Guide
Banking and tax
UAE corporate tax: the 9% regime and what it means for you
The United Arab Emirates has taxed company profits since Federal Decree-Law No. 47 of 2022 came into force. The rate is low, the mechanism is simple, and that is exactly why it is badly applied: most of the reassessments we see are not about the rate but about the tax base and filing obligations nobody saw coming.
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9% Above AED 375,000 of taxable profit
- Rate above the threshold
- 9%
- Marginal scale: only the portion above the threshold is taxed
- Taxable profit threshold
- AED 375,000
- Below it, the applicable rate is nil
- Filing deadline after year-end
- 9 months
- Return and payment within the same period
Rate, threshold and deadline: working values being verified, dated September 2026. They describe a mechanism, not your file.
The short answer
The rate is nil up to the taxable profit threshold and 9% above it, on the portion above the threshold only. A free zone company can have its qualifying income taxed at a nil rate, under cumulative conditions. Every company, including those that will pay nothing, must register and file within nine months of its year-end: penalties apply to the filing failure, not to the tax due.
Corporate tax is only one part of the tax and banking framework of the United Arab Emirates, which the guide to banking and tax in the United Arab Emirates sets out — no personal income tax, VAT, and above all the question of tax residence, which cannot simply be declared.
Scope
Who falls within the scope of corporate tax
| Taxpayer | In scope | On what basis |
|---|---|---|
| Company registered in the UAE | Yes | On its worldwide profit, subject to tax treaties |
| Free zone company | Yes | Nil rate possible on qualifying income only |
| Branch or permanent establishment of a foreign company | Yes | On the profit attributable to the establishment |
| Individual running a business in their own name | Above a turnover threshold | On the profit of the business only |
| Employee | No | Salary stays outside the scope |
| Individual receiving rent, dividends or private capital gains | No | Private wealth management, not a business |
Scroll the table sideways to see every column.
The row that deserves attention is the individual. A freelancer who invoices under their own name from the UAE comes within scope as soon as their annual turnover crosses a regulatory threshold. The absence of income tax covers private income, not the profit of a business run on a professional basis.
The tax base
What matters is not the rate, it is the taxable profit
Taxable profit starts from the accounting result prepared under accepted standards, then goes through adjustments. The items that produce the largest differences, in the files we take over:
Related-party transactions
Director’s pay, royalties paid to a group company, recharges between entities: the market price must be used and documented. It is the most neglected point in single-shareholder structures.
Mixed-use expenses
Car, housing, travel: the private share is not deductible, and accounts that do not separate the two expose the whole item.
Interest
The deduction of financing costs is subject to limits, notably for intra-group financing.
Provisions and loss carry-forward
They follow their own rules on caps and continuity of business.
The operational consequence: accounts rebuilt at year-end from bank statements produce a tax base that cannot be defended. This is not a matter of formal rigour; it is what decides the amount.
Free zone
The qualifying free zone regime, condition by condition
A free zone company can have its qualifying income taxed at a nil rate. The regime requires all of the following at the same time:
- real economic substance in the UAE, assessed on functions, staff and assets;
- income from activities on the list of qualifying activities;
- non-qualifying income kept under a cap, expressed both as a percentage of revenue and as an amount, whichever is stricter applying;
- up-to-date transfer pricing documentation;
- no election for the standard regime.
The mainland client trap
A free zone consulting company that invoices clients established on the mainland generates, in principle, non-qualifying income. Below the cap, the regime holds; above it, the company loses the nil rate for the financial year and for a set number of following years, on its entire profit. A threshold to monitor month by month, not to discover at year-end.
The choice between a free zone and the mainland is therefore made on the nature of your clients, not on the headline rate: see the structure comparator and the page free zone company in the UAE.
Election
Small business relief, and when it works against you
A company whose turnover stays below a regulatory cap can elect for a relief regime: it is then treated as having no taxable income for the period, with reduced filing obligations. The election is claimed in the return, it is not automatic, and the scheme is limited in time — the first thing to check before making it a business-plan assumption.
The case where the election works against you: a loss-making company. Electing means giving up recognising the loss for the period, and therefore carrying it forward to later profitable years. For a young structure that invests before it sells, the relief can cost more than it brings. The calculation has to be done, not assumed.
Calendar
From the first tax period to filing the return
Determine the tax period
It normally follows the financial year. The first financial year is often longer or shorter than twelve months, and it sets every deadline that follows.
Register with the tax authority
Required even when the applicable rate is nil, including in a free zone and for a company with no activity. Lateness is penalised regardless of the tax due.
Keep accounts that stand up to an audit
Taxable profit starts from the accounting result. Accounts rebuilt from bank statements produce adjustments that cannot be documented.
Decide on elections before year-end
Small business relief, the qualifying free zone regime, choice of method: these elections are made in the return but prepared beforehand, and some commit several financial years.
File the return and pay
Within nine months of year-end. There are no instalments during the year, which gives a false sense of comfort in the first year.
Keep the records
For several years, longer for real estate. A dissolved company is not exempt from this retention.
To get an order of magnitude before we talk, the corporate tax and VAT calculator applies the scale to your own turnover and profit assumptions, and shows where you stand against the two thresholds. VAT obligations, which are separate and independent, are covered on the page VAT in the United Arab Emirates.
Frequently asked questions about UAE corporate tax
Does the 9% rate apply from the first dirham of profit?
No. The scale is marginal: the rate is nil up to the taxable profit threshold and 9% only on the portion above it. Crossing the threshold does not make the whole profit taxable retroactively. That is a fundamental difference from a cliff-edge threshold, and it changes how you manage the end of a financial year.
Is my free zone company exempt?
It is not exempt: it is within the scope of the tax and can benefit from a nil rate on its qualifying income if it meets all the conditions of the regime. It must still register and file a return, whatever rate is applied.
What is small business relief?
An optional regime that lets a company whose turnover stays below a cap be treated as having no taxable income for the period, with lighter obligations. It is elective, it is claimed in the return, and the scheme is limited in time by the regulations.
Does an individual pay corporate tax in the UAE?
They can be subject to it if they run a business in their own name in the UAE and their annual turnover exceeds a regulatory threshold. Salary, rent received personally, dividends and private capital gains remain outside it. A freelancer who invoices under their own name should check their position.
What are the risks of being late?
Administrative penalties, separate from the tax itself, for failing to register, file or pay, or doing so late. They apply even when the tax due is nil, which surprises young structures convinced that a company with no profit has nothing to file.
The other pages of the tax guide
Tax
VAT in the United Arab Emirates
Tool
Corporate tax and VAT calculator
Structuring
Setting up a free zone company
Structuring
Accounting and filing obligations
Independent advice
Have your structure checked before year-end
Free zone regime, small business relief, director’s pay: these choices are prepared before the end of the financial year and are hard to correct afterwards. Describe your structure and we will look at what holds.