What is the UAE corporate tax rate?

The UAE charges 0% on taxable profits up to AED 375,000 and 9% on profits above that threshold, for financial years starting on or after 1 June 2023. There is no higher rate: 9% is the maximum. Free zone companies that qualify as a Qualifying Free Zone Person can apply 0% to qualifying income, provided they meet the substance and de minimis conditions.

When did UAE corporate tax come into effect?

Federal Corporate Tax applies to financial years starting on or after 1 June 2023. A company with a calendar-year accounting period (January to December) would therefore have its first taxable period begin on 1 January 2024. A company whose financial year starts on 1 June 2023 entered scope from that date.

Do free zone companies pay UAE corporate tax?

Free zone companies can qualify as a Qualifying Free Zone Person (QFZP) and pay 0% on qualifying income, broadly income from international clients and transactions with other free zone companies. Income from mainland UAE customers or from certain excluded activities is taxed at 9%. Non-qualifying revenue must stay below the de minimis threshold, the lower of AED 5 million or 5% of total revenue, to preserve the 0% benefit.

Who has to register for UAE corporate tax?

All UAE-incorporated companies, whether free zone or mainland, must register for corporate tax with the Federal Tax Authority and obtain a Tax Registration Number. Registration is mandatory even if you expect to owe 0% tax. The FTA has set registration deadlines by licence issue date, and late registration can attract penalties.

What is small business relief for UAE corporate tax?

Small business relief allows eligible businesses with revenue of AED 3 million or less in a tax period to elect to be treated as having no taxable income for that period, effectively paying 0% regardless of profit level. It is an election available for financial years ending on or before 31 December 2026, subject to conditions. It is not available to free zone persons who claim QFZP status.

When do I have to file a UAE corporate tax return?

Corporate tax returns must be filed, and any tax due paid, within nine months of the end of the relevant tax period. For a company with a 31 December year-end, the return for the period ending 31 December 2024 is due by 30 September 2025. The return is filed electronically through the FTA's EmaraTax portal.

Is there UAE corporate tax on dividends paid to shareholders?

Dividends received by a UAE company from another UAE company, or from a foreign company in which it holds at least 5% for at least twelve months, are generally exempt from UAE corporate tax under the participation exemption. Dividends paid out to individual shareholders are not subject to UAE corporate tax at the shareholder level, as the UAE has no personal income tax.

Do I need an accountant to comply with UAE corporate tax?

Most businesses will need professional support. You must prepare financial statements complying with IFRS or IFRS for SMEs, compute taxable income under the Corporate Tax Law, file the return on EmaraTax, and maintain records for seven years. For free zone companies claiming QFZP status, the qualifying income analysis and de minimis monitoring add further complexity.

Does UAE corporate tax affect UK tax for UK founders?

It can, depending on your circumstances. UK-resident shareholders of a UAE company may still owe UK tax on dividends or profits, since the UK taxes residents on worldwide income. The UAE corporate tax paid may reduce the effective rate overall, but the interaction between UAE and UK tax depends on your personal residence status and the UK–UAE double tax treaty. Take cross-border advice if you have UK connections.

UAE Corporate Tax (9%): What Company Owners Need to Know (2026)

The UAE introduced a federal corporate tax in 2023, ending decades of zero corporate tax across most of the country. For company owners, whether newly setting up or already operating, understanding the rate structure, the free zone exemptions, and the compliance obligations is now a practical necessity.

This guide sets out the key facts accurately and conservatively. Tax rules change and outcomes depend on your specific circumstances, so treat this as an orientation, not a substitute for advice tailored to your business.

Key takeaways

The UAE federal corporate tax rate is 0% on taxable profits up to AED 375,000 and 9% on profits above that, for financial years starting on or after 1 June 2023.
Free zone companies that meet the Qualifying Free Zone Person conditions pay 0% on qualifying income, but 9% on income that falls outside the qualifying category.
All UAE companies must register for corporate tax with the Federal Tax Authority, even if they expect to owe nothing.
Small business relief allows businesses with revenue of AED 3 million or less to elect for 0% tax on all income for periods ending on or before 31 December 2026.
Returns and any tax due must be filed and paid within nine months of the end of the tax period.
The UAE has no personal income tax, so profit extracted by individual shareholders from a UAE company is not taxed again at the personal level in the UAE.

The rate structure: 0%, 9% and no more

The UAE Federal Corporate Tax Law (Federal Decree-Law No. 47 of 2022) establishes a two-band rate structure that applies to all taxable persons in the UAE, mainland and free zone:

Taxable profit	Rate
Up to AED 375,000	0%
Above AED 375,000	9%
Qualifying Free Zone income (QFZP)	0%
Non-qualifying income (QFZP)	9%
Large multinationals (Pillar Two)	15% (see note)

The 15% rate applies only to multinational enterprise groups with consolidated global revenues of at least EUR 750 million, in line with the OECD's Pillar Two global minimum tax. The vast majority of SMEs and owner-managed businesses will only encounter the 0%/9% bands.

AED 375,000 is approximately £80,000 at mid-2026 exchange rates. For context, a business generating AED 1 million of taxable profit would pay 0% on the first AED 375,000 and 9% on the remaining AED 625,000, a tax bill of AED 56,250 (roughly £12,000). These figures are illustrative; exchange rates and exact computations will vary.

9% is the maximum rate for most UAE companies

There is no higher rate, no surcharge, and no dividend withholding tax in the UAE. Once taxed at up to 9% at the corporate level, profits distributed to individual shareholders face no further UAE tax. Compare that to the UK, where combined corporation tax (25%) and additional-rate dividend tax (39.35%) can produce an effective rate on business profits above 50%.

Who is within scope

Corporate tax applies to "taxable persons," which includes:

UAE-incorporated companies, whether mainland or free zone (unless they qualify as a Qualifying Free Zone Person and meet all the relevant conditions)
Foreign companies that are effectively managed and controlled in the UAE, or that have a permanent establishment in the UAE
Natural persons (individuals) conducting business or commercial activity in the UAE, if their turnover from that activity exceeds AED 1 million in a calendar year

Individuals earning employment income, investment income (interest, dividends on personal portfolios), or income from real estate in a personal capacity are generally outside the corporate tax regime. The UAE remains a jurisdiction with no personal income tax.

Government entities and extractive businesses

UAE federal and emirate government entities, government-controlled entities engaged in sovereign functions, and businesses engaged in the extraction of UAE natural resources (subject to separate emirate-level taxation) are either exempt from federal corporate tax or subject to different rules. If your business touches these areas, take specific advice.

The Qualifying Free Zone Person regime

Free zones remain a core part of the UAE business ecosystem. The corporate tax law preserves a 0% rate for free zone companies, but with conditions. To benefit, a company must be a Qualifying Free Zone Person (QFZP):

What qualifies a free zone company

The company must:

Be incorporated, registered or established in a UAE free zone
Maintain adequate substance in the free zone (real activities, appropriate employees, adequate assets and expenditure in the UAE)
Derive income that falls within the definition of qualifying income
Not have elected to be subject to the standard 9% rate
Comply with transfer pricing rules where transactions with related parties are involved

What counts as qualifying income

Qualifying income broadly covers:

Income from transactions with other free zone persons (other QFZP companies and free zone persons)
Income from transactions with non-free-zone persons where the income relates to the QFZP's qualifying activities (broadly, international or cross-border activities)
Income from owning or exploiting intellectual property assets, subject to a modified nexus approach

Income from excluded activities (banking and insurance for retail customers, certain finance activities, real estate activities other than with free zone persons, and others) is not qualifying income, even if the counterparty is a free zone person.

The de minimis test

A QFZP can earn some non-qualifying income without losing its 0% status on the qualifying portion, provided the non-qualifying revenue stays within the de minimis threshold: the lower of AED 5 million and 5% of total revenue in the tax period.

If non-qualifying revenue exceeds de minimis, the company is treated as having forfeited its QFZP status for that entire period, and all income is taxed at 9%.

Monitor your non-qualifying revenue through the year

The de minimis test is applied per tax period. A QFZP that takes on a mainland UAE client mid-year and generates non-qualifying revenue above 5% of total revenue will lose its 0% status for the whole period, not just on that income. Review your revenue mix quarterly if you operate near the threshold.

Small business relief

For businesses below a certain size, the corporate tax law includes a small business relief election. An eligible taxable person whose revenue does not exceed AED 3 million in a tax period can elect to be treated as having no taxable income for that period, effectively paying 0% tax regardless of profitability.

Key points on small business relief:

The revenue threshold is AED 3 million (approximately £650,000 at mid-2026 rates). If revenue exceeds this in any period, relief is not available for that period
The election is currently available for financial years ending on or before 31 December 2026. The UAE government may extend this, but at the time of writing there is no confirmed extension
A Qualifying Free Zone Person that has opted to apply the QFZP 0% rate cannot also elect small business relief; the two regimes do not stack
The election is made in the tax return for the relevant period

For very small businesses, small business relief effectively means UAE corporate tax does not bite during the relief window. But it is worth understanding that the 0%/9% rate structure would, in most cases, already produce a low effective rate for small profitable companies given the AED 375,000 zero-rate band.

Registration obligations

Registration for corporate tax is mandatory for all UAE taxable persons, including free zone companies and companies that expect to owe 0% tax. The Federal Tax Authority (FTA) requires registration through its EmaraTax portal, which issues a Tax Registration Number (TRN) upon completion.

The FTA published a phased registration deadline schedule based on the month a company's trade licence was issued. Penalties apply for late registration. If you have not already registered your UAE company, do so promptly and seek guidance on the applicable deadline for your licence.

Filing and payment

Once registered, the ongoing compliance cycle is straightforward but must not be missed:

Obligation	Deadline
Tax return filing	Within 9 months of the end of the tax period
Corporate tax payment	Within 9 months of the end of the tax period
Financial statements	Must be prepared to IFRS or IFRS for SMEs standard
Record retention	7 years from the end of the relevant tax period

For a company with a 31 December year-end, the first full tax period would typically be 1 January 2024 to 31 December 2024, with a return and any payment due by 30 September 2025.

There is no requirement to make instalment payments during the year; the full liability is settled in one payment after the period ends, alongside the return.

What counts as taxable income

Taxable income starts with accounting net profit prepared under IFRS or IFRS for SMEs, then adjusted for:

Exempt income: dividends from UAE resident companies, dividends from foreign companies where the participation exemption applies (at least 5% ownership for at least 12 months), and qualifying free zone income for QFZPs
Non-deductible expenditure: interest on related-party debt above the 30% EBITDA cap (the general interest limitation rule), expenses not incurred for business purposes, fines and penalties, and certain entertainment costs
Transfer pricing adjustments: transactions between related parties must be priced at arm's length; the UAE has adopted the OECD transfer pricing guidelines

Salaries paid to owner-directors are generally deductible, as with any commercial employment arrangement, provided they are at arm's length. Excessive or uncommercial remuneration arrangements may be challenged.

A worked example

Worked example

Aisha, a DMCC free zone company, consulting income

Aisha set up a consultancy company in DMCC in early 2024. Her company's financial year runs January to December. She provides consulting services to clients in Europe and Asia (qualifying income) and, from late 2024, begins working with two mainland UAE clients as well.

Revenue mix for 2024:

Revenue type	AED
International consulting (qualifying)	1,800,000
Mainland UAE consulting (non-qualifying)	80,000
Total revenue	1,880,000

De minimis check:

5% of total revenue: AED 94,000
Non-qualifying revenue: AED 80,000
AED 80,000 is below AED 94,000, so the de minimis test is passed

Tax position (assuming QFZP status maintained, adequate substance):

Qualifying income taxed at 0%
Non-qualifying income taxed at 9%
9% of AED 80,000: AED 7,200

Total corporate tax: AED 7,200 (approximately £1,550 at illustrative rates)

If Aisha's mainland revenue had reached AED 100,000 (above 5% of total), she would have lost QFZP status for the whole of 2024. All profit above AED 375,000 would then be taxed at 9%, a materially higher bill.

These figures are illustrative. Actual tax depends on exact revenue, deductible costs, transfer pricing and individual circumstances. Always take professional advice.

Interaction with UK tax for UK founders

For UK founders who have relocated to the UAE or who retain UK connections, the UAE corporate tax is only part of the picture. The UK taxes its residents on worldwide income. If you are UK-resident, dividends or income from a UAE company remain subject to UK tax, though the UAE corporate tax paid may be creditable against UK liability in certain circumstances.

The UK–UAE double tax treaty (in force since 2016) allocates taxing rights but does not override UK residence rules. Your personal position under the Statutory Residence Test determines whether UK tax arises at all on UAE company profits.

If you have UK ties, a UK departure that has not been structured carefully, or a UAE company whose management and control can be argued to sit in the UK, the UAE corporate tax rate is only the start of your analysis. See our guide to setting up a Dubai company and UK tax for a detailed treatment of the UK side, and our VAT registration guide for the UAE's other major business tax.

Understanding your setup costs in context

UAE corporate tax is one line in the overall cost of operating a UAE company. To see how it sits alongside licence fees, visa costs, accounting obligations and other recurring expenses, our cost to set up a company in Dubai guide covers the full picture.

Corporate tax compliance checklist for UAE company owners

Register for corporate tax on EmaraTax and obtain your Tax Registration Number, even if you expect to owe nothing.
Confirm your financial year-end and calculate when your first tax period started (must be on or after 1 June 2023).
Prepare financial statements to IFRS or IFRS for SMEs for each tax period.
If you are a free zone company, assess whether you meet the QFZP conditions: adequate substance, qualifying income analysis, de minimis monitoring.
Monitor your non-qualifying revenue quarterly if you have any mainland UAE or excluded-activity income.
Consider whether small business relief is available if your revenue is AED 3 million or below and your financial year ends on or before 31 December 2026.
Review related-party transactions and ensure they are priced at arm's length under the OECD transfer pricing guidelines.
File your corporate tax return and pay any tax due within nine months of your period-end.
Retain all financial records and supporting documentation for at least seven years.
If you have UK connections or have recently relocated from the UK, take cross-border advice covering both UAE corporate tax and your UK position.

Get the compliance right from the start

UAE corporate tax is relatively straightforward for most SMEs: the rates are low, the structure is simple, and for free zone companies meeting the QFZP conditions, the effective rate on qualifying income is zero. But the registration obligation is not optional, the de minimis test for QFZPs requires active monitoring, and the interaction with UK tax can be complex for founders who have recently left the UK.

If you would like help getting your UAE structure right from the outset, or reviewing your existing compliance position, speak to our team. We work with both UAE and UK specialists, so the advice joins up on both sides.