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UAE Corporate Tax is a federal tax on business profits. For most taxable businesses, the standard rate is 0% on taxable income up to AED 375,000 and 9% on the amount above AED 375,000. A company in a free zone is not automatically exempt: it must meet the Qualifying Free Zone Person rules to obtain 0% on qualifying income.
The regime applies across the Emirates, including Dubai, Abu Dhabi and Ras Al Khaimah. Most companies must register, keep proper accounting records and file a return even when the amount payable is zero.
The key distinction: AED 375,000 is a taxable-income threshold, not a revenue threshold. Free-zone status alone does not create a blanket 0% rate.
| Corporate Tax point | 2026 rule in brief |
|---|---|
| Standard rate | 0% up to AED 375,000 taxable income; 9% above |
| Qualifying Free Zone Person | 0% on qualifying income; 9% on non-qualifying income |
| Return and payment | Generally within nine months after the tax period ends |
| Natural person threshold | UAE business turnover above AED 1 million in a calendar year |
| Small Business Relief | Revenue up to AED 3 million, subject to eligibility and the current relief period |
| Records | Generally retained for at least seven years |
This guide is a practical overview, not individual tax advice. Contracts, ownership, customer location, related-party transactions and management decisions can change the outcome.
What is Corporate Tax in the UAE?
Corporate Tax is calculated on taxable income. The starting point is normally the accounting profit or loss shown in the financial statements, followed by tax adjustments for items such as exempt income, non-deductible expenditure, tax losses and related-party transactions.
It is separate from VAT, customs duties and sector-specific taxes. A business can be registered for both Corporate Tax and VAT because each regime has different thresholds, calculations and filing requirements.
The UAE Ministry of Finance provides the legislative framework, while the Federal Tax Authority administers registration, returns and payments through EmaraTax. See the Ministry of Finance Corporate Tax overview and the FTA Corporate Tax portal.
UAE Corporate Tax rates and the AED 375,000 threshold
The standard calculation is:
| Annual taxable income | Rate |
|---|---|
| AED 0 to AED 375,000 | 0% |
| Amount above AED 375,000 | 9% |
Suppose a mainland company has AED 600,000 of taxable income. The first AED 375,000 is taxed at 0%. The remaining AED 225,000 is taxed at 9%, producing Corporate Tax of AED 20,250 before any other relevant adjustments.
Revenue is not the same as taxable income. A company may invoice AED 1 million but, after genuine deductible costs and tax adjustments, have taxable income below AED 375,000. It may owe no Corporate Tax while still having registration, accounting and filing obligations.
Large multinational groups can fall under separate minimum-tax rules. Those rules do not describe the typical small or medium-sized UAE company and should not be mixed into an ordinary setup estimate.
Who must register for UAE Corporate Tax?
UAE-incorporated legal entities, including mainland and free-zone companies, are generally taxable persons and should assess their registration deadline. Foreign entities can also be within scope when they are effectively managed and controlled in the UAE, have a permanent establishment or otherwise meet a UAE nexus test.
For a natural person, UAE Corporate Tax can apply when turnover from a business or business activity conducted in the UAE exceeds AED 1 million in a calendar year. Wages and qualifying personal investment or real-estate investment income are treated separately. The FTA registration service sets out the process and taxpayer categories.
Do not use the AED 375,000 taxable-income band as the registration threshold. These are different concepts.
Do UAE free-zone companies pay 0% Corporate Tax?
Not by default. A free-zone company is still within the Corporate Tax regime. It can benefit from 0% on qualifying income only if it meets every condition for a Qualifying Free Zone Person, or QFZP.
The conditions include adequate substance in a UAE free zone, qualifying income, arm’s-length related-party dealings, required transfer-pricing documentation, audited financial statements and compliance with the de minimis rule. The company must also not have elected into the standard regime.
A QFZP’s non-qualifying income is generally taxed at 9%; it does not receive the standard 0% band on the first AED 375,000 of that non-qualifying income. The FTA’s guide for Free Zone Persons explains the framework.
The de minimis test focuses on non-qualifying revenue, not profit. Broadly, the relevant amount must not exceed the lower of 5% of total relevant revenue or AED 5 million, subject to the detailed exclusions and definitions.
If the company stops meeting a QFZP condition, it can lose the status from the start of that tax period and for subsequent periods under the applicable rules. The 0% position therefore needs evidence and annual review.
What income can qualify for the free-zone 0% rate?
The answer depends on the payer, activity and transaction. Potential qualifying activities include certain manufacturing and processing, qualifying commodity trading, holding shares for investment, specific shipping, reinsurance, fund management, wealth and investment management, headquarter services to related parties, certain treasury and financing activities, aircraft financing, distribution from a designated zone and logistics services.
Intellectual-property income has its own nexus-based conditions. Transactions with natural persons and income from banking, some insurance and finance, and certain real-estate activities are generally excluded, subject to exceptions.
A service company billing mainland customers or individuals should not assume all of its profit qualifies. Map each revenue stream, customer type, contract and place of performance before relying on 0%. This is one reason the choice of free zone should follow the operating model rather than a tax slogan.
Mainland versus free zone for Corporate Tax
A mainland company normally applies the standard 0% and 9% bands. A free-zone company follows the same federal regime unless it qualifies for the special QFZP treatment.
For a small service business, the standard regime or Small Business Relief may be simpler than maintaining a QFZP position. For a business carrying out a listed qualifying activity with real substance, the free-zone regime may be valuable. The answer depends on revenue, clients and transactions, not the name of the licence.
Compare the commercial structure in our free zone versus Dubai Mainland overview before incorporating.
Small Business Relief
Small Business Relief allows an eligible resident person whose revenue does not exceed AED 3 million to elect to be treated as having no taxable income for an eligible tax period. The revenue test must be met for the relevant period and prior periods covered by the rule.
It is not available to a Qualifying Free Zone Person or a constituent company of an in-scope multinational group. The election is made in the tax return and does not remove the need to register, file or retain records.
Relief periods and conditions have been extended through ministerial decisions. Because these rules can change, check the current Ministry of Finance announcements or obtain advice for the relevant tax period rather than relying on an old incorporation proposal.
Corporate Tax registration on EmaraTax
Registration is completed through EmaraTax. A typical company prepares:
- trade licence and incorporation documents;
- passport and Emirates ID details for relevant owners and authorised signatories;
- registered address and contact information;
- shareholder, director and beneficial-owner information;
- incorporation date and financial-year details;
- evidence of authority for the person filing the application.
Deadlines depend on the taxpayer type and incorporation or nexus date. Missing the applicable registration deadline can trigger an administrative penalty. Use the FTA’s current service guidance for the exact deadline, or use Square Zone’s Corporate Tax registration service.
Filing and payment deadlines
The Corporate Tax return and payment are generally due within nine months after the end of the tax period. A company with a financial year ending 31 December 2025 would normally file and pay by 30 September 2026.
A nil payment does not normally remove the filing obligation. The return may need information from the financial statements, tax adjustments, relief elections, exempt income, related parties and any free-zone claim.
Set the tax calendar as soon as the licence is issued. Waiting for the first profitable year is a common and avoidable mistake.
Accounting, audit and record keeping
Corporate Tax starts with accounting figures, so bookkeeping should begin with the first transaction. Keep sales and purchase invoices, bank statements, contracts, expense evidence, payroll, ownership decisions and related-party documentation in an organised system.
Tax records are generally retained for at least seven years after the relevant tax period. Audited financial statements are required for a QFZP and can also be required above specified revenue thresholds or under a free zone’s own regulations.
Square Zone can coordinate accounting and tax compliance alongside company formation.
Common Corporate Tax mistakes
- assuming a free-zone licence means 0% tax on every invoice;
- confusing revenue, accounting profit and taxable income;
- registering late because no tax is expected;
- failing to file a return when the tax amount is zero;
- ignoring payments to owners, directors or related companies;
- claiming QFZP treatment without documenting customers and income streams;
- mixing personal and business expenses;
- relying on a setup quotation as tax advice.
UAE Corporate Tax checklist
- Confirm the first tax period and registration deadline.
- Set up bookkeeping from the first transaction.
- Determine whether the standard regime, Small Business Relief or QFZP rules may apply.
- Map each revenue stream and related-party transaction.
- Prepare the return and payment before the nine-month deadline.
- Retain the underlying records for at least seven years.
If the company has not been formed yet, begin with our guide on how to start a business in Dubai, then request an itemised setup quote.
FAQ
Is UAE Corporate Tax 0% or 9%?
For most businesses, the standard rate is 0% on taxable income up to AED 375,000 and 9% on taxable income above that amount. Different rules apply to a Qualifying Free Zone Person and certain large multinational groups.
Is AED 375,000 a revenue threshold?
No. It is the standard 0% band for taxable income. Revenue, accounting profit and taxable income are different figures.
Must a free-zone company register for Corporate Tax?
Generally yes. Free-zone companies are taxable persons even when they expect to qualify for a 0% rate on qualifying income.
Must a company file when no Corporate Tax is due?
Generally yes. A registered taxable person normally files for each tax period even if it has a loss, falls below the 9% threshold or elects for eligible relief.
When is the UAE Corporate Tax return due?
The general deadline is nine months after the end of the relevant tax period. Check the company’s financial year and any specific FTA decision that applies to it.
Does UAE Corporate Tax determine my personal tax residence?
No. Company taxation and personal tax residence are separate analyses. A foreign country may continue to treat an owner as tax resident or consider the company managed there, depending on domestic law and any treaty.
