Corporate tax arrived in the UAE with Federal Decree-Law No. 47 of 2022, applying to financial years starting on or after 1 June 2023. What was announced as a modest 9% levy is now an operating reality — registrations, elections, transfer pricing files and first returns have all worked through the system. This guide maps the regime end to end: who is taxable, what stays exempt, how free zones fit, and the deadlines that govern compliance.
How the Regime Is Built
UAE corporate tax is a federal tax on business profits, administered by the Federal Tax Authority through the EmaraTax platform. The design is deliberately two-tier: taxable income up to AED 375,000 is taxed at 0%, and everything above that line at 9%. The threshold shelters genuinely small operations; the headline rate keeps the UAE competitive while aligning it with the OECD framework on base erosion and profit shifting. There is no withholding tax on payments leaving the UAE — the rate is currently 0% — which preserves the country’s position as a holding and treasury location.
Who Is Subject to Corporate Tax
Four groups sit inside the net. UAE resident juridical persons — companies incorporated in the UAE, mainland or free zone, and foreign companies effectively managed and controlled from the UAE — are taxable on worldwide income. Foreign juridical persons are taxable where they have a permanent establishment in the UAE, derive UAE-sourced income or maintain a sufficient nexus, generally only on the income attributable to that presence. Natural persons are taxable where they conduct licensed business activity and the turnover from it exceeds AED 1 million in a calendar year — an activity-based test that catches freelancers and sole establishments, not salaries or personal investments. Branches and partnerships follow their owners: a branch is taxed as part of its parent, and an unincorporated partnership is generally transparent unless it elects to be taxed in its own right.
What Stays Outside the Net
Individuals are not taxed on employment income, on personal investment income such as dividends and capital gains, or on personal real estate income — provided none of it arises through a licensed business activity. These categories remain outside corporate tax regardless of size, which is what keeps the UAE a genuinely tax-free environment for private income even after the corporate regime.
Rates and the 15% Minimum Tax for Large Groups
For most businesses the arithmetic is simple: 0% on taxable income up to AED 375,000 and 9% above it. Large multinationals face a second layer. The UAE has implemented a domestic minimum top-up tax (DMTT) of 15% for groups with consolidated global revenue of EUR 750 million or more, effective for financial years starting on or after 1 January 2025. For in-scope groups the planning question is no longer whether the 9% rate applies, but how the UAE entities’ effective rate interacts with the global minimum.
Exempt Persons
The law exempts entities with a public or quasi-public function: government entities and government-controlled entities, extractive and non-extractive natural resource businesses (which remain taxed at Emirate level), qualifying public benefit entities, pension and social security funds, and qualifying investment funds that meet regulatory conditions. Exemption is not invisibility — several exempt categories must still register with the FTA and maintain records.
Calculating Taxable Income and the Reliefs
The starting point is accounting net profit under IFRS (or IFRS for SMEs), adjusted under the tax law. Expenses are deductible where incurred wholly and exclusively for the business; administrative fines, penalties and non-qualifying donations are not. Three reliefs do most of the work in practice. Small Business Relief lets a resident business with revenue of AED 3 million or less elect to be treated as having no taxable income — but only for tax periods ending on or before 31 December 2026, and it is not open to qualifying free zone persons or members of large multinational groups. Tax losses can be carried forward, subject to conditions, with offset capped at 75% of taxable income in any later period. Group reliefs permit qualifying intra-group transfers and restructurings on a tax-neutral basis.
Free Zone Companies: The QFZP Regime
Free zone entities keep a 0% rate, but only as a Qualifying Free Zone Person. That status requires adequate substance in the zone, qualifying income from qualifying activities, compliance with transfer pricing rules, audited financial statements, and non-qualifying revenue held within the de minimis allowance — the lower of AED 5 million or 5% of total revenue. Qualifying income is taxed at 0% and non-qualifying income at 9%, with no AED 375,000 0% band on the latter. Fail a condition and the entity falls into the standard regime.
Transfer Pricing Touchpoints
Transactions with related parties and connected persons must meet the arm’s length standard, supported where thresholds are met by a disclosure form filed with the return and master file and local file documentation. Intra-group services, shared infrastructure, management charges and intercompany financing are the usual pressure points, and misalignment invites adjustments and penalties.
Administration: Registration, Filing and Records
Every taxable person registers through EmaraTax, then files a return and pays any tax within 9 months of financial year end — a 31 December 2026 year end means a 30 September 2027 deadline. Books and records must be kept for at least 7 years, and audited financial statements are required in prescribed cases. Late registration, late filing and poor records each carry administrative penalties. For quick answers on specific scenarios, see our UAE corporate tax FAQ.
Frequently Asked Questions
What is the UAE corporate tax rate?
9% on taxable income above AED 375,000 and 0% below it. Multinational groups with global revenue of EUR 750 million or more are additionally subject to a 15% domestic minimum top-up tax for financial years starting on or after 1 January 2025.
Who has to register for corporate tax?
All taxable persons, including free zone entities and exempt persons in several categories. Individuals register only where turnover from licensed business activity exceeds AED 1 million in a calendar year.
Do free zone companies pay corporate tax?
A qualifying free zone person pays 0% on qualifying income and 9% on non-qualifying income. The 0% rate is conditional on substance, qualifying activities, transfer pricing compliance, audited accounts and the de minimis limit — it is not automatic.
Is Small Business Relief still available?
Yes, for resident businesses with revenue of AED 3 million or less — but only for tax periods ending on or before 31 December 2026. No extension has been announced, so the current financial year is the last for most calendar-year businesses.
When is the corporate tax return due?
Within 9 months of the end of the financial year, with payment by the same date. Records supporting the return must be retained for at least 7 years.