In short
- 0% on taxable income up to AED 375,000 and 9% above, for mainland and free-zone companies alike.
- In our example a profit of AED 1,200,000 gives taxable income of AED 1,140,000 and tax of AED 68,850.
- A new company registers within three months of incorporation. A late application costs AED 10,000.
- The return and the payment are due nine months after the year end: 30 September 2027 for 2026.
In this guide
What is the corporate tax rate in the UAE?
Corporate tax applies to financial years that start on or after 1 June 2023, under Federal Decree-Law No. 47 of 2022. The rate follows the size of the taxable income and, for a free-zone company, the kind of income.
| Who pays | Rate | On what |
|---|---|---|
| Any company, mainland or free zone | 0% | Taxable income up to AED 375,000 |
| Any company, mainland or free zone | 9% | Taxable income above AED 375,000 |
| Qualifying Free Zone Person | 0% | Qualifying income |
| Qualifying Free Zone Person | 9% | All other taxable income, with no AED 375,000 band |
| Company that elects Small Business Relief | No tax | Revenue of AED 3 million or less in every tax period |
| Group with revenue of €750 million or more | 15% | Top-up tax, financial years from 1 January 2025 |
The AED 375,000 band is counted once for each company in a tax period, whatever the number of its activities. A company with taxable income of AED 1,000,000 pays 9% on AED 625,000, which is AED 56,250, or 5.6% of the whole. We file the application to the tax authority: corporate tax registration in the UAE.
Who pays corporate tax in the UAE and who is exempt
The tax falls on every company incorporated in the UAE, on the mainland or in a free zone, and covers its income from inside and outside the country. Three more groups are taxable:
- a foreign company that is managed and controlled from the UAE, taxed as a resident
- a foreign company with a permanent establishment here, such as a branch, an office or a person who habitually does business on its behalf, taxed on the income of that establishment
- an individual in business whose turnover passes AED 1 million in a calendar year
Exempt are government entities and the companies they control, businesses that extract natural resources and pay tax to their emirate, qualifying public benefit entities, qualifying investment funds and pension funds. A fund or a pension fund applies to the Federal Tax Authority (FTA) for its exemption.
The tax does not touch a person's salary, income from personal investments or income from real estate held as an investment. None of the three counts towards the AED 1 million of turnover.
How to calculate corporate tax in the UAE
Start from the profit in the financial statements. The law adds back some costs and takes out some income, and what is left is the taxable income.
| Item in the accounts | Treatment for tax |
|---|---|
| Running costs of the business | Deductible in the period in which they are incurred |
| Dividends from a UAE company | Exempt: taken out of the profit |
| Dividends and gains from a foreign subsidiary | Exempt when the stake is 5% or more, held for 12 months, and the subsidiary is taxed at 9% or more |
| Client entertainment | 50% deductible |
| Fines and penalties | Not deductible |
| Donations | Deductible only when paid to a qualifying public benefit entity |
| Net interest | Deductible up to 30% of EBITDA; the cap does not apply while net interest is AED 12 million or less |
| Pay to owners and directors | Deductible up to the market value of their work |
Corporate tax itself, recoverable input VAT and income tax paid abroad are not deductible either. A tax loss from an earlier year reduces up to 75% of the taxable income of a later one, and the unused part carries forward.
A worked example: the year of a trading company
A trading company closes 2026 with an accounting profit of AED 1,200,000. Its accounts include a fine of AED 20,000, client entertainment of AED 40,000 and a dividend of AED 100,000 from a UAE company whose shares it holds.
| Step | Amount, AED |
|---|---|
| Accounting profit | 1,200,000 |
| Plus the fine | 20,000 |
| Plus half of the entertainment | 20,000 |
| Less the UAE dividend | 100,000 |
| Taxable income | 1,140,000 |
| Less the 0% band | 375,000 |
| Taxed at 9% | 765,000 |
| Corporate tax | 68,850 |
The tax is 5.7% of the accounting profit. With a loss of AED 300,000 brought forward from 2025, taxable income would be AED 840,000 and the tax AED 41,850.
Corporate tax registration: who applies and by when
Every taxable person registers with the FTA, and that includes a free-zone company that expects to pay 0%. A company incorporated on or after 1 March 2024 applies within three months of the date of incorporation: one incorporated on 15 October 2026 applies by 15 January 2027. An individual in business applies by 31 March of the year after turnover passes AED 1 million.
You apply in EmaraTax, the FTA's portal, free of charge. The FTA completes a full application within 20 business days and issues the tax registration number.
A late application costs AED 10,000. The FTA waives the penalty when the first tax return is filed within seven months of the end of the first tax period.
The corporate tax period, the return and the payment
The tax period is the financial year: the calendar year, or the 12 months for which the company prepares its accounts. A company can apply to the FTA to change it. The return and the payment are due within nine months of the end of the period. The company computes the tax itself and files in EmaraTax. A year with no tax to pay is filed too.
| Financial year ends | Return and payment due |
|---|---|
| 31 December 2025 | 30 September 2026 |
| 31 March 2026 | 31 December 2026 |
| 30 June 2026 | 31 March 2027 |
| 31 December 2026 | 30 September 2027 |
Filing late costs AED 500 for each of the first twelve months and AED 1,000 for each month after that. Unpaid tax carries a penalty of 14% a year, charged monthly.
Accounts follow IFRS. A company with revenue up to AED 50 million may use IFRS for SMEs, and one with revenue up to AED 3 million may keep its accounts on a cash basis. The tax rules require audited statements when revenue passes AED 50 million and for every Qualifying Free Zone Person. Company law and some free zones add their own grounds, set out in which companies in the UAE must be audited. Records are kept for seven years after the period: for 2026, until the end of 2033.
We do this for you Corporate tax registration in the UAE from $350 a month with accounting
Small Business Relief: no tax up to AED 3 million of revenue
A resident company can elect to be treated as having no taxable income for a tax period. Its revenue must be AED 3 million or less in that period and in every earlier one. Ministerial Decision No. 131 of 2026 extended the relief to tax periods ending by 31 December 2029. The election is made in the return, year by year.
If the trading company in the example had revenue of AED 2.8 million, the election would save it the whole AED 68,850. The price is that a loss made in a year under the relief is not carried forward. The conditions, and the years in which the election costs more than it saves, are in Small Business Relief and the AED 3 million test.
Free-zone companies: when the 0% rate applies
A free-zone license does not bring 0% by itself. The rate belongs to a Qualifying Free Zone Person (QFZP): a free-zone company that keeps staff, assets and spending in its zone, has audited financial statements and earns qualifying income. That is income from other free-zone companies, or from activities on the Ministry of Finance list, such as manufacturing, logistics, trading in qualifying commodities and holding shares.
A free-zone agency that bills marketing services to clients on the mainland or abroad earns no qualifying income from them. It pays tax like a mainland company and can elect Small Business Relief. The list of activities, the 5% allowance and the audit rule are set out in the Qualifying Free Zone Person rules.
Dividends, tax groups and owners abroad
- Dividends paid to an owner abroad: the UAE withholds tax at 0%.
- Tax paid abroad on foreign income is credited against the UAE tax on that income. The unused part of the credit is lost.
- A parent that owns 95% or more of its UAE subsidiaries can form a tax group with them and file one return. A Qualifying Free Zone Person cannot join.
- Dealings with related companies and with owners are priced as between independent parties. The FTA can ask for the papers behind the prices and gives 30 days to send them.
- VAT is a separate tax of 5%. Registration is required once taxable supplies pass AED 375,000 in 12 months and possible from AED 187,500: see VAT registration in the UAE.
A new company's first tax year, step by step
- Within three months of incorporation: apply in EmaraTax and receive the tax registration number.
- From the first invoice: keep books that separate free-zone customers from customers on the mainland and abroad.
- Before the year ends: compare Small Business Relief with the standard rates and, in a free zone, with the 0% regime, on your own figures.
- After the year end: close the accounts, have them audited where the rules require it and work out the taxable income.
- Within nine months of the year end: file the return and pay the tax.
- For seven years: keep the accounts, contracts and invoices behind the return.
We register companies, keep their books and file their returns. The fines and our steps are on the page about registering a company for corporate tax in the UAE, and the monthly service is accounting services in Dubai and the UAE.
