UAE Corporate Tax: Rates, Registration, and Free Zone Rules
The UAE introduced federal corporate tax effective June 2023. At 9% on taxable income above AED 375,000, it remains one of the lowest rates globally. This guide covers who pays, how to register, free zone qualifying income rules, and filing deadlines.
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What Is UAE Corporate Tax?
Before 2023, the UAE had no federal corporate tax (except for oil companies and foreign bank branches). The introduction of corporate tax aligns the UAE with global minimum tax initiatives and OECD standards while maintaining a competitive rate. The 9% rate is one of the lowest in the world.
Does the UAE still have 0% tax?
Taxable income up to AED 375,000 is taxed at 0%. Income above that threshold is taxed at 9%. Free zone companies can benefit from 0% corporate tax on qualifying income if they meet the substance and activity requirements. Personal income remains untaxed in the UAE.
Who Pays Corporate Tax?
| Entity type | Corporate tax status |
|---|---|
| Mainland company | Taxable at 9% above AED 375,000 |
| Free zone company (qualifying) | 0% on qualifying income, 9% on non-qualifying |
| Free zone company (non-qualifying) | 9% on all income above threshold |
| Foreign branch | Taxable on UAE-sourced income |
| Natural person (business) | Taxable if turnover exceeds AED 1 million |
| Employee salary | Not taxable (personal income) |
Indicative prices. Actual cost varies with government fees, your business activity and visa requirements — ask us for an exact quote.
Corporate Tax Rates
Taxable income is calculated as accounting profit adjusted for deductions and exemptions specified in the law. Common adjustments include: non-deductible expenses (fines, certain entertainment), exempt income (qualifying dividends, capital gains), and transfer pricing adjustments for related-party transactions.
Free Zone Tax Rules
Qualifying income generally includes: income from transactions with other free zone entities, income from qualifying activities (manufacturing, logistics, certain services), and income from sources outside the UAE. Non-qualifying income includes: income from transactions with mainland UAE entities (unless it is a qualifying activity), and income from excluded activities (banking, insurance, certain regulated activities).
What if I have both qualifying and non-qualifying income?
If qualifying income exceeds a de minimis threshold (the lower of AED 5 million or 5% of total revenue), the company can benefit from 0% on the qualifying portion. Non-qualifying income is taxed at 9%. If non-qualifying income exceeds the de minimis limit, all income may be taxed at 9%. Proper revenue segregation and accounting are essential.
Corporate Tax Registration
- Create an EmaraTax account. Log in with UAE Pass at eservices.tax.gov.ae.
- Submit the registration form. Provide trade licence, company details, financial year dates.
- Receive TRN. The FTA issues a Tax Registration Number within 5 to 10 business days.
Filing and Deadlines
| Obligation | Deadline | Penalty for non-compliance |
|---|---|---|
| Tax registration | Within timeline set by FTA | AED 10,000 |
| Tax return filing | 9 months after year-end | AED 1,000 first, AED 2,000 repeat |
| Tax payment | Same as filing deadline | 14% per annum on late amounts |
Indicative prices. Actual cost varies with government fees, your business activity and visa requirements — ask us for an exact quote.
Corporate Tax: Frequently Asked Questions
Do free zone companies need to register for corporate tax?
Yes. All free zone companies must register for corporate tax with the FTA, even if they qualify for 0% tax on qualifying income. Registration is separate from qualifying for the 0% rate. A Qualifying Free Zone Person (QFZP) still files a tax return – the return shows 0% tax on qualifying income, but the filing obligation remains.
Failure to register carries a penalty of AED 10,000. Bizstart ensures all clients are registered within the required timeline.
Is there a minimum tax even at 0%?
The 0% rate applies to the first AED 375,000 of taxable income. Below that threshold, no corporate tax is payable. There is no minimum tax amount. However, the filing obligation remains – even a business with zero taxable income must file a tax return. Large multinationals subject to Pillar Two may have a 15% minimum effective tax rate.
Small businesses with revenue below AED 3 million can elect for small business relief, which simplifies accounting and filing requirements.
Can I deduct all business expenses?
Most ordinary business expenses are deductible: rent, salaries, materials, professional fees, marketing, and travel. Non-deductible expenses include: fines and penalties, donations to non-qualifying entities, certain entertainment expenses above limits, and personal expenses. Interest deductions may be limited under thin capitalisation rules.
Related-party transactions must be at arm's length (market value). Proper accounting ensures all deductible expenses are claimed and non-deductible items are identified before filing.
What is the small business relief?
Businesses with revenue below AED 3 million per financial year can elect for small business relief. This treats the business as having no taxable income for that year (effectively 0% tax). The relief simplifies accounting requirements – no need for full tax calculations. The threshold is assessed per financial year.
Small business relief is available for a limited period (expected to apply until 2026 financial years). Businesses relying on this relief should plan for when it expires. Bizstart monitors regulatory changes and advises clients in advance.
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