What is the UAE corporate tax rate?

The UAE corporate tax rate is 0% on taxable income up to AED 375,000 and 9% on taxable income above AED 375,000. There is also a 15% rate for large multinationals with global revenue above EUR 750 million (Pillar Two compliance).

Is UAE corporate tax applicable to all businesses?

UAE corporate tax applies to all UAE businesses and individuals conducting business in the UAE, unless specifically exempt. Exemptions include government entities, qualifying public benefit organisations, qualifying investment funds, and individuals earning employment income.

Do free zone companies pay UAE corporate tax?

Free zone companies can qualify for a 0% rate on qualifying income if they meet substance requirements and do not derive income from mainland UAE. Non-qualifying income is subject to the 9% rate. All free zone companies must still register with the FTA and file returns.

What is Small Business Relief in UAE corporate tax?

Small Business Relief allows businesses with annual revenue of AED 3 million or less to elect to be treated as having zero taxable income. The relief is available for tax periods ending on or before 31 December 2026. It cannot be used by free zone persons or members of multinational groups.

When must UAE businesses register for corporate tax?

All UAE businesses (except exempt entities) must register with the FTA for corporate tax purposes. Registration deadlines vary based on the business's financial year. Penalties apply for late registration — AED 10,000 for initial failure and AED 20,000 for repeated failure.

Does UAE corporate tax apply to personal salary or investment income?

No. UAE corporate tax does not apply to employment income (salaries, bonuses), personal investment income from dividends and capital gains on personal portfolios, real estate income earned by individuals not operating as a business, or income from personal bank deposits.

UAE Corporate Tax Guide 2025 — Rates, Exemptions & How to File

The UAE introduced a federal corporate tax in June 2023 — ending the era of zero business taxation and creating one of the most important new compliance obligations for companies operating in the Emirates. The headline rate is 9%, but the reality is more nuanced: most small businesses pay nothing, free zones retain their advantages if structured correctly, and individuals earning employment income are entirely outside the scope.

This guide explains exactly who pays, who doesn't, how free zones are affected, and what you need to do to stay compliant.

The Tax Rates Explained

UAE corporate tax applies a tiered structure based on taxable income for each financial year:

Taxable Income	Rate	Example (AED 1M profit)
AED 0 – AED 375,000	0%	AED 375k × 0% = AED 0
Above AED 375,000	9%	AED 625k × 9% = AED 56,250
Total on AED 1M profit	5.625% effective	AED 56,250 tax owed

A separate 15% rate applies to large multinationals with global consolidated revenue exceeding EUR 750 million, in compliance with the OECD Pillar Two global minimum tax framework. This affects only the largest global corporations.

Who Pays Corporate Tax?

UAE corporate tax applies to:

UAE companies and legal entities — all mainland and free zone companies incorporated in the UAE
Foreign companies with a UAE permanent establishment — e.g., a branch office or a deemed PE through consistent business activities
Individuals conducting business in the UAE whose annual business turnover exceeds AED 1 million — this includes freelancers with trade licences, sole proprietors, and self-employed individuals

Important: If you are an employee earning a salary, your income is entirely outside the scope of corporate tax. Employment income, personal investment returns, and dividend income from personal shareholdings are not taxable under corporate tax.

Exempt Entities

The following are fully exempt from corporate tax:

UAE federal and emirate government entities
Government-controlled entities listed by Cabinet decision
Qualifying public benefit organisations (charities, NGOs) approved by Cabinet
Qualifying investment funds (subject to conditions on investor type and distribution)
Pension and social security funds
Qualifying UAE holding companies receiving dividends and capital gains from subsidiaries

Free Zone Companies: The 0% Qualifying Income Rate

Free zone companies occupy a special position. They can qualify for a 0% corporate tax rate on qualifying income, preserving the traditional free zone tax advantage — but only if they meet strict conditions.

What Qualifies as a Qualifying Free Zone Person (QFZP)?

To maintain the 0% rate, a free zone company must:

Maintain adequate substance in the free zone (staff, premises, core income-generating activities must occur in the free zone)
Earn qualifying income — broadly income from transactions with other free zone persons, or certain regulated activities
Not elect to be subject to standard corporate tax
Meet de minimis thresholds — non-qualifying revenue must not exceed 5% of total revenue or AED 5 million, whichever is lower
Comply with transfer pricing rules and maintain audited financial statements

Key trap: If a free zone company earns income from mainland UAE customers or conducts certain activities, that income is taxable at 9% — even if the company is in a free zone. The 0% rate only applies to genuinely qualifying income.

Non-qualifying income (e.g., UAE mainland revenue, certain financial income) is taxed at 9% on the amount exceeding AED 375,000. Free zone companies must still register with the FTA and file annual tax returns even if they owe zero tax.

Small Business Relief

Small businesses can elect for a simplified treatment that eliminates their corporate tax liability entirely:

Eligibility: Businesses with annual revenue of AED 3 million or less for the relevant tax period
Effect: The business is treated as having zero taxable income — i.e., no corporate tax is payable
Availability: Tax periods ending on or before 31 December 2026 (subject to extension by the Minister)
Not available to: Free zone persons, members of multinational enterprise groups (global revenue > EUR 750M), and businesses making artificial arrangements to stay below the AED 3M threshold

Practical impact: The vast majority of UAE small businesses and self-employed individuals will qualify for Small Business Relief and pay zero corporate tax — at least through 2026. The 9% rate primarily affects mid-to-large businesses with substantial profits.

Allowable Deductions

UAE corporate tax follows a net profit approach — you pay 9% on taxable income, which is gross revenue minus allowable business expenses. Key deductible expenses include:

Staff salaries, wages, bonuses, and end-of-service gratuity
Rent, utilities, and office expenses
Depreciation on business assets
Interest on business loans (subject to a 30% EBITDA cap for larger businesses)
Marketing, advertising, and client entertainment (with reasonable limits)
Professional fees (legal, accounting, consulting)
Bad debt write-offs (subject to conditions)

Non-deductible: Personal expenses, fines and penalties, bribes or corrupt payments, expenses related to exempt income, and 50% of entertainment expenses exceeding a threshold.

FTA Registration & Filing

Every taxable person must register with the UAE Federal Tax Authority (FTA) via the EmaraTax portal before their first tax return deadline.

Register on EmaraTax

Go to tax.gov.ae → EmaraTax portal → Create an account → Submit corporate tax registration. Receive your Tax Registration Number (TRN).

Determine your financial year

Most UAE companies use a calendar year (Jan–Dec) or fiscal year matching their trade licence. Your first tax period begins on or after 1 June 2023.

Prepare financial statements

Maintain IFRS or IFRS for SMEs compliant accounts. Free zone QFZPs must have audited financials. Others may use reviewed or management accounts depending on revenue.

File your tax return

File within 9 months of the end of your financial year (e.g., by 30 September 2025 for a December 2024 year-end). No advance payments required for most businesses.

Pay tax owed

Payment is due at the same time as filing. Pay via EmaraTax using bank transfer or credit card. Late payment incurs a monthly penalty of 1% on unpaid amounts.

Penalties for Non-Compliance

Violation	Penalty
Failure to register (first offence)	AED 10,000
Failure to register (repeated)	AED 20,000
Failure to file return on time	AED 500/month (first year) → AED 1,000/month (after)
Failure to pay tax on time	1% per month on unpaid amount
Understating taxable income	50% of unpaid tax + recovery of full amount

What This Means for Expat Business Owners

If you operate a business in the UAE as an expat — whether a mainland LLC, a free zone company, or as a licensed freelancer — corporate tax now applies to you. Here is a practical summary:

Freelancer with AED 800k revenue and AED 350k profit: Profit is under AED 375k — zero tax owed. If revenue is under AED 3M, Small Business Relief also applies.
Small mainland company with AED 600k profit: Tax = (600k – 375k) × 9% = AED 20,250
DMCC company selling only to other free zone companies: Likely qualifies for 0% on that income if substance requirements are met
Employee drawing a salary from a UAE employer: No corporate tax impact whatsoever

Calculate Your UAE Corporate Tax

Use our free UAE Corporate Tax Calculator to estimate your 2025 tax liability in seconds.

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Frequently Asked Questions

0% on the first AED 375,000 of taxable income; 9% above that. Large multinationals (global revenue > EUR 750M) face a 15% rate under Pillar Two rules. The effective rate on AED 1M profit is approximately 5.6%.

Free zone companies can qualify for 0% on qualifying income if they meet substance requirements and the de minimis non-qualifying income test. Income from mainland UAE customers or certain non-qualifying activities is taxed at 9%. All free zone companies must still register and file returns.

No. Employment income — salaries, bonuses, allowances, end-of-service gratuity — is entirely outside the scope of UAE corporate tax. It applies to businesses and self-employed individuals earning business income above AED 1M, not to employees.

Small Business Relief allows businesses with annual revenue ≤ AED 3M to elect zero taxable income — meaning no corporate tax is payable. Available for tax periods ending on or before 31 December 2026. Not available to free zone persons or multinational groups.

Filing deadline is 9 months after the end of your tax period. For a company with a December 2024 year-end, the first return is due by 30 September 2025. Registration must happen before this deadline.

Yes — salaries paid to employees (including owner-managers) are a deductible expense, reducing the company's taxable profit. However, the FTA may scrutinise excessive salaries paid to related parties under transfer pricing and market-rate principles.