On 7 August 2026, the Ministry of Finance extended Small Business Relief to tax periods ending on or before 31 December 2029 under Ministerial Decision No. 131. The relief had been due to end with 2026 tax periods, so small UAE companies and sole traders now have three more years of simplified corporate tax compliance.
UAE corporate tax is a federal tax on the taxable income of a business, which is its accounting profit after the adjustments set out in the law. It is charged at 0% on taxable income up to AED 375,000 and 9% on the portion above it, for financial years starting on or after 1 June 2023. Registrations passed 651,000 by the end of September 2025.
For a founder, freelancer or company director, the tax falls on the business. Your salary and personal portfolio sit outside it. The UAE still levies no personal income tax. The practical questions are whether your business is in scope, what it owes and when it must file through the Federal Tax Authority's EmaraTax portal.
The answers differ across four groups: mainland companies, Qualifying Free Zone Persons, small businesses eligible for relief, and individuals running a business in their own name. Large multinational groups sit in a fifth category with a separate minimum tax.
This guide explains what UAE corporate tax is, the 2026 rates with worked examples, who must register, how Small Business Relief and the free zone regime work, what a business can deduct, the filing deadlines and penalties, and how corporate tax sits alongside VAT and personal taxes.
| Item | 2026 position |
|---|---|
| Standard rate | 0% up to AED 375,000 of taxable income; 9% above |
| Qualifying Free Zone Person | 0% on qualifying income; 9% on other taxable income |
| Large multinational groups | 15% Domestic Minimum Top-up Tax (revenue EUR 750 million or more) |
| Small Business Relief | Revenue up to AED 3 million; tax periods ending by 31 December 2029 |
| Individuals in business | In scope when business turnover exceeds AED 1 million in a calendar year |
| Return and payment deadline | Nine months after the end of the tax period |
| Withholding tax | 0% |
Source: PwC Worldwide Tax Summaries, Federal Tax Authority, Khaleej Times (as of 3 November 2026)
What is UAE corporate tax and when does it apply?
Corporate tax was introduced by Federal Decree-Law No. 47 of 2022. It applies to each business from its first financial year starting on or after 1 June 2023. A company with a calendar financial year therefore had its first tax period from 1 January to 31 December 2024.
Three numbers often get mixed up, and only one of them is taxed.
- Revenue is everything the business earns before costs. It drives eligibility tests, such as the AED 3 million Small Business Relief threshold.
- Accounting profit is revenue minus expenses, as shown in financial statements prepared under IFRS.
- Taxable income is accounting profit adjusted for the tax rules: non-deductible costs are added back, exempt income is removed and losses brought forward are applied. The 0% and 9% rates apply to this figure.
A business with AED 2 million of sales and AED 1.8 million of costs has AED 200,000 of accounting profit. If no adjustments apply, its taxable income sits inside the 0% band, though it still has to register and file.
Some income is exempt. Dividends from a UAE resident company are exempt, and a participation exemption covers dividends and gains on holdings of at least 5% kept for 12 months, subject to conditions. Government entities, qualifying public benefit entities, qualifying investment funds and pension funds can be exempt persons.
UAE corporate tax rates in 2026
The standard regime has two bands. The first AED 375,000 of taxable income is taxed at 0%, and only the slice above it is taxed at 9%. Your effective rate therefore rises gradually and always stays below 9%.
| Taxable income | Tax at 0% band | Tax at 9% band | Total corporate tax | Effective rate |
|---|---|---|---|---|
| AED 300,000 | AED 0 | AED 0 | AED 0 | 0% |
| AED 500,000 | AED 0 | AED 11,250 | AED 11,250 | 2.25% |
| AED 1,000,000 | AED 0 | AED 56,250 | AED 56,250 | 5.63% |
| AED 2,000,000 | AED 0 | AED 146,250 | AED 146,250 | 7.31% |
| AED 5,000,000 | AED 0 | AED 416,250 | AED 416,250 | 8.33% |
Example only. Assumes taxable income equals the figure shown, with no exempt income, reliefs or losses, under the 0% and 9% bands.
Take the AED 500,000 row. The portion above the threshold is AED 125,000, and 9% of that is AED 11,250, before any credits.
Corporate tax payable and effective rate at five levels of taxable income under the 0% and 9% bands
Large groups face a different floor. The Domestic Minimum Top-up Tax brings in a 15% minimum effective rate for multinational groups above a revenue threshold. A group is in scope with consolidated revenue of EUR 750 million or more in at least two of the four preceding financial years. The tax applies to financial years starting on or after 1 January 2025. Most owner-managed businesses fall well outside it.
The UAE also charges 0% withholding tax on UAE-sourced payments to non-residents, so dividends paid to a foreign shareholder leave the country without a domestic deduction.
Who must register for UAE corporate tax?
Registration is wider than liability. Most businesses that will pay nothing still need a corporate tax registration number, which is separate from a VAT number.
Companies and other juridical persons. Every UAE-incorporated company, including free zone entities, must register. A company incorporated on or after 1 March 2024 has three months from incorporation to apply. Foreign companies with a UAE permanent establishment, or that are managed and controlled from the UAE, also fall in scope.
Individuals. A natural person is subject to corporate tax only when they run a business in the UAE and their turnover from it exceeds AED 1 million in a calendar year. Wages, personal investment income and real estate investment income are left out of that test. A resident who crosses the threshold must register by 31 March of the following year.
So a salaried employee who also holds shares, funds and a rented flat has no corporate tax position at all. A freelance consultant billing AED 1.2 million in 2026 does, and must register by 31 March 2027.
The cost of missing the deadline is fixed. The Ministry of Finance set an AED 10,000 penalty for late corporate tax registration from 1 March 2024. The FTA waives it if the first tax return is filed within seven months of the end of the first tax period. Where the penalty was already paid, it is refunded as a credit.
Founders setting up a new company can map this into their launch checklist alongside licensing and banking, covered in StashAway's guide on how to start a business in Dubai.
Small Business Relief: rules and the 2029 extension
Small Business Relief lets an eligible resident business be treated as having no taxable income for a tax period. It exists to cut the compliance load on very small firms, and it is an election, made in the tax return for each period.
The core test is revenue. A business qualifies when revenue in the current and every previous tax period stays at or below AED 3 million. The figure is gross revenue from all business activity, in the UAE and abroad. Once a business crosses AED 3 million in any period, it loses access for later periods too.
Ministerial Decision No. 131 of 2026 kept that threshold and moved the end date. The relief now covers tax periods ending on or before 31 December 2029. For a calendar-year company, 2029 is the last year it can elect.
Three groups are shut out regardless of revenue:
- Qualifying Free Zone Persons
- Members of multinational groups with consolidated revenue above AED 3.15 billion
- Non-residents, except for their UAE permanent establishments
Electing has trade-offs. A business that opts in still registers and files a simplified return. Tax losses and disallowed interest from that period cannot be carried forward, and earlier losses cannot be used against its profits. A loss-making start-up planning to grow past the threshold may prefer to file normally and keep its losses.
The FTA also looks for artificial splitting. A business broken into several entities to keep each one under AED 3 million can lose the relief if the separation lacks a real commercial purpose.
Do Dubai and Abu Dhabi free zone companies pay corporate tax?
The free zone 0% rate belongs to a Qualifying Free Zone Person (QFZP), and even then it covers only qualifying income. A licence from DMCC, IFZA or ADGM is only the starting point for that status. Other taxable income is charged at 9%, including profit attributable to a branch on the mainland or abroad.
To be a QFZP, a free zone entity must meet every one of these conditions each period:
- Keep adequate substance in the free zone, with core income-generating activities, assets, qualified staff and operating spending there
- Earn qualifying income
- Not elect to join the standard regime
- Follow transfer pricing rules and documentation requirements
- Keep non-qualifying revenue below 5% of total revenue or AED 5 million, whichever is lower
- Prepare audited financial statements under IFRS
Failing any condition is expensive. The entity is taxed under the standard regime on all its income for that year and the following four, and can only retest its status in the sixth year. The FTA has published a dedicated corporate tax guide on free zone persons that lists qualifying and excluded activities.
A DMCC, IFZA or ADGM company selling services to mainland customers can end up paying 9% on much of its profit. Free zone owners should check their revenue mix against the de minimis limit every year, before the year closes.
Decision flow showing which UAE corporate tax treatment applies to individuals, free zone entities and small businesses
What can a business deduct?
The starting point is generous. Non-capital spending incurred wholly and exclusively for the business is generally deductible. Mixed-purpose costs are deductible for their business share. Capital spending is relieved through depreciation and amortisation, which generally follows IFRS.
The limits and add-backs are where most adjustments arise.
| Expense category | Corporate tax treatment |
|---|---|
| Salaries, rent, software, professional fees | Generally deductible if wholly and exclusively for the business |
| Client and supplier entertainment | 50% deductible |
| Net interest expense | Deductible up to the higher of AED 12 million or 30% of tax-adjusted EBITDA; excess carried forward for 10 periods |
| Donations to non-qualifying public benefit entities | Not deductible |
| Dividends and profit distributions | Not deductible |
| Fines, penalties and bribes | Not deductible |
| Tax losses from earlier periods | Can offset up to 75% of taxable income in a period |
Source: PwC Worldwide Tax Summaries, Deloitte (as of 3 November 2026)
Owner-managers should watch two areas. Payments to themselves or related parties must be at arm's length under transfer pricing rules. Personal spending run through the company is not deductible, because it fails the wholly-and-exclusively test.
Losses carry forward without a time limit, but they only survive a change of ownership if at least 50% of the shares stay with the same people and the business continues.
Filing deadlines, EmaraTax and penalties
Corporate tax runs on the business's financial year, called its tax period. One return is filed for each period through EmaraTax, the FTA's online portal. The return and any tax due must reach the FTA within nine months of the end of the tax period.
For a company with a calendar financial year, the 2026 timeline works like this:
- 1 January to 31 December 2026: tax period
- 30 September 2027: deadline to file the 2026 return and pay any tax
- 31 December 2033: earliest date the 2026 records can be discarded
The last date follows from the rule that records must be kept for seven years after the end of the tax period. Check your own financial year end and registration date before relying on these dates.
Timeline of corporate tax dates for a UAE company with a calendar financial year
Two accounting rules sit alongside the deadline. Financial statements must be audited when revenue exceeds AED 50 million, or when the business is a QFZP. Businesses with revenue up to AED 3 million can prepare cash-basis accounts.
Penalties apply per breach.
| Violation | Penalty |
|---|---|
| Late registration | AED 10,000 (waived if the first return is filed within seven months of the first period end) |
| Late tax return | AED 500 per month for the first 12 months, then AED 1,000 per month |
| Late payment of tax | 14% per year, charged for each month or part of a month |
| Failure to keep records | AED 10,000, or AED 20,000 for a repeat within 24 months |
| Incorrect tax return | AED 500, waived if corrected before the payment deadline |
Source: Federal Tax Authority, PGP Law, Khaleej Times (as of 3 November 2026)
A business can also ask the FTA to change its tax period, within limits, but must apply no later than six months after the original period ends.
UAE corporate tax versus VAT and personal taxes
Corporate tax and VAT are separate taxes with separate registrations. VAT is charged at 5% on most goods and services, with mandatory registration once taxable supplies pass AED 375,000 a year. The matching AED 375,000 figure is a coincidence: one is a revenue test for VAT, the other a profit band for corporate tax.
| Tax | Charged on | Rate | Who registers |
|---|---|---|---|
| Corporate tax | Taxable income of a business | 0% up to AED 375,000; 9% above | All UAE companies; individuals with business turnover over AED 1 million |
| VAT | Taxable supplies of goods and services | 5% | Businesses with taxable supplies over AED 375,000 a year |
| Personal income tax | Not levied | None | Not applicable |
| Withholding tax | Certain payments to non-residents | 0% | Not applicable |
Source: PwC Worldwide Tax Summaries (as of 3 November 2026)
For you as an individual, salary, investment returns and rental income from personal property stay outside corporate tax. Dividends you take from your own UAE company are paid out of profit that has already been through corporate tax, and you pay no personal tax on receiving them. That leaves the choice of where to invest them, compared in StashAway's guide to the best investment plans in the UAE.
Cross-border founders have a second set of questions. Your home country may tax worldwide income, or treat a UAE company it considers managed from abroad as resident there. The UAE has a wide double tax treaty network, but treaty relief depends on your tax residency and the specific treaty. A cross-border adviser should review these points.
Plan your personal wealth beyond the company with StashAway Reserve
Once the business is compliant, the next decision is what to do with the profit you take out. Dividends and retained earnings that leave the company become personal wealth, and they deserve a plan of their own. StashAway's guide to financial advisors and wealth management in the UAE covers the main routes.
StashAway Reserve gives you a dedicated Wealth Advisor once you have US$100,000 invested in any StashAway portfolio, measured as the higher of net deposits or portfolio value. There is no fee to qualify or to speak with your advisor, and the US$100,000 entry point sits well below typical private bank minimums in Dubai.
- A one-hour wealth discovery session, then a financial plan built over two sessions and refreshed each year
- Portfolio reviews twice a year, by WhatsApp, email or phone
- Access to private markets for those who qualify as Professional Clients
StashAway Management (DIFC) Limited is regulated by the DFSA under licence F006312. StashAway does not give tax advice, and investing involves risk, including the possible loss of capital.
Frequently asked questions
Quick answers on revenue, free zones, salaries, relief, filing and losses.
Is UAE corporate tax based on revenue or profit?
It is charged on taxable income, which is accounting profit after tax adjustments. Revenue matters only for eligibility tests, such as the AED 3 million Small Business Relief limit and the AED 1 million turnover test for individuals.
Do free zone companies pay 9% tax?
They can. A Qualifying Free Zone Person pays 0% on qualifying income and 9% on other taxable income. A free zone company that fails any QFZP condition moves to the standard 0% and 9% bands on all its income for five tax periods.
Does an individual earning a salary in Dubai owe corporate tax?
No. Wages, personal investment income and real estate investment income fall outside the corporate tax rules for individuals. You only come into scope if you also run a business with turnover above AED 1 million in a calendar year.
Is AED 3 million Small Business Relief still available after 2026?
Yes. Ministerial Decision No. 131 of 2026 extended it to tax periods ending on or before 31 December 2029. The revenue test still applies to the current and all previous tax periods.
Does every company have to submit a corporate tax return?
Yes, every registered taxable person files a return for each tax period, even when the tax due is zero. Businesses electing Small Business Relief file a simplified return, and late filing triggers monthly penalties.
Can a company carry forward losses?
Yes. Losses carry forward indefinitely and can offset up to 75% of taxable income in a later period. Losses from a period in which Small Business Relief was elected cannot be carried forward.
The bottom line
UAE corporate tax charges nothing on the first AED 375,000 of taxable income and 9% above it. The work lies in the detail: registering on time, testing free zone status each year, deciding whether Small Business Relief helps before its 2029 end date, and filing within nine months. Get those right and the business is in good order. The profits you draw from it then become personal wealth, and moving from wealth building to wealth continuity deserves the same care.