If your business operates here, the UAE corporate tax rate comes down to two numbers: 0% on the first AED 375,000 of Taxable Income, and 9% on the portion above it. Registration, filing and payment deadlines follow from those figures — not from your turnover.
Key Takeaways
- The UAE corporate tax rate is banded, not flat: 0% on Taxable Income up to AED 375,000, and 9% on the portion above it, per the Federal Tax Authority’s Corporate Tax Guide (CTGDT|1, issued July 2024) (a-h-g.net).
- The 0% band applies to the Taxable Income of a single Taxable Person. It is not a personal allowance and cannot be multiplied by the number of owners.
- You can owe nothing at all and still have to register and file. A nil return is still a return.
- Small Business Relief is a separate mechanism from the AED 375,000 band, based on Revenue rather than Taxable Income. Confirm current eligibility and rules with the FTA before relying on it.
- A free zone licence by itself does not deliver 0%. Qualifying Free Zone Person status is an annual assessment, not a one-time decision.
- Corporate Tax returns and payment are generally due within nine months of the end of your Tax Period (theaccountant.ae).
What Is the UAE Corporate Tax Rate in 2025 and 2026?
The headline is simple. Once your Taxable Income for the period is worked out, Corporate Tax is charged at 0% on the portion that does not exceed AED 375,000, and 9% on the portion that does (a-h-g.net).
| Taxable Income for the period | Rate applied |
|---|---|
| Up to AED 375,000 | 0% |
| Above AED 375,000 | 9% |
UAE Corporate Tax applies to Tax Periods beginning on or after 1 June 2023, so your first return depends on your financial year end rather than the calendar year (theaccountant.ae).
9% is one of the lowest headline corporate tax rates in the world, and that is worth appreciating. But it is not a flat 9% on all profit. The first AED 375,000 of Taxable Income is taxed at 0%, and that band stays with you.
Three details are worth holding onto:
The 0% band belongs to one Taxable Person. It is a rate band applied to the Taxable Income of a single entity. It is not a personal allowance, and it is not multiplied by the number of shareholders. A company with four partners does not get four bands.
Two groups sit outside this simple picture. Qualifying Free Zone Persons can access 0% on Qualifying Income, and large multinational groups face separate top-up rules. Both are covered in their own sections below.
Rates and thresholds can change. Before you rely on any figure for planning, confirm it against the FTA’s latest guidance. We check these references with every client we onboard, because a stale number can distort a whole year of decisions.
How UAE Corporate Tax Is Calculated (With a Worked Example)
The calculation runs in two steps, and keeping them separate is what stops most errors.
Step one: determine Taxable Income. This is not your revenue, and it is not your accounting profit either. It starts from your accounting profit and is then adjusted — disallowed expenses are added back, certain unrealised gains and losses are stripped out, and other adjustments apply depending on your circumstances. The 0% band is not a deduction and it is not an exemption. It is simply a rate applied to a smaller number.
Step two: apply the rate bands. Once you have a Taxable Income figure, the first AED 375,000 is taxed at 0% and everything above it at 9%.
Here is a worked example, drawn from published guidance on mainland businesses (kgrnaudit.com):
- Taxable Income: AED 1,000,000
- First AED 375,000 × 0% = AED 0
- Remaining AED 625,000 × 9% = AED 56,250
- Total Corporate Tax: AED 56,250
A second, purely illustrative example shows where micro-businesses land. If Taxable Income is AED 300,000, the whole amount sits inside the 0% band and the tax is AED 0 — provided no Small Business Relief election or other rule changes the picture.
Two things people get wrong here. First, crossing the threshold does not claw back the benefit of the 0% band. You do not suddenly pay 9% on the entire AED 1,000,000. Second, applying 9% to turnover massively overstates what a typical SME owes. A business turning over AED 5 million on thin margins might have a Taxable Income of AED 400,000 — and the tax bill follows the profit, not the sales line.
Who Has to Register and File for UAE Corporate Tax?
Registration has nothing to do with whether the UAE corporate tax rate produces a bill for you. It is a separate obligation, triggered by what you are and when your licence or incorporation date falls.
The categories treated as Taxable Persons include:
- UAE mainland companies, including LLCs (a limited liability company, where owners’ liability is capped at their share) and sole establishments
- Free zone companies that are not Qualifying Free Zone Persons
- Branches of UAE companies and of foreign companies
- Partnerships and other unincorporated structures
- Non-residents with a UAE permanent establishment or UAE-source income
If you are setting up as a non-resident, the ownership and residency questions matter well before tax registration. Our guide to Requirements to Start a Business in the UAE as a Non-Resident walks through that groundwork.
A nil return is still a return. A company with zero profit, or profit below the AED 375,000 band, still has to register and file. Failing to file because you owe nothing is one of the most expensive misunderstandings in the system.
Some entities are generally treated as exempt — qualifying public benefit entities and qualifying investment funds are the common examples, alongside certain others. Exemption is not a label you can assume. It has to be assessed against the conditions, and in our experience it is rarely as obvious as owners expect.
Ownership structure also shapes the conversation. A UAE company owned directly by individuals faces one set of questions about who uses the 0% band. A company owned by another company faces a different set, because the band is not duplicated up the chain. If you are working through how an LLC is structured here, our Arabic guide to معنى شركة ذات مسؤولية محدودة في الإمارات: دليل شامل explains the legal form in detail.
Finally, remember that registration is separate from your trade licence. A licence issued by any emirate — including one obtained through a virtual office arrangement in Dubai — does not register you for Corporate Tax. Dormant or pre-revenue companies may still carry a registration obligation tied to their licence or incorporation date, so check before assuming you are out of scope.
Does the 0% Threshold Mean Small Businesses Pay Nothing?
Not automatically — and this is where a lot of competing guides blur two different things. The AED 375,000 figure is a rate band on Taxable Income. Small Business Relief is a separate mechanism based on Revenue. They are not the same, and they are frequently confused.
| Feature | AED 375,000 rate band | Small Business Relief |
|---|---|---|
| What it looks at | Taxable Income | Revenue |
| What it gives you | 0% on the first AED 375,000 | Treated as having no Taxable Income for the period |
| Automatic? | Yes, part of the rate structure | No — elections and conditions apply |
| Availability | Ongoing | Limited window — confirm current rules with the FTA |
| Can you use both? | — | Confirm with the FTA; the two interact |
| What it costs you | Nothing | You generally forgo the AED 375,000 band in that period |
In broad terms, a Resident Taxable Person whose Revenue stays at or below the AED 3,000,000 threshold may be able to elect to be treated as having no Taxable Income for that period — meaning 0% tax for that period. Revenue, note, is not profit. The AED 3,000,000 test looks at what you brought in; the AED 375,000 band looks at what you actually earned after adjustments.
Two cautions. First, this is an election with conditions and a limited availability window, so it is not automatic and not permanent. Confirm the current eligibility period and rules with the FTA or with our team before relying on it — the details here change, and a guide written last year may already be out of step. Second, electing relief means forgoing certain things, including the ability to also claim the AED 375,000 band in the same period. Which route is better depends entirely on your numbers.
A quick decision rule:
- Low revenue and low profit → investigate Small Business Relief seriously.
- Revenue above the relief threshold, or healthy profit → the standard 0%/9% bands on Taxable Income usually apply.
Mainland vs Free Zone: Who Pays 9% and Who Qualifies for 0%?
On the mainland, the standard UAE corporate tax rate applies: 0% on the first AED 375,000 of Taxable Income and 9% above it. There is no separate free zone relief on a mainland licence.
Free zone companies are not automatically different. The same 0%/9% structure applies unless the company qualifies as a Qualifying Free Zone Person, in which case Qualifying Income can be taxed at 0%.
| Mainland company | Free zone company (not QFZP) | Qualifying Free Zone Person | |
|---|---|---|---|
| How Taxable Income is taxed | 0% up to AED 375,000; 9% above | 0% up to AED 375,000; 9% above | 0% on Qualifying Income; 9% above the AED 375,000 band on non-qualifying income |
| Is the licence enough? | Standard rules apply | Standard rules apply | No — substance, income type, de minimis and election are all required |
| Main risk | None specific | Assuming the free zone licence means 0% | Losing QFZP status mid-year after a change in what you sell or to whom |
To qualify, a company generally has to be a Free Zone Person maintaining adequate substance in a free zone, derive Qualifying Income, stay within the de minimis requirement for non-qualifying income, and elect to be treated as a Qualifying Free Zone Person.
Qualifying Income covers things like income from transactions with other free zone persons and income from qualifying activities. Income outside that definition is non-qualifying income, and above the AED 375,000 band it is taxed at 9%.
The practical reality for SMEs is blunt: a free zone licence alone does not guarantee 0%. Fail on substance, activity type, or the de minimis limit, and you fall back into the standard rates. Because the tests depend on what you sell and to whom, treat eligibility as an annual check rather than a one-time decision. A new product line or a new customer outside the zone can quietly break qualification.
If you have not chosen a zone yet, our breakdown of Which Abu Dhabi Free Zone Is Right for Your Business? covers how zone rules and activity permissions differ — and why that choice feeds directly into your tax position later. Zone selection also affects how long setup takes; see How Long Does It Take to Set Up a Company in Dubai? for the realistic timeline.
Do Multinational Groups Pay a Different Rate?
Usually not the same conversation. A separate 15% domestic minimum top-up tax regime applies for large multinational groups, distinct from the 9% rate and outside the scope of typical SMEs. This is a specialised area with its own rules and thresholds, and we recommend verifying the current scope and figures directly with the FTA or a tax adviser before assuming it applies to you.
The core reassurance for our clients: a single-company SME, a family business, or a freelancer will almost never be in scope. If you are one owner, one licence and one set of books, this section is background reading, not a planning problem.
Where it does matter is group structure. Even when the top-up regime does not apply, group companies may still face transfer pricing documentation and disclosure obligations, because transactions with related parties have to be priced on arm’s-length terms. If your UAE entity sits inside an overseas group, have the structure reviewed. The UAE entity’s position can be affected by the wider group’s profile in ways that are not obvious from the local accounts alone.
How to Register for UAE Corporate Tax with the FTA
Registration is a process with a fixed order, and doing the steps in sequence saves weeks.
| Step | What happens | What you need |
|---|---|---|
| 1 | Confirm your Taxable Person status | Your legal form, ownership, and whether you are a Free Zone Person |
| 2 | Gather your documents | See list below |
| 3 | Create or access your EmaraTax account | EmaraTax is the FTA’s online portal for registration and filing |
| 4 | Submit the Corporate Tax registration application | Entity details, financial year end, contact and authorisation information |
| 5 | Receive your Corporate Tax Registration Number (TRN) | The TRN is your identifier for filings and payments |
Documents typically needed:
- Trade licence
- Emirates ID or passport of owners and managers
- Proof of authorisation for whoever submits the application
- Articles of Association or incorporation documents
- Details of your financial year end
The deadline depends on your licence or incorporation date, not on when you start making a profit. FTA decisions set registration deadlines that differ depending on when your licence was issued or your entity was incorporated, so check your own deadline rather than copying a generic date from a guide. This is the single most common cause of late-registration penalties — owners assume registration starts when profit starts, and it does not.
You can also register before your first Tax Period begins. Registering early avoids a scramble later, and it gives you time to sort out your financial year end and bookkeeping before the first return is due.
Our accounting team handles registration end to end for mainland and free zone clients, including document checks, eligibility questions, and EmaraTax submission. If you would rather not work through the sequence alone, that is exactly the kind of task we take off your desk.
Filing, Deadlines and Penalties: What Happens After You Register
Once registered, a Taxable Person generally files its Corporate Tax Return and pays the Corporate Tax due within nine months from the end of the relevant Tax Period (theaccountant.ae).
For a newly formed company, the first Tax Period can be longer or shorter than 12 months, which means the first filing deadline may land somewhere you did not expect. Confirm your financial year end with the FTA early; every later deadline is measured from it.
The return needs, at minimum:
- Financial statements for the period
- The tax computation, showing adjustments from accounting profit to Taxable Income
- Any elections, such as Small Business Relief or Qualifying Free Zone Person status
Corporate Tax is self-assessed. The FTA does not calculate it for you. You report your own Taxable Income and elections, and getting the adjustments wrong is what triggers assessments and follow-up queries. That is a bookkeeping problem before it is a tax problem.
Penalties in principle can apply for late registration, late filing, and late payment — each set out in FTA decisions. Amounts and schedules change, so check the current schedule rather than relying on a figure you read somewhere. We confirm the applicable penalty position with clients directly instead of quoting stale numbers.
A simple compliance calendar keeps you ahead of all of it:
| When | What happens |
|---|---|
| Licence or incorporation date | Registration deadline clock starts |
| Financial year end | Tax Period closes |
| Shortly after year end | Books closed, adjustments agreed |
| Mid-year | Return prepared, elections decided |
| Month nine | Return filed and tax paid |
Common Mistakes SMEs Make with UAE Corporate Tax
These are the ones we see repeatedly, and each has a cost attached.
Assuming no registration is needed because there is no profit. New businesses, dormant companies, and anyone below the AED 375,000 band still register. The obligation follows your status, not your bottom line.
Treating the free zone licence as an automatic 0% pass. Qualification depends on substance, income type, and the de minimis limit — checked every year, not once at setup.
Mixing up the AED 375,000 band with the AED 3,000,000 relief threshold. One looks at Taxable Income, the other at Revenue. Claiming both in the same period is another trap. Get a professional view before you elect.
Calculating tax on revenue instead of Taxable Income. This overstates the liability badly, and it leads to overpayment or to plans built on wrong numbers. If your numbers look alarming, check the calculation basis before you act on them.
Missing the nine-month window because the financial year end was never confirmed with the FTA. Diarise it the day you register.
Keeping weak books. Unrecorded owner drawings, personal expenses run through the company, and missing invoices all complicate the tax computation — and they are exactly what an audit will surface. Clean records are cheaper than reconstructed ones.
Ignoring elections entirely and defaulting into a less favourable position by accident. Small Business Relief and QFZP status both require an active decision.
Should You Handle Corporate Tax Yourself or Use an Accountant?
There is no shame in either answer. Here is a straight framework.
DIY may be workable if you are a very small, single-entity business with clean books, standard mainland income, no free zone qualification questions, no related-party transactions, and a comfortable distance from the AED 3,000,000 relief threshold.
Use professional help when any of these apply:
- You are a free zone company relying on Qualifying Income status
- You have related-party transactions or a group structure
- Your revenue sits near the AED 3,000,000 relief threshold
- You have multiple entities
- You are already behind on registration
Professional support should cover the whole chain, not just a form: eligibility assessment, registration and TRN, bookkeeping that produces a reliable Taxable Income figure, the tax computation and elections, return filing, and a compliance calendar for future years.
On cost and timeline, expect a range rather than a fixed number. Final pricing depends on entity type, number of transactions, and whether bookkeeping needs to be cleaned up first. It runs from a standalone registration through to full ongoing filing support. We will give you a clear figure after a short review of your position. If cash flow is part of the picture, our guide to a Business Loan in UAE: How to Fund Your Company in 2026 covers funding options, and American Banks in the UAE: Which One Fits Your Business? is useful if you are choosing a banking partner alongside your tax setup.
Our accounting and auditing team registers, prepares and files for mainland and free zone SMEs, and we can review your structure before your first Tax Period ends. If you would like the full picture of licence and renewal costs feeding into your tax planning, our breakdown of تكلفة رخصة التجارة العامة في دبي سنوياً بالتفصيل puts the annual figures in one place.
Book a Corporate Tax review with Al Ain Business Center and get your rate, your deadline and your filing obligations confirmed in writing — before the next deadline finds you.
Frequently Asked Questions About Uae Corporate Tax Rate
What is the UAE corporate tax rate for 2025 and 2026?
The rate structure is banded: 0% on Taxable Income up to AED 375,000 and 9% on the portion above it. It applies to Tax Periods beginning on or after 1 June 2023, so your first return depends on your financial year end rather than the calendar year.
Do small businesses in the UAE have to pay corporate tax?
Not automatically. A business with Taxable Income at or below AED 375,000 sits entirely in the 0% band and owes nothing on that income. Small Business Relief is a separate Revenue-based mechanism with elections and conditions, so eligibility should be confirmed with the FTA before relying on it.
Who is exempt from UAE corporate tax?
Qualifying public benefit entities and qualifying investment funds are generally treated as exempt, alongside certain other entities. Exemption is not a label you can assume — it has to be assessed against the conditions.
Do free zone companies in the UAE pay 9% corporate tax?
Free zone companies are not automatically different: the standard 0%/9% structure applies unless the company qualifies as a Qualifying Free Zone Person, in which case Qualifying Income can be taxed at 0%. A free zone licence alone does not deliver 0%, and eligibility is an annual assessment.
When do I need to register for UAE corporate tax?
Registration is a separate obligation triggered by what you are and when your licence or incorporation date falls, not by whether the rate produces a bill. A nil return is still a return, so you can owe nothing and still have to register and file.
How much corporate tax does a company with AED 1 million profit pay in the UAE?
Using a worked example: the first AED 375,000 is taxed at 0% (AED 0) and the remaining AED 625,000 at 9% (AED 56,250), for total Corporate Tax of AED 56,250. The figure follows Taxable Income after adjustments, not revenue.