UAE Corporate Tax, Explained Simply: The 9% Rate, the Reliefs, and What You Owe
Ali JasimUAE corporate tax is 9% on taxable profit above AED 375,000, and 0% on the first AED 375,000. It applies to most businesses, including free zone companies, though a Qualifying Free Zone Person can still pay 0% on qualifying income.
Small Business Relief lets companies with revenue up to AED 3 million elect to be treated as having no taxable income, through the end of 2026. Every taxable business must register for corporate tax and file a return, even if it owes nothing.
For most of its history the UAE had no corporate tax, so its arrival caught a lot of business owners off guard.
The good news: the system is one of the simplest and lowest in the world, and if you are a genuinely small business you may owe nothing at all.
The catch: "owe nothing" is not the same as "do nothing". You still have to register and file.
Here is the whole thing in plain terms.
Who has to pay corporate tax?
Corporate tax applies to UAE companies and to individuals carrying on a business or business activity under a licence. That covers mainland companies, free zone companies, and freelancers or sole proprietors doing business above a certain scale.
It does not apply to an individual's salary, personal investment income, or personal real estate income earned outside a business. If you run a licensed business in the UAE, assume you are in scope and register.
How the Rate Works
The structure is deliberately simple. Your first AED 375,000 of taxable profit is taxed at 0%.
Everything above that is taxed at 9%. So a company with AED 500,000 of taxable profit pays 9% on AED 125,000, not on the whole amount.
There is also a separate 15% domestic minimum top-up tax aimed at very large multinational groups (those with global revenues above EUR 750 million), which does not affect ordinary UAE businesses.
| Taxable profit | Rate applied | Tax due (illustrative) |
|---|---|---|
| AED 300,000 | 0% (under the threshold) | AED 0 |
| AED 375,000 | 0% up to the threshold | AED 0 |
| AED 500,000 | 0% on first 375k, 9% on 125k | AED 11,250 |
| AED 1,000,000 | 0% on first 375k, 9% on 625k | AED 56,250 |
Small Business Relief: How Many Small Firms Pay Nothing
This is the part many owners miss. Small Business Relief lets a resident business with revenue of AED 3 million or less in the relevant period elect to be treated as having no taxable income for that period.
In effect, if you qualify and elect, your corporate tax is nil. The relief is currently available through the end of 2026.
It is an election, not automatic, and you still have to register and file to claim it. So a small company that ignores corporate tax entirely can end up penalised for not filing, even though it would have owed nothing.
What about free zone companies?
A common myth is that free zone companies are simply exempt. They are not.
A free zone company is a taxable person like any other. However, a "Qualifying Free Zone Person" that meets specific conditions can enjoy a 0% rate on its "qualifying income", with 9% applying to non-qualifying income.
The conditions include maintaining adequate substance in the UAE, earning the right type of income, and meeting transfer pricing and other requirements. It is a genuine benefit, but it is conditional, and getting it wrong means the standard 9% applies.
If your business is in a free zone, this is worth getting professional eyes on.
We register companies and set up their tax and bookkeeping together, so nothing is missed. Price your setup to get started.
Registration and Filing: The Deadlines That Bite
Two obligations matter. First, registration: every taxable business must register for corporate tax and obtain a Tax Registration Number.
The authority has set registration deadlines based on when your licence was issued, and missing them carries an administrative penalty.
Second, filing: you file one corporate tax return per tax period, generally within nine months of the end of that period, and pay any tax due by the same date.
There is no separate advance payment system for most businesses; it is one return, one payment.
- Register for corporate tax and get your Tax Registration Number by your deadline.
- Keep proper records for the required retention period. The tax is on profit, so records defend your expenses.
- File one return per tax period, usually within nine months of period end.
- Pay any tax due by the same filing deadline.
- File even if you owe nothing, including when claiming Small Business Relief.
VAT Is a Separate Thing
Do not confuse corporate tax with VAT. VAT is a 5% tax on goods and services, with mandatory registration once your taxable supplies pass AED 375,000 (and voluntary registration from AED 187,500).
Corporate tax is on profit. A business can be registered for both, one, or neither depending on its numbers.
They have different thresholds, different returns and different deadlines, so treat them as two separate obligations.
Frequently asked questions
The standard rate is 9% on taxable profit above AED 375,000. Profit up to AED 375,000 is taxed at 0%. A separate 15% domestic minimum top-up tax applies only to very large multinational groups with global revenue above EUR 750 million.
Often not, but they must still register and file. Small Business Relief lets a resident business with revenue of AED 3 million or less elect to be treated as having no taxable income, currently through the end of 2026. It is an election claimed on a return, not an automatic exemption.
No, not automatically. A free zone company is a taxable person. A Qualifying Free Zone Person that meets specific conditions can pay 0% on its qualifying income, with 9% on non-qualifying income. The conditions include real substance in the UAE and earning qualifying types of income.
Yes. Registration and filing are required even when the tax due is zero, including when you claim Small Business Relief or fall under the AED 375,000 threshold. Failing to register or file on time carries penalties.
Generally within nine months of the end of your tax period. You file one return per period and pay any tax due by the same date. Registration deadlines are separate and are based on when your licence was issued.
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