What is UAE corporate tax?
Corporate tax (CT) is a federal tax on the profits of businesses. The UAE brought it in for financial years starting on or after 1 June 2023. For a company with a calendar year, the first tax year was 2024. Before that, most UAE businesses paid no tax on profit at all, apart from oil companies and foreign banks under emirate-level rules.
The headline rate is 9%, which is low by world standards. There is also a 0% band for the first AED 375,000 of taxable income each year. That band is there to protect small businesses and start-ups. On top of that, very small businesses can elect Small Business Relief and pay nothing, as long as they still register and file.
Corporate tax is separate from VAT. VAT is a tax on sales, collected from customers. Corporate tax is a tax on your profit, paid by the business. Many companies deal with both. For VAT figures, use our UAE VAT Calculator.
Who must pay UAE corporate tax and register?
The law calls the people it taxes "Taxable Persons". The main groups are:
- UAE companies and other legal entities, on the mainland or in a free zone. They are resident persons and are taxed on their worldwide income.
- Foreign companies that are effectively managed and controlled in the UAE.
- Individuals doing business, such as sole traders and freelancers, but only when their business turnover in a calendar year is more than AED 1 million.
- Non-residents with a permanent establishment in the UAE, or a nexus such as UAE real estate income.
What is not taxed
- Salaries and wages from employment. A normal expat employee does not pay corporate tax.
- Personal investment income of individuals, such as savings interest and share dividends, if it is not part of a licensed business.
- Personal real estate income of individuals, such as renting out your own flat, if no licence is needed.
Some bodies are exempt, such as government entities, certain public benefit organisations, qualifying investment funds and pension funds. Businesses extracting natural resources are covered by emirate-level tax instead. Even some exempt persons must register.
The law and the rates
The main law is Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. Many Cabinet decisions, ministerial decisions and FTA decisions add the detail. The Ministry of Finance sets policy, and the Federal Tax Authority (FTA) registers taxpayers, collects tax and issues guides.
| Type of income or person | Rate |
|---|---|
| Taxable income up to AED 375,000 | 0% |
| Taxable income above AED 375,000 | 9% |
| Resident person that elects Small Business Relief (revenue up to AED 3 million) | Treated as no taxable income |
| Qualifying Free Zone Person: qualifying income | 0% |
| Qualifying Free Zone Person: non-qualifying income | 9% (no AED 375,000 band) |
| Large multinational groups (revenue of EUR 750 million or more) | Top-up to a 15% effective rate under the DMTT |
The AED 375,000 band is for a 12-month tax period. If your period is shorter or longer, for example in your first year, the band is adjusted in proportion to the number of days.
How to calculate UAE corporate tax: the formula
The calculator follows the steps below. Real returns have many more adjustments, but the core logic is the same.
Step 1: Start with your accounting profit
Step 2: Make the tax adjustments
Taxable income is your accounting profit after adjustments. You remove exempt income, such as most dividends from UAE companies and qualifying foreign shareholdings. You add back costs that are not deductible, such as fines, half of client entertainment costs, donations to non-approved bodies and corporate tax itself. Net interest above 30% of tax EBITDA (with an AED 12 million safe harbour) may also be limited. Our calculator calls the result "deductible expenses", so enter expenses after these add-backs.
Step 3: Use past losses
Tax losses from earlier years can be carried forward and set off, but only up to 75% of the taxable income in a later year. Enter your taxable income after any loss relief if you use the direct mode.
Step 4: Apply the rates
Effective rate = Corporate tax ÷ Taxable income × 100
Step 5: Check Small Business Relief
Corporate tax = 0
Worked examples
Each example uses the calculator above with a 12-month period ending in 2026.
Example 1: A small trading company
Farhan's general trading LLC in Dubai has revenue of AED 2,500,000 and deductible expenses of AED 1,900,000.
- Taxable income: 2,500,000 − 1,900,000 = AED 600,000
- Taxed at 0%: AED 375,000
- Taxed at 9%: AED 225,000 × 9% = AED 20,250
- Corporate tax: AED 20,250.00, an effective rate of 3.38%
Now he ticks Small Business Relief. His revenue is below AED 3 million, so if he elects the relief, his tax is AED 0.00. He must still register, file a return and keep records.
Example 2: A mid-sized services firm
An engineering consultancy in Abu Dhabi has revenue of AED 8,000,000 and deductible expenses of AED 6,500,000.
- Taxable income: AED 1,500,000
- Taxable at 9%: 1,500,000 − 375,000 = AED 1,125,000
- Corporate tax: AED 101,250.00
- Effective rate: 101,250 ÷ 1,500,000 = 6.75%
Small Business Relief is not possible because revenue is above AED 3 million.
Example 3: Profit under the zero band
A small café makes taxable income of AED 300,000. All of it falls in the 0% band, so corporate tax is AED 0.00. The café still has to register and file.
Example 4: Revenue just over AED 3 million
A printing shop has revenue of AED 3,200,000 and expenses of AED 2,500,000. The owner ticks Small Business Relief, but the calculator explains that revenue is above the limit.
- Taxable income: AED 700,000
- Tax: (700,000 − 375,000) × 9% = AED 29,250.00
- Effective rate: 4.18%
Example 5: AED 1 million taxable income
Using the direct mode with taxable income of AED 1,000,000 gives tax of 625,000 × 9% = AED 56,250.00, an effective rate of 5.63%.
Small Business Relief: now extended to 2029
Small Business Relief (SBR) is set out in Article 21 of the law and in Ministerial Decision No. 73 of 2023. A resident person whose revenue does not exceed AED 3 million in the tax period, and in each earlier tax period, can elect to be treated as having no taxable income.
The original rule covered tax periods ending on or before 31 December 2026. In August 2026 the Ministry of Finance announced Ministerial Decision No. 131 of 2026. It extends SBR to tax periods ending on or before 31 December 2029. The AED 3 million limit stays the same.
Key conditions
- You must be a resident person, a company or an individual in business.
- Revenue must be AED 3 million or less in the current period and in previous periods. Once you go over in one year, you cannot use SBR in later years.
- Qualifying Free Zone Persons cannot elect SBR.
- Members of multinational groups with consolidated revenue over AED 3.15 billion cannot elect SBR.
- You must elect it in your tax return. It is not automatic.
What you give up
In a year when you claim SBR, you cannot carry forward that year's tax loss, and you cannot use some other reliefs. If you expect a big loss in a start-up year, it may be better not to elect SBR so the loss can be used later. Splitting one business into several smaller ones only to stay under AED 3 million is treated as tax avoidance.
Free zones and the 0% rate
Free zone companies are taxable persons. A free zone company that meets all the conditions is a Qualifying Free Zone Person (QFZP). It pays 0% on qualifying income and 9% on other taxable income.
To stay a QFZP, a company must:
- keep adequate substance in the free zone, with enough staff, assets and spending for its core activities;
- earn qualifying income, mostly from qualifying activities such as manufacturing, logistics, fund management, treasury and some distribution, or from dealings with other free zone persons;
- pass the de minimis test: non-qualifying revenue must not exceed 5% of total revenue or AED 5 million, whichever is lower;
- prepare audited financial statements and follow transfer pricing rules;
- not elect to be taxed at the normal rates.
If a QFZP fails any condition, it loses the status for that tax period and the next four. That means up to five years of tax at the normal rates. Our calculator does not split qualifying and non-qualifying income, so QFZPs should use it only for their non-qualifying part, or seek advice.
15% Domestic Minimum Top-up Tax for large groups
Federal Decree-Law No. 60 of 2023 lets the UAE apply a domestic minimum top-up tax, in line with the OECD global minimum tax (Pillar Two). The rules apply to financial years starting on or after 1 January 2025, with details in Cabinet Decision No. 142 of 2024.
The DMTT hits only UAE entities of multinational groups with consolidated global revenue of EUR 750 million or more in at least two of the four preceding years. If such a group's effective tax rate in the UAE is below 15%, it pays a top-up tax to reach 15%. Ordinary small and mid-sized businesses are not affected.
Corporate tax registration and filing deadlines
Registration
FTA Decision No. 3 of 2024 sets the time limits. The main ones:
| Who | Deadline to apply |
|---|---|
| UAE company set up on or after 1 March 2024 | 3 months from incorporation or licence |
| Foreign company managed and controlled in the UAE | 3 months from the end of its financial year |
| Resident individual with business turnover over AED 1 million | 31 March of the following year |
| Non-resident individual | 3 months from becoming taxable |
| Companies existing before 1 March 2024 | Dates in 2024, set by licence month (now passed) |
Registration is free and done on EmaraTax with UAE Pass. You receive a corporate tax registration number.
Filing and payment
The return and any tax payable are due within nine months from the end of each tax period. For a calendar year 2025, that was 30 September 2026. For 2026, it will be 30 September 2027. Keep records for seven years after the end of the tax period. Businesses with revenue over AED 50 million, and all QFZPs, need audited financial statements.
If you are planning a new venture, put tax dates next to your other business costs. A visa holder starting out can use our UAE Personal Loan Calculator to plan start-up funding.
UAE corporate tax penalties
| Breach | Penalty |
|---|---|
| Late registration | AED 10,000, waived if the first return is filed within 7 months of the end of the first tax period |
| Late tax return | AED 500 per month for the first 12 months, then AED 1,000 per month |
| Late payment (from 14 April 2026) | 14% a year on the unpaid tax, worked out monthly |
| Failure to keep records | AED 10,000, or AED 20,000 for a repeat within 24 months |
| Voluntary disclosure of an error | 1% per month on the tax difference; higher if made after an audit notice |
The late payment rule changed under Cabinet Decision No. 129 of 2025. It replaced the earlier system of 2% at once plus 4% each month. The FTA's late registration waiver started in 2025. It also refunds penalties already paid if you meet the seven-month rule.
Common mistakes
- Charging 9% on revenue. The tax is on taxable income, not sales.
- Forgetting the zero band. Only income above AED 375,000 is taxed at 9%.
- Thinking "no tax due" means "no filing". Every taxable person must register and file, even with zero tax or SBR.
- Applying SBR after revenue went over AED 3 million. Once you pass the limit in a year, SBR is gone for later years too.
- Assuming free zone means 0%. Only QFZPs that pass every test pay 0%, and only on qualifying income.
- Deducting everything. Fines, half of client entertainment and personal costs of owners are not fully deductible.
- Mixing up salary and business income. A freelancer's salary from a job is not counted toward the AED 1 million test.
Practical tips and official help
- Diary your registration and return dates. The penalty waiver depends on filing within seven months.
- Keep monthly bookkeeping. It is the only way to know your revenue against the AED 3 million test.
- If you own a property business in Dubai, transfer fees and rent rules also matter. See our Dubai Property Transfer Fee Calculator.
- Pay staff end of service benefits correctly; provisions for gratuity affect your profit. Our UAE Gratuity Calculator can help.
- Use an FTA-registered tax agent for complex cases such as groups, free zones or foreign income.
Official help: the FTA website (tax.gov.ae) has the corporate tax guides, public clarifications and the EmaraTax portal. The Ministry of Finance (mof.gov.ae) publishes the laws and decisions. The FTA call centre can answer basic registration questions.
Frequently asked questions
What is the corporate tax rate in the UAE?
0% on taxable income up to AED 375,000 and 9% on taxable income above that. Qualifying Free Zone Persons pay 0% on qualifying income, and large multinational groups face a 15% minimum through the Domestic Minimum Top-up Tax.
How much corporate tax do I pay on AED 1 million profit?
If your taxable income is AED 1,000,000, the first AED 375,000 is taxed at 0% and the remaining AED 625,000 at 9%. The tax is AED 56,250, an effective rate of 5.625%.
Is corporate tax 9% of revenue?
No. Corporate tax is charged on taxable income, which is broadly accounting profit after adjustments, not on revenue or turnover. A business with high sales but low profit can pay little or no tax.
What is Small Business Relief?
It is an election for resident businesses with revenue of AED 3 million or less in the tax period and earlier periods. If you elect it, you are treated as having no taxable income, so no corporate tax is due. It now applies to tax periods ending on or before 31 December 2029.
Has Small Business Relief been extended?
Yes. Ministerial Decision No. 131 of 2026, announced in August 2026, extended the relief from periods ending by 31 December 2026 to periods ending by 31 December 2029. The AED 3 million revenue limit did not change.
Do I still need to register if my profit is below AED 375,000?
Yes. All UAE companies and other juridical persons must register for corporate tax and file a return, even if no tax is due. The same applies if you claim Small Business Relief.
Do freelancers and individuals pay corporate tax in the UAE?
Only if their business turnover in a calendar year is more than AED 1 million. Salary, personal investment income and personal real estate income are not taxed. Individuals who must register do so by 31 March of the following year.
What is the penalty for late corporate tax registration?
AED 10,000. The FTA waives it if you file your first tax return, or annual declaration for exempt persons, within seven months from the end of your first tax period.
When is the UAE corporate tax return due?
Within nine months from the end of the tax period. For a year ending 31 December 2025, the return and the payment were due by 30 September 2026.
Do free zone companies pay corporate tax?
A free zone company that meets all the Qualifying Free Zone Person conditions pays 0% on qualifying income and 9% on other taxable income. A free zone company that does not qualify is taxed like a mainland company.
Disclaimer
This calculator gives a simple estimate for general guidance. It is not tax advice. Real taxable income depends on many adjustments, reliefs and elections that a short tool cannot cover. Confirm your position with the Federal Tax Authority or an FTA-registered tax agent before filing.
Sources and references
Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (including Article 21); Ministerial Decision No. 73 of 2023 on Small Business Relief and Ministerial Decision No. 131 of 2026 extending it; FTA Decision No. 3 of 2024 on registration timelines; Federal Decree-Law No. 60 of 2023 and Cabinet Decision No. 142 of 2024 on the Domestic Minimum Top-up Tax; Cabinet Decision No. 129 of 2025 on administrative penalties. Official and reference pages: FTA – Waiver of the late corporate tax registration penalty; The National – Small Business Relief extended to 2029; PwC Worldwide Tax Summaries – UAE corporate tax.