By Dubai Tax Resident Editorial Team · Last reviewed: October 2026
UAE corporate tax is charged at 0% on taxable profit up to AED 375,000 and 9% on profit above that. It applies to UAE companies for financial years starting on or after 1 June 2023 under rules published by the UAE Ministry of Finance, and to individuals running a business once their business turnover exceeds AED 1 million a year. Qualifying free zone companies can pay 0% on qualifying income, and small businesses with revenue under AED 3 million can elect small business relief for eligible periods. Every company must register with the Federal Tax Authority and file an annual return, even if no tax is due.
Key facts
- Law: Federal Decree-Law No. 47 of 2022
- Rates: 0% up to AED 375,000, 9% above
- Free zones: 0% on qualifying income for Qualifying Free Zone Persons
- Individuals: taxable once business turnover exceeds AED 1 million a year
- Small business relief: revenue up to AED 3 million, for tax periods ending by 31 December 2026
- Large groups: 15% domestic minimum top-up tax for groups with EUR 750m+ revenue
- Return deadline: within nine months of the end of the tax period
Who has to pay UAE corporate tax?
- UAE companies: mainland and free zone companies and other juridical persons incorporated in the UAE.
- Foreign companies: effectively managed and controlled in the UAE, or with a permanent establishment there.
- Individuals: natural persons conducting a business or business activity in the UAE whose turnover from those activities exceeds AED 1 million in a calendar year.
Salary, private investment income and personal real estate investment income of individuals are not subject to corporate tax.
How is corporate tax calculated?
Taxable income is based on accounting profit under IFRS, adjusted for exempt income, non-deductible expenses and reliefs. The first AED 375,000 of taxable income is taxed at 0% and the remainder at 9%. For example, a company with taxable profit of AED 1,000,000 pays 9% on AED 625,000, which is AED 56,250.
Dividends and capital gains from qualifying shareholdings, generally at least 5% held for 12 months, are exempt under the participation exemption. Transactions with related parties and connected persons, including payments to the owner, must follow arm’s-length transfer pricing rules.
Free zone companies
A free zone company can be a Qualifying Free Zone Person and pay 0% on qualifying income if it:
- maintains adequate substance in the UAE, with employees, assets and expenses appropriate to its activities,
- earns qualifying income, such as income from transactions with other free zone persons or from qualifying activities,
- keeps non-qualifying revenue within the de minimis limit of 5% of total revenue or AED 5 million, whichever is lower,
- prepares audited financial statements and complies with transfer pricing rules, and
- does not elect to be subject to the standard regime.
Income that is not qualifying is taxed at the normal rates. Failing the conditions can disqualify the company for the current and following four tax periods.
Small business relief
Resident businesses with revenue of AED 3 million or less in the relevant and previous tax periods can elect to be treated as having no taxable income, for tax periods ending on or before 31 December 2026. They must still register and file a simplified return. Qualifying free zone persons and members of large multinational groups cannot use it.
Registration, returns and records
- Register with the Federal Tax Authority through the EmaraTax portal within the deadline that applies to your licence date. Late registration triggers a penalty.
- File the annual corporate tax return and pay any tax within nine months of the end of the tax period.
- Keep records for at least seven years. Audited financial statements are required for qualifying free zone persons and businesses with revenue above AED 50 million.
VAT
VAT is separate from corporate tax (see which taxes Dubai has). The standard rate is 5%. Registration is mandatory when taxable supplies exceed AED 375,000 in 12 months and voluntary from AED 187,500. Many services exported to clients outside the UAE can be zero-rated if the conditions are met.
What this means for European founders
For a consultant or online business owner moving to Dubai, the combination of a free zone company, a moderate salary and dividends can result in a very low overall tax burden, provided the company has real substance in the UAE and is managed from there. If the business is still managed from your home country, that country may treat the company as resident there, and a tax treaty may be needed to resolve it. Read our business setup guide for the setup process.
Structuring your business in the UAE?
We help you choose the right structure, assess free zone eligibility and align your company with your personal tax residency.
Frequently asked questions
UAE corporate tax is 0% on taxable profit up to AED 375,000 and 9% above that. Large multinational groups with revenue of at least EUR 750 million pay a 15% domestic minimum top-up tax.
Free zone companies are within the corporate tax system and must register and file returns. Qualifying Free Zone Persons pay 0% on qualifying income if they meet substance, audit and de minimis conditions; other income is taxed at the standard rates.
Only if they run a business or business activity in the UAE with turnover above AED 1 million in a calendar year. Salary, private investments and personal real estate income are not subject to corporate tax.
Resident businesses with revenue of AED 3 million or less can elect to be treated as having no taxable income for tax periods ending on or before 31 December 2026. They must still register and file a return.
The corporate tax return must be filed and any tax paid within nine months of the end of the company’s tax period.
Dividends received by individuals are not taxed. For companies, dividends from qualifying shareholdings, generally 5% held for 12 months, are exempt under the participation exemption. The UAE charges no withholding tax on dividends paid.
Yes. All UAE companies and other taxable persons must register with the Federal Tax Authority and file an annual return, even when no tax is payable.
VAT registration is mandatory once taxable supplies exceed AED 375,000 in 12 months and voluntary from AED 187,500. The standard VAT rate is 5%.
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Disclaimer: This article provides general information only and is not tax advice. UAE corporate tax rules are supplemented by frequent Cabinet and Ministerial Decisions; confirm current guidance with the Federal Tax Authority or a qualified adviser.