UAE Corporate Tax (CT) applies at 9% on taxable income above AED 375,000 per financial year. Below AED 375,000 the rate is 0%. Businesses with revenue ≤ AED 3 million can elect Small Business Relief (effectively 0%). All UAE entities must register — regardless of profit. The first CT return is due 9 months after the financial year end. Free-zone QFZPs can achieve 0% on qualifying income.
Who is subject to UAE Corporate Tax?
UAE CT applies to all juridical persons (companies and partnerships) incorporated or effectively managed in the UAE, and to individuals conducting business activity under a trade licence. There is no revenue threshold for applicability — every UAE business entity is subject to CT from its first financial year starting on or after 1 June 2023.
Foreign entities with a permanent establishment (PE) in the UAE are also liable for CT on the income attributable to that PE. A PE exists when a foreign entity has a fixed place of business in the UAE, a dependent agent who concludes contracts here, or a substantial presence over 183 days.
CT registration is mandatory for all taxable persons — regardless of whether they generate a profit. A startup with zero revenue must still register on EmaraTax and file a return (even if it is a nil or loss return). Failure to register: AED 10,000 penalty.
CT rates and the AED 375,000 threshold
A business with three subsidiaries in a Tax Group gets one shared AED 375,000 threshold. Each standalone entity gets its own. Tax Group formation can be advantageous for loss-offsetting but reduces the aggregate number of zero-rate bands.
| Taxable income | CT rate | Notes |
|---|---|---|
| AED 0 – AED 375,000 | 0% | Zero-rate band; applies to all taxable persons |
| Above AED 375,000 | 9% | On the portion exceeding the threshold |
| Qualifying Free Zone Person (QFZP) | 0% on qualifying income | 9% on non-qualifying income; strict conditions |
| Small Business Relief election | 0% (all income) | Revenue ≤ AED 3M; last eligible period ends 31 Dec 2026 |
| Multinational groups (BEPS Pillar 2) | 15% (forthcoming) | For groups with consolidated revenue ≥ €750M; separate regulation |
Small Business Relief — effectively 0% for most startups
Businesses with revenue of AED 3 million or less in the current and all prior tax periods can elect Small Business Relief (SBR). The election means they are treated as deriving no taxable income — effective 0% CT — for that period. SBR must be elected on the CT return each year.
Critical: SBR sunsets on 31 December 2026. The last eligible tax period must end on or before 31 December 2026. Businesses whose financial year ends on 31 December 2026 can still elect SBR for that year. A business with a 31 March FY end will have its last eligible SBR period ending 31 March 2026 — the next period (April 2026 – March 2027) will not qualify.
Electing SBR does NOT exempt you from transfer pricing disclosure obligations if you have related-party transactions. The arm’s-length test still applies. An SBR election next to a below-market intercompany loan can trigger a transfer pricing adjustment that wipes out the SBR benefit.
Registration, filing, and payment
Register on EmaraTax
All UAE taxable persons must register for CT on EmaraTax. The registration deadline is generally 3 months from the end of the first tax period, though FTA has issued various grace periods. Penalty for late registration: AED 10,000 (waivable if first CT return is filed within 7 months of FY end).
Determine your financial year
Most UAE entities use a calendar year (1 Jan – 31 Dec). If your trade licence or Articles specify a different year-end, that applies. For new businesses, the first tax period starts on the business licence issue date and runs to the year-end following the 12-month anniversary.
Prepare financial statements
CT is computed on accounting profit adjusted for CT-specific additions and deductions. IFRS (or IFRS for SMEs) is the standard. Non-IFRS books must be reconciled before filing.
Compute taxable income and elect SBR if eligible
Start with net accounting profit. Add back non-deductible expenses (fines, personal expenses, certain entertainment). Deduct exempt income (dividends from ≥5% shareholding, qualifying capital gains). Elect SBR if revenue ≤ AED 3M.
File the CT return and pay
CT return is due 9 months after the financial year end. Example: FY ending 31 December 2024 → return and payment due 30 September 2025. Late filing: AED 500/month for first 12 months, then AED 1,000/month.
Free-zone businesses: 0% or 9%?
A Qualifying Free Zone Person (QFZP) pays 0% CT on qualifying income — typically income from transactions with other free-zone entities or from overseas. However, qualifying requires adequate substance (qualified staff, operating expenditure, core income-generating activities in the UAE), passing the de minimis test (non-qualifying income ≤ AED 5M or 5% of total revenue), and audited financial statements.
Income from UAE mainland activities — including supplies to mainland companies — is generally non-qualifying and taxed at 9%. Most free-zone businesses with any mainland customers face a blended rate. Getting this wrong and claiming full 0% on mixed-source income is an FTA audit target.
Being registered in a UAE free zone does not automatically make you a QFZP. You must meet all qualifying conditions every year they apply. One year of inadequate substance or a de minimis breach disqualifies you for that entire tax period — retroactively.
Ready to set up your CT compliance framework?
Registration, first-return preparation, SBR election review, and QFZP eligibility assessment — all on a fixed fee.
Frequently asked questions
What is the UAE Corporate Tax rate in 2026?+
9% on taxable income above AED 375,000 per financial year. Below AED 375,000 the rate is 0%. Qualifying Free Zone Persons pay 0% on qualifying income. Businesses with revenue ≤ AED 3 million can elect Small Business Relief (effectively 0%).
When did UAE Corporate Tax start?+
UAE CT applies to financial years starting on or after 1 June 2023. A business with a calendar year (1 Jan – 31 Dec) had its first CT financial year from 1 January 2024 to 31 December 2024, with the first return due by 30 September 2025.
Who must register for UAE Corporate Tax?+
All UAE-incorporated entities and individuals with a trade licence who conduct business must register on EmaraTax, regardless of revenue or profit. There is no revenue threshold for the registration obligation.
What is Small Business Relief in UAE CT?+
Businesses with revenue ≤ AED 3 million in the relevant and all prior tax periods can elect SBR, which treats them as deriving no taxable income (0% CT). SBR must be elected annually and sunsets for tax periods ending after 31 December 2026.
Do free-zone companies pay UAE Corporate Tax?+
Free-zone companies qualifying as QFZPs pay 0% on qualifying income and 9% on non-qualifying income. To be a QFZP, strict conditions on substance, de minimis income, and audited accounts must be met. Non-qualifying free-zone businesses pay the standard 9% rate on income above AED 375,000.
When is the UAE Corporate Tax return due?+
9 months after the end of the financial year. For a calendar-year business (FY ending 31 December 2024), the return and payment were due by 30 September 2025.