If you run a business in the UAE, corporate tax comes down to two questions: are you in scope, and what rate applies to you. Most of the confusion online comes from mixing up three different versions of “0%” that look alike and work nothing alike. This guide separates them and gives you the exact figures and dates for 2026, so you can see where you stand before you talk to anyone.
The quick answer
For most UAE businesses, corporate tax is 0% on taxable income up to AED 375,000 and 9% on taxable income above AED 375,000, for financial years starting on or after 1 June 2023.
Three separate rules produce a “0%” outcome, and they are not interchangeable:
- The 0% band: the first AED 375,000 of taxable income is taxed at 0% for most taxable persons.
- Qualifying Free Zone Person (QFZP): 0% on qualifying income only, with no AED 375,000 band at all.
- Small Business Relief: an election that treats you as having no taxable income for the period, if you qualify.
The Federal Tax Authority (FTA) and the Ministry of Finance publish the rates and rules; the sections below tag each figure to its source and show what it means for your numbers.
| Route to 0% | What is taxed at 0% | What is taxed at 9% |
|---|---|---|
| Standard 375,000 band | Taxable income up to AED 375,000 | Taxable income above AED 375,000 |
| Qualifying Free Zone Person | Qualifying income (no 375,000 band) | All non-qualifying income, from the first dirham |
| Small Business Relief elected | Treated as no taxable income for the period | Nothing for that period, if you qualify |
Read the routes as separate. You use one of them, not all three, and a QFZP cannot also take the 375,000 band or Small Business Relief.
Who is in scope for UAE corporate tax
Corporate tax can apply to UAE companies, some non-residents, and individuals running a business whose turnover passes AED 1 million in a calendar year.
UAE companies (mainland and Free Zone)
Most companies incorporated or registered in the UAE are in scope. A Free Zone licence does not mean “no corporate tax.” A Free Zone company is still a taxable person; the only question is which regime applies, the standard rules or the Qualifying Free Zone Person rules.
Non-residents
A non-resident can be in scope if it has a permanent establishment or another defined connection in the UAE. If you are a foreign business operating here without local registration, confirm whether your activity creates a UAE tax presence before assuming it does not.
Natural persons and freelancers
An individual is subject to corporate tax when they run a business or business activity in the UAE and their turnover from those activities is more than AED 1,000,000 in a Gregorian calendar year. Corporate tax is not only for companies. A freelancer, consultant, or sole trader over that turnover line is potentially in scope, even without a trade licence and an office. Employment salary and one-off personal transactions are outside this; regular, continuous activity carried on for profit is inside it.
Exempt persons and special categories
Some entities can be exempt from corporate tax, but exempt does not mean “ignore everything”. An exempt person may still have to register, file, and keep records, depending on its category.
The categories that can qualify include government entities, government-controlled entities meeting set conditions, qualifying public benefit entities, and certain investment funds and pension or social security funds. Each has detailed requirements, and exemption often has to be confirmed through the FTA rather than assumed. Separately, large multinational groups with consolidated global revenues of EUR 750 million or more fall under the Domestic Minimum Top-up Tax, a 15% minimum effective rate, which sits outside the standard 0% and 9% rates. If you think you are exempt or in scope for the top-up tax, confirm it through official channels before relying on it.
What you will actually pay: worked examples
These show the arithmetic. Taxable income is broadly your accounting profit after allowable adjustments, not your revenue.
| Situation | Taxable income | Corporate tax due |
|---|---|---|
| Small mainland company | AED 300,000 | AED 0 (all below the 375,000 band) |
| Medium mainland company | AED 600,000 | AED 20,250 (9% on 225,000) |
| Larger mainland company | AED 1,500,000 | AED 101,250 (9% on 1,125,000) |
| Free Zone QFZP | 800,000 qualifying + 200,000 non-qualifying | AED 18,000 (9% on 200,000; no 375,000 band) |
Note the Free Zone row: a Qualifying Free Zone Person does not get the AED 375,000 band, so every dirham of non-qualifying income is taxed at 9% from the first dirham.
Free Zone corporate tax and Qualifying Free Zone Persons
A Qualifying Free Zone Person pays 0% on qualifying income and 9% on income that is not qualifying, and the AED 375,000 band does not apply. Keeping that status depends on conditions you have to meet every tax period.
A Free Zone Person is generally a company incorporated, established, or registered in a Free Zone. Having a Free Zone licence makes you a Free Zone Person; it does not, on its own, set your rate. A Free Zone Person is treated as a Qualifying Free Zone Person unless it fails the conditions or elects to be taxed under the standard rules.
The conditions to meet for the tax period
- Adequate substance in the Free Zone: core income-generating activities performed there, with adequate assets, full-time employees, and operating expenditure to match the qualifying income claimed.
- Qualifying income earned within the framework (start-up phases are allowed for in defined circumstances).
- No election into the standard rules (electing out ends QFZP treatment).
- Related-party transactions at arm’s length, with transfer pricing documentation maintained.
- Audited financial statements prepared for corporate tax purposes, regardless of revenue size.
The de minimis test
You keep QFZP status only if your non-qualifying revenue stays within the de minimis limit: the lower of AED 5,000,000 or 5% of total revenue. Cross it, and you can lose Qualifying Free Zone Person treatment for the period.
If your non-qualifying revenue is drifting toward that 5% line, review the position before the year closes rather than after. Some breaches can affect more than one tax period, so QFZP status is something to manage actively, not assume once and forget.
What counts as qualifying income, and what does not
Qualifying income generally includes income from transactions with other Free Zone Persons (where they are the beneficial recipient and the activity is not excluded), income from defined qualifying activities, and certain income from qualifying intellectual property. Income that is typically not qualifying includes income attributable to a domestic or foreign permanent establishment, certain income from immovable property, and non-arm’s-length income from connected parties. Classify each income stream and keep the evidence in your files, rather than deciding it after the year ends.
Small Business Relief: when it helps and when it does not
Small Business Relief lets an eligible resident person elect to be treated as having no taxable income for a tax period, so no corporate tax is due for that period. It is set by Ministerial Decision No. 73 of 2023 and you elect it in your return through the EmaraTax portal.
Eligibility
- Revenue is AED 3,000,000 or less in the current tax period and in every previous tax period. Cross AED 3 million once, and you cannot elect it again, even if you drop back below.
- You make an active election for that specific tax period; it is never automatic.
The 2026 expiry most guides miss
Small Business Relief is temporary. As the rules stand, it applies to tax periods that end on or before 31 December 2026, so for many businesses the 2026 tax period is the last one it covers unless the relief is extended.
Who is excluded
- A Qualifying Free Zone Person cannot elect it; QFZPs already sit under the qualifying-income regime.
- A member of a multinational enterprise group above the consolidated-revenue threshold (the Pillar Two level of EUR 750 million or more) cannot elect it, even if the UAE entity is small.
The trade-offs before you elect
When you elect Small Business Relief, you are treated as having no taxable income, which means you cannot carry a loss from that period forward to offset future profits, and you cannot claim certain net interest deductions for the period. If you made a loss, or you expect to cross AED 3 million soon and want a track record under the standard rules, electing may cost you more than it saves. The upside is real too: no tax to calculate, simplified filing, and the option of cash-basis accounting. Records still have to be kept.
Registration and filing deadlines
Corporate tax returns and any payment are generally due within 9 months after the end of your tax period. Registration is separate and comes first.
Registration
Every taxable person must register for corporate tax with the FTA and obtain a Tax Registration Number, even if the expected tax is zero. The FTA set registration deadlines driven by the month a licence was issued (and by the incorporation date for newer entities), with an administrative penalty of AED 10,000 for late registration. Confirm your own registration deadline against the FTA’s schedule rather than assuming it has passed or has not.
Filing
The return and payment fall due 9 months after your tax period ends. If your financial year ends on 31 December, the return is generally due by 30 September of the following year. If it ends on 31 March, it is generally due by 31 December of the same year. Confirm your tax period end date first, because everything is measured from it. Late filing and late payment carry penalties, so a practical rule is to treat the 9-month date as a hard stop and set an internal deadline about 30 days earlier.
What to have ready before you file
Financial statements for the period, the trial balance and general ledger, bank statements and reconciliations, and the contracts and invoices behind your revenue. Add a fixed-asset register, related-party schedules, and, if relevant, your Free Zone qualifying-versus-non-qualifying split, your Small Business Relief election basis, transfer pricing documentation, audited statements for a QFZP, and substance evidence. Clean monthly records make this routine; messy ones make it expensive.
Records to keep, and the mistakes to avoid
Taxable persons and exempt persons must keep relevant records for at least 7 years after the end of the tax period.
Relevant records means accounting books, contracts, invoices issued and received, bank statements, payroll, asset registers, transfer pricing documentation, and correspondence on tax matters. The FTA can ask for them in a review, so the point of monthly bookkeeping is a paper trail you can actually produce. A few errors account for most of the trouble:
- Assuming a Free Zone licence means 0% forever, instead of checking QFZP conditions, substance, audited financials, and income classification.
- Waiting until year end to fix the books, so transactions are miscategorised and accounts are unreconciled.
- Mixing personal and business spending in one account, which makes business and personal impossible to separate at filing.
- Reading a generic “deadline 30 September” and missing that your own deadline is set by your tax period end.
- Doing business with related parties without arm’s-length pricing or documentation, which invites transfer pricing questions.
How Consultycs can help
Most businesses do not struggle because the rules are impossible; they struggle because records are inconsistent and decisions are made late. Consultycs can confirm whether you are in scope and what rate applies based on your actual setup rather than your licence type, review your Free Zone position and QFZP eligibility, assess whether Small Business Relief fits or whether the standard rules serve you better, set up a monthly record-keeping routine, and prepare and submit your return with clean supporting schedules.
Your fastest next step: Send your trade licence, your financial year end, and whether you are mainland or Free Zone. We will come back with your likely corporate tax position and the specific actions to take next.
FAQs
Do I pay 9% on all my profit?
Usually no. For most taxable persons, 0% applies to the first AED 375,000 of taxable income and 9% applies above it. On AED 500,000 of taxable income you would pay 9% on AED 125,000, which is AED 11,250.
Is the AED 375,000 threshold based on revenue or profit?
Taxable income, not revenue. Taxable income is broadly your accounting profit after allowable adjustments, so it is normally lower than turnover.
When does corporate tax first apply to my business?
From the first financial year that starts on or after 1 June 2023. A January-to-December year means the first tax period began on 1 January 2024; an April-to-March year began on 1 April 2024.
Are Free Zone companies exempt from corporate tax?
No. Free Zone companies are taxable persons. A Qualifying Free Zone Person can get 0% on qualifying income if it meets all the conditions, but that is a preferential rate, not an exemption.
Does a Qualifying Free Zone Person get 0% on the first AED 375,000?
No. The AED 375,000 band does not apply to a QFZP. It is 0% on qualifying income and 9% on non-qualifying income, whatever the amounts.
What is the Small Business Relief threshold?
Revenue of AED 3,000,000 or less in the current tax period and in all previous tax periods, plus the other conditions. Cross AED 3 million once and you generally cannot elect it again. As the rules stand it applies to tax periods ending on or before 31 December 2026.
What is the minimum threshold for corporate tax in the UAE?
There is no minimum below which you are outside the system. Companies are in scope regardless of size and must register and file. What the AED 375,000 figure sets is the point below which the rate is 0%, not a point below which corporate tax does not apply. Individuals are different: a natural person is only in scope once business turnover passes AED 1,000,000 in a calendar year.
How do small businesses file corporate tax in the UAE?
Register with the FTA for a Tax Registration Number, prepare financial statements and a tax computation for the period, then file the return and pay any tax through the EmaraTax portal within 9 months of your tax period end. A business that qualifies and elects Small Business Relief files a simplified return and has no tax to calculate for that period.
Does the UAE have personal income tax in 2026?
No. The UAE has no personal income tax on salaries or personal income. Corporate tax is separate: it applies to business profits, and it can reach an individual only when they run a business whose turnover passes AED 1,000,000 in a calendar year. Earning a salary does not put you in scope.
The next question most owners have is whether to elect Small Business Relief or stay on the standard rules for their own numbers, which is the point where your figures, not a general guide, decide the answer.
