UAE corporate tax is charged at 0% on taxable income up to AED 375,000 and 9% on taxable income above AED 375,000. It applies to financial years starting on or after 1 June 2023 under Federal Decree-Law No. 47 of 2022, and every taxable person must register with the Federal Tax Authority — free zone persons included, and including companies whose profits sit entirely inside the 0% band.
Registration is a standalone legal obligation. It is not triggered by owing tax, and it is not waived because you do not. That distinction is responsible for most of the penalties we see.
Who pays UAE corporate tax?
The regime reaches further than many owners expect. In broad terms, the taxable persons are:
- Companies incorporated in the UAE, mainland or free zone. The legal form creates no exemption; a free zone licence does not put you outside the law.
- Foreign companies with a permanent establishment in the UAE, those effectively managed and controlled from the UAE, and those earning UAE-sourced income in defined circumstances.
- Natural persons carrying on a business in the UAE, but only where annual turnover from that activity exceeds AED 1 million.
Employment income, personal investment income and personally held real estate are not business income. A sole establishment or freelance permit is a business, though — and once turnover passes AED 1 million that individual becomes a taxable person.
Government entities, qualifying public benefit entities, qualifying investment funds and natural resource extraction sit outside the charge or are exempt. Exempt status is applied for or confirmed, not a conclusion you reach yourself and leave unrecorded.
What are the rates, and how does the threshold work?
The threshold applies to taxable income, not revenue. Taxable income starts from accounting profit under IFRS, adjusted for items the law treats differently: disallowed expenditure, exempt income, related-party adjustments and reliefs you elected into.
| Taxable income | Rate |
|---|---|
| Up to AED 375,000 | 0% |
| Above AED 375,000 | 9% on the excess |
| Qualifying income of a Qualifying Free Zone Person | 0%, where conditions are met and maintained |
| Groups with consolidated global revenues of EUR 750 million or more | Domestic Minimum Top-up Tax of 15%, for financial years starting on or after 1 January 2025 |
The 9% rate bites only on income above AED 375,000, so a company just over the line is not suddenly taxed on everything. The figure the rate applies to comes straight out of your accounts, which is why our accounting and bookkeeping service exists to make that number defensible.
Do free zone companies have to register for corporate tax?
Yes. Free zone persons are taxable persons and must register, file and keep records like any mainland company. The widely repeated idea that a free zone licence means no corporate tax and nothing to do is simply wrong, and it is the costliest misunderstanding in the market.
What a free zone can offer is 0% on qualifying income, where the company meets the conditions for a Qualifying Free Zone Person: adequate substance, qualifying activities, transfer pricing compliance and audited accounts. Non-qualifying revenue is tolerated only within a de minimis allowance set as a proportion of total revenue, and exceeding it can cost the status for more than the year in question.
So a free zone company usually carries more compliance, not less. If you are still choosing, the trade-offs are on our free zone business setup page — better compared before you license than after.
Registration, and the AED 10,000 penalty
Registration runs through the FTA’s EmaraTax portal and produces a corporate tax registration number. Deadlines follow your own circumstances — licence issue date, incorporation date, or for natural persons the period in which turnover passed AED 1 million.
Late registration attracts an administrative penalty of AED 10,000 under FTA Decision No. 3 of 2024, charged for being late whether or not any tax was due. A dormant company, a holding company with no income and a profitable trading company face the same penalty for the same failure.
Owners regularly tell us they assumed a loss, a small profit or not yet trading meant there was nothing to do. Paying nothing is an outcome, not an exemption.
When is the corporate tax return due?
A tax return must be filed within 9 months after the end of the tax period, and any tax due is payable by the same date. Your deadline therefore follows your own financial year end rather than a national filing date shared by everyone.
A single return covers the period, with no provisional filings along the way — convenient in theory, a trap in practice, because nothing interim arrives to tell you the figures are not ready. The window closes quickly once accounts must be prepared and an audit arranged, which is why our audit services work to the same timetable.
Who gets caught out, and how
The businesses that run into trouble rarely set out to avoid tax; they did not realise an obligation applied.
- Free zone companies that never registered, on the assumption the free zone sat outside the law.
- Dormant and holding companies. No trade, no income, no profit — and still a registration obligation.
- Businesses treating the 0% band as an exemption. Falling under AED 375,000 changes what you pay, not what you file.
- Individuals over the AED 1 million turnover line who read corporate tax as something that applies only to companies.
- Owners who conflated corporate tax with VAT. Separate regimes, separate registrations, separate deadlines; being registered for one tells you nothing about the other.
- Related-party transactions recorded at convenient values. Management fees and intra-group charges must survive transfer pricing scrutiny.
What is the Domestic Minimum Top-up Tax?
A separate Domestic Minimum Top-up Tax of 15% applies to multinational groups with consolidated global revenues of EUR 750 million or more, for financial years starting on or after 1 January 2025, under Cabinet Decision No. 142 of 2024. It implements the global minimum tax standard, so in-scope groups pay at least that effective rate on UAE profits.
If you own an owner-managed business, this does not reach you. It matters where you belong to a large international group — including where you are a small UAE entity under such a parent, which is easy to miss because the test looks at the group’s consolidated revenues, not yours. See the Ministry of Finance for the announcements.
Common questions
Do I have to register if my company has made no money at all?
Yes. Registration applies to taxable persons, not to profitable ones. A loss-making or dormant company that registers late is exposed to the AED 10,000 penalty under FTA Decision No. 3 of 2024.
My profit is below AED 375,000. Do I still file a return?
Yes. The 0% band determines the tax, not the filing. You still register and still submit a return within 9 months after the end of the tax period.
Does a free zone licence exempt me from corporate tax?
No. Free zone persons are in scope and must register. A Qualifying Free Zone Person can achieve 0% on qualifying income, but only by meeting and maintaining the conditions — and it still files.
I am a freelancer with a permit, not a company. Am I in scope?
You are a taxable person where annual turnover from your business exceeds AED 1 million. Below that, no corporate tax obligation arises, though you should still be able to evidence the turnover.
How does the AED 375,000 threshold work across several companies I own?
That depends on how they are held and whether they should form a tax group. Anti-fragmentation rules stop a single business being split to multiply the benefit, so answer it on your actual structure.
Talk it through before the deadline, not after
Most corporate tax problems in the UAE are administrative rather than technical: cheap to prevent, expensive to fix. In a consultation we will confirm each entity is registered, check your financial year and filing date line up, review your bookkeeping and audit position, and say plainly where the exposure is. To have us look at your structure, speak to our Dubai team. This page is general information, not tax advice for a specific business; we have formed no view on your own position here.
This page sets out the position as at October 2026. Tax rules change, and the treatment of any specific business depends on its own facts — confirm the current requirements before you act.
