice of profit above AED 375,000 — not to your entire profit. Second, a 0% rate is not a 0% obligation: even businesses paying nothing must register, keep proper accounting records, and file a return every tax period.
The 9% Standard Corporate Tax Rate: Who Does It Apply To?
The 9% rate applies to the taxable income of every "Taxable Person" that is not exempt and not covered by a relief.
Taxable Persons Under UAE CT Law
- UAE-incorporated companies — mainland LLCs, sole establishments, civil companies, and free zone entities (free zone rules below).
- Foreign companies effectively managed and controlled from the UAE — if key management decisions are made here, the company is treated as UAE-resident for CT.
- Natural persons (individuals) — freelancers, influencers, and sole traders conducting business in the UAE are taxable only if annual business turnover exceeds AED 1 million. Salaries, personal bank interest, and personal real estate investment income stay outside the scope.
Non-Resident Companies: UAE-Sourced Income
A foreign company with no UAE residence can still fall within the regime if it has a Permanent Establishment (PE) in the UAE, earns UAE-sourced income, or has a "nexus" here (for example, income from UAE immovable property). Non-residents with a PE pay the same 0%/9% rates on income attributable to that PE.
Not yet registered with the FTA? Register for Corporate Tax before penalties apply.
The 0% Rate: Taxable Income Under AED 375,000
The first AED 375,000 of taxable income is taxed at 0% for every taxable person. This is a genuine threshold, not an exemption you apply for — it is built into the rate structure.
Worked example: A Dubai trading company earns AED 600,000 taxable income in its 2025 financial year.
- First AED 375,000 → 0% = AED 0
- Remaining AED 225,000 → 9% = AED 20,250 total corporate tax
That is an effective rate of just 3.4% on total profit — a useful number to remember when the headline "9%" sounds alarming.
Small Business Relief: AED 375,000 Threshold vs AED 3 Million Revenue
Small Business Relief (SBR) is a separate, more generous mechanism that is frequently confused with the AED 375,000 threshold:
- Available to resident businesses with revenue of AED 3 million or less in the current and all previous tax periods.
- An eligible business can elect (on its tax return) to be treated as having no taxable income at all for that period — meaning zero corporate tax and simplified compliance.
- The window is closing: SBR applies only to tax periods ending on or before 31 December 2026. For calendar-year businesses, 2026 is the final year of relief unless the Ministry of Finance extends it. If you currently rely on SBR, start planning now for the standard 9% regime from 2027.
- Exclusions apply — Qualifying Free Zone Persons and members of large multinational groups cannot claim SBR.
Free Zone Qualifying Income: 0% Corporate Tax Rate
Free zone companies are not automatically tax-free. They are fully within the corporate tax regime and must register and file like everyone else. The 0% rate is available only to a Qualifying Free Zone Person (QFZP) — and only on qualifying income.
Qualifying Free Zone Person (QFZP): 0% Rate Conditions
To hold QFZP status, a free zone entity must, broadly:
- Maintain adequate substance in the free zone (staff, assets, expenditure proportionate to its activities);
- Earn qualifying income — e.g., transactions with other free zone persons, and specified "Qualifying Activities" such as manufacturing, fund management, or distribution from a designated zone;
- Stay within the de minimis limit for non-qualifying revenue (the lower of AED 5 million or 5% of total revenue);
- Comply with transfer pricing rules and prepare audited financial statements;
- Not elect into the standard regime.
Fail any condition and QFZP status is lost — typically for the current period and the following four tax periods — with all income taxed at 0%/9% under the standard rules. Mainland income (except certain passive or permitted income) is generally non-qualifying and taxed at 9%. If your business operates from DMCC, JAFZA, DAFZA, IFZA, or any other free zone, a proper QFZP assessment is one of the highest-value tax exercises you can commission. Learn more about Free Zone CT Rules.
Which Businesses Are Exempt from UAE Corporate Tax?
A short list of persons is exempt from corporate tax altogether:
- Government entities and government-controlled entities (for mandated activities);
- Extractive businesses and non-extractive natural resource businesses (taxed at emirate level instead);
- Qualifying public benefit entities (approved charities and NGOs);
- Qualifying investment funds, public and regulated private pension and social security funds;
- Wholly-owned UAE subsidiaries of exempt persons, in specified cases.
Exemption is narrower than most owners assume — an ordinary trading, services, or consulting company is never "exempt"; at best it benefits from the 0% band, Small Business Relief, or QFZP status described above.
Corporate Tax vs VAT: Key Differences
Corporate tax has not replaced VAT — most UAE businesses must now comply with both.
| Feature | Corporate Tax | VAT |
|---|---|---|
| Type | Direct tax on profits | Indirect tax on consumption |
| Rate | 0% / 9% (15% DMTT for large MNEs) | 5% standard (0% and exempt categories exist) |
| Who bears it | The business | The end customer (business collects) |
| Registration trigger | All taxable persons; individuals above AED 1M turnover | Mandatory at AED 375,000 taxable supplies; voluntary at AED 187,500 |
| Filing | Annually, within 9 months of period end | Quarterly or monthly returns |
| Law | Federal Decree-Law No. 47 of 2022 | Federal Decree-Law No. 8 of 2017 |
The identical AED 375,000 figure in both regimes causes endless confusion: for VAT it is a revenue registration threshold; for CT it is a profit band. They are unrelated tests.
When Did UAE Corporate Tax Start?
Corporate tax applies to financial years starting on or after 1 June 2023:
- Financial year 1 June 2023 – 31 May 2024 → first taxable period began 1 June 2023.
- Calendar-year businesses (Jan–Dec) → first taxable period began 1 January 2024, with the first return due 30 September 2025.
- For the 2025 calendar year, the return and payment deadline is 30 September 2026 — the single most important date in many UAE finance calendars right now.
Separately, the Domestic Minimum Top-up Tax (DMTT) took effect for financial years starting on or after 1 January 2025 (Cabinet Decision No. 142 of 2024), lifting the effective rate to 15% for constituent entities of multinational groups with consolidated revenue of EUR 750 million or more. If your group is below that threshold, DMTT does not apply to you.
How to Calculate Your UAE Corporate Tax Liability
The calculation follows five steps:
- Start with accounting net profit per IFRS-compliant financial statements.
- Make tax adjustments — add back non-deductible items (e.g., 50% of client entertainment, fines, certain related-party payments above arm's length) and apply the interest deduction limitation where relevant.
- Apply reliefs and exemptions — participation exemption on qualifying dividends and capital gains, qualifying group relief, business restructuring relief, or a Small Business Relief election if eligible.
- Deduct carried-forward tax losses (offset up to 75% of taxable income).
- Apply the rates — 0% to the first AED 375,000, 9% above it.
Example: Net accounting profit AED 1,000,000; add back AED 40,000 disallowed expenses; taxable income AED 1,040,000. Tax = (375,000 × 0%) + (665,000 × 9%) = AED 59,850.
Getting step 2 wrong is the most common cause of under- or over-payment — which is why the FTA requires proper books of account, and why voluntary disclosures and penalties follow sloppy record-keeping.
Next Steps: Register and File with Expert Help
Whatever rate applies to you — 0%, 9%, or the free zone regime — three obligations are universal: register with the FTA, maintain compliant accounting records, and file on time. The late-registration penalty alone is AED 10,000, and late filing and late payment attract further administrative penalties on top.
Our Dubai-based corporate tax team handles the entire cycle: CT registration on EmaraTax, taxable income computation, Small Business Relief and QFZP assessments, and return filing before the deadline.
Register for Corporate Tax | File Your CT Return | Speak to a Corporate Tax Expert | Call us: +971 52 406 3000
Frequently Asked Questions
What is the corporate tax rate in the UAE?
The UAE corporate tax rate is 0% on taxable income up to AED 375,000 and 9% on taxable income above AED 375,000. Large multinational groups with global revenue of EUR 750 million or more are subject to a 15% minimum effective rate under the Domestic Minimum Top-up Tax (DMTT).
Do free zone companies pay corporate tax in the UAE?
Free zone companies must register for corporate tax and file returns. A Qualifying Free Zone Person (QFZP) pays 0% on qualifying income and 9% on non-qualifying income. If QFZP conditions are not met, the standard 0%/9% regime applies to all taxable income.
What is Small Business Relief under UAE corporate tax?
Small Business Relief allows resident businesses with revenue of AED 3 million or less to elect to be treated as having no taxable income for the period. It is available for tax periods ending on or before 31 December 2026 and must be elected in the corporate tax return.
When did corporate tax start in the UAE?
UAE corporate tax applies to financial years starting on or after 1 June 2023 under Federal Decree-Law No. 47 of 2022. A business with a calendar-year financial period became subject to corporate tax from 1 January 2024.
Do freelancers and individuals pay corporate tax in the UAE?
Individuals conducting business in the UAE are subject to corporate tax only if their annual business turnover exceeds AED 1 million. Employment salaries, personal bank interest, and personal real estate investment income remain outside the scope of corporate tax.
What is the penalty for late corporate tax registration in the UAE?
The Federal Tax Authority imposes an administrative penalty of AED 10,000 for late corporate tax registration. Late filing and late payment attract additional penalties, so registration and filing deadlines should be diarised well in advance.
When is the UAE corporate tax return due?
A corporate tax return must be filed within 9 months of the end of the relevant tax period. For businesses with a January to December 2025 financial year, the filing and payment deadline is 30 September 2026.
Is the UAE corporate tax rate the same as VAT?
No. VAT is a 5% indirect tax on the supply of goods and services, collected from customers and paid to the FTA. Corporate tax is a direct tax of 0% or 9% on business profits. Many businesses must comply with both regimes separately.