UAE Corporate Tax is 9% on business profits, with 0% on the first AED 375,000 of taxable income. It applies to mainland and free zone companies, and to individuals running a business above a turnover limit. Smaller businesses may be able to elect Small Business Relief, but that relief is currently legislated only up to tax periods ending 31 December 2026, so it is worth confirming before relying on it for 2027.
What Corporate Tax is
Corporate Tax is a federal tax on business profits, introduced under Federal Decree-Law No. 47 of 2022. It applies to each business's financial year beginning on or after 1 June 2023. In short, if your business makes a profit in the UAE, a share of it above a threshold is now taxable.
The 9% and the 0% band
There are two headline numbers. You pay 0% on taxable income up to AED 375,000, and 9% on taxable income above that. So a business with AED 500,000 of taxable income pays nothing on the first AED 375,000 and 9% on the remaining AED 125,000, which is AED 11,250.
Who pays
Corporate Tax reaches further than many founders expect:
- Mainland and free zone companies are both within the regime.
- Individuals running a business or business activity in the UAE are subject only if their total turnover from that activity exceeds AED 1,000,000 in a calendar year. Salary, personal investment income and personal real estate income are excluded.
- Certain persons are exempt (subject to conditions), including government and government-controlled entities, extractive and natural-resource businesses, qualifying public benefit entities, qualifying investment funds, and pension funds.
Small Business Relief
If your business is a UAE resident person with revenue of AED 3,000,000 or less (in the current and every previous tax period), you can elect for Small Business Relief. If you do, you are treated as having no taxable income for that period, with lighter compliance obligations.
Small Business Relief is currently legislated only for tax periods ending on or before 31 December 2026. For most calendar-year businesses, the 2026 year is the last period it is confirmed to cover. It has not been confirmed beyond that, so check for any extension before relying on it for 2027 onward.
Free zones and the 0%
Being in a free zone does not automatically mean no tax. A Qualifying Free Zone Person (QFZP) pays 0% on its qualifying income and 9% on income that does not qualify, and only if it meets all the conditions, which include maintaining audited financial statements and meeting substance requirements. If the conditions are not met, the ordinary rules apply.
How taxable income is worked out
Taxable income starts from the accounting profit in your financial statements, then is adjusted for exempt income, reliefs and any expenses the law restricts or disallows. Statements are prepared under IFRS, or IFRS for SMEs where revenue does not exceed AED 50,000,000. This is exactly why accurate, well-kept books matter so much under Corporate Tax.
What you need to do
- Register for Corporate Tax with the FTA and get your registration number (see our guide on the deadlines).
- Keep proper books of account on the right standard, and retain records for 7 years.
- Decide whether Small Business Relief or free zone treatment applies to you.
- File your Corporate Tax return and pay any tax within 9 months of the end of your tax period.
FAQ
Do I still register if my profit is under AED 375,000?
Yes. The 0% band applies to your income, but registration and filing are still required.
Does a free zone company really pay no tax?
Only on qualifying income, and only if it meets all the QFZP conditions. Otherwise the standard 9% applies to income above AED 375,000.
When is the return due?
Within 9 months after the end of your tax period. For a year ending 31 December 2026, that is 30 September 2027.
Want Corporate Tax handled properly?
We register you, keep your books to the right standard, work out your reliefs, and file on time, so Corporate Tax becomes a non-event.
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