UAE Corporate Tax: 9% and What Falls Under It
The rate is single and simple, but it is surrounded by exceptions, and that is where money is lost. The base rule: 0% on the first AED 375,000 of taxable income and 9% on everything above. The tax was introduced by Federal Decree-Law No. 47 of 2022 and applies to tax periods starting on or after 1 June 2023.
Who pays
- Companies incorporated in the UAE, as a general rule — including free zone companies
- Foreign companies doing business in the UAE through a permanent establishment
- Certain categories of individuals carrying on a business
How it is administered
The tax is administered by the Federal Tax Authority (FTA) through the EmaraTax portal. Registration, filing and payment for corporate tax and for VAT are separate procedures, even when a company is registered for both. Missing registration is the most common and most avoidable mistake: it has nothing to do with whether there is profit, and it costs a penalty of AED 10,000. A late return costs AED 500 for each month of delay in the first twelve months and AED 1,000 a month after that.
What is usually missed
- Registration is mandatory whether or not there was any profit
- Registration and filing deadlines follow the company's own tax period
- Intra-group transactions need arm's-length pricing support
- A free zone does not remove the duty to register: the 0% rate there is available only to a Qualifying Free Zone Person on Qualifying Income; on everything else a QFZP pays 9% from the first dirham, with no AED 375,000 threshold — and the status is lost for the current period and the four following ones if the conditions are breached
Small Business Relief: extended to 2029
Resident companies with revenue of no more than AED 3 million in a period may elect Small Business Relief and be treated as having no taxable income. The relief was originally limited to periods ending by the end of 2026; in August 2026 the Ministry of Finance extended it to tax periods ending on or before 31 December 2029. It is claimed in the return, not applied automatically, and it does not remove the duty to register and file. It has exclusions: it is not available to a Qualifying Free Zone Person or to a member of a multinational group (a Multinational Enterprises Group under Cabinet Decision No. 44 of 2020). And it has a price: for a period in which the relief is elected, tax losses and unrelieved net interest expenditure cannot be carried forward.
Large groups: 15%
Multinational groups with consolidated revenue of EUR 750 million or more are subject to a 15% Domestic Minimum Top-up Tax from 1 January 2025, under the OECD Pillar Two rules. This does not touch small and medium businesses, but if a UAE company belongs to a large group the arithmetic is different.
The home-country side
A UAE company does not switch off tax at home. Most countries have controlled foreign company rules, and the UAE takes part in the automatic exchange of financial account information, so the structure is visible to your home tax authority. Whether a double tax treaty exists between the UAE and your country — and what it actually says about dividends, interest and management — is checked before the structure is built, not after the first distribution.
What we need from you
Constitutional documents, the company's tax period, financial statements and details of intra-group transactions. If the books have been kept irregularly, the first job is to rebuild them: there is nothing to compute the tax from without correct data, and the deadlines keep running.
What to do first
Check whether the company is registered for corporate tax, and register if it is not. Then fix the tax period, put the deadlines in the calendar, and bring the books to a state where a return can be assembled in days rather than a month.
Groups of companies
With several entities the question gets harder: intra-group transactions need support, and shifting profit between companies is looked at separately. Arrangements where profit "moves" to a zero-rate company with no economic substance are a straight road to an assessment.
Frequently asked questions
If profit is below AED 375,000, is there no tax at all?
The rate on that portion is zero, but the duty to register and file remains. These are different things.
What if the company was dormant?
The bookkeeping and filing duties do not disappear by themselves. We confirm the position for dormant entities case by case.
Does Small Business Relief cover VAT?
No. It concerns corporate tax only. VAT (5%) and its registration thresholds live separately.
This is a general framework, not legal advice. UAE law changes, and procedures differ between emirates and free zones. We review each situation individually.