What Is the Corporate Tax Rate in the UAE?

Working through it

The rate itself is simple. What makes the answer longer than two numbers is that the rate applies to taxable income, and taxable income is not the same as the profit shown in your accounts.

The computation starts from accounting income prepared under an acceptable framework, then adjusts it. Entertainment expenditure is partially disallowed. Fines and penalties are not deductible at all, including tax penalties. Interest is subject to a deduction limitation. Payments to owners and connected persons are deductible only up to market value for the service actually provided. General provisions are added back while specific ones meeting the criteria are not. Income covered by the participation exemption is excluded.

In a typical owner-managed business those adjustments account for nearly all of the difference between the profit figure the owner has in mind and the figure the 9 per cent applies to, and they can move it in either direction.

Rates that are not 9 per cent

Several positions produce something other than the headline rate:

• 0 per cent up to AED 375,000 of taxable income: applies to every taxable person, not just small ones
• Qualifying Free Zone Person: 0 per cent on qualifying income, 9 per cent on non-qualifying income, subject to annual conditions
• Small Business Relief: a qualifying business at or below AED 3,000,000 of revenue may elect to be treated as having no taxable income, currently until 31 December 2026
• Exempt persons: certain government entities, qualifying public benefit entities and qualifying investment funds, subject to conditions
• Large multinationals within the scope of the global minimum tax framework, where a different effective rate may apply

For an ordinary owner-managed UAE business, the first three are the ones that actually come up.

What is not taxed

Worth stating plainly, because the introduction of corporate tax caused a good deal of confusion about what else changed:

There is no personal income tax in the UAE. Employment salary is not taxed. There is no capital gains tax on individuals, and personal investment income and personal real estate income are generally outside the corporate tax regime where they do not amount to carrying on a business.

What corporate tax applies to is business income of taxable persons, companies, and natural persons carrying on business above AED 1,000,000 revenue in a calendar year of turnover. An employee remains untaxed on their salary, and an individual holding shares personally is not taxed on the dividends in the way a company might be on other income.

VAT at 5% is a separate tax with separate rules, and a business can easily be liable for one and not the other.

The rate is rarely the expensive part

Nine per cent remains low by regional and international standards, and for most UAE businesses the rate is not the thing worth optimising. The costs that actually hurt in this regime are unrelated to the rate, and several of them exceed the tax.

• AED 10,000 for late registration, per entity, regardless of turnover or profit
• Loss of QFZP status for a period and typically the following four, from a single de minimis breach
• Small Business Relief forfeited by not electing it in the return
• Owner remuneration disallowed where no arm’s length basis was established
• Tax losses put at risk by an unfiled return in a loss-making year
• 14% per annum on overdue tax on overdue tax under Cabinet Decision No. 129 of 2025, on top of the fixed penalties

Each of those costs more than a few percentage points of rate, and each is avoidable by paying attention rather than by planning. That is the practical argument for spending effort on compliance in this regime rather than on rate optimisation.

Where this goes wrong

• Treating the bands as a cliff. Exceeding AED 375,000 does not put all your income at 9 per cent, only the excess.
• Applying 9 per cent to accounting profit. The rate applies to taxable income, which is accounting income after adjustments.
• Assuming free zone means 0 per cent on everything. It is 0 per cent on qualifying income only, and the conditions are tested annually.
• Believing the rate differs by emirate. It is federal and identical everywhere in the UAE.
• Confusing the corporate tax rate with the 5% VAT rate. They are different taxes with different bases.
• Assuming a low rate means low risk. The fixed penalties: AED 10,000 for late registration, are unrelated to the rate and frequently exceed the tax.

Your next step

1. Start from your accounting profit, then identify the adjustments that apply to your business.
2. Check whether you are within the 0 per cent band after those adjustments, which many smaller businesses are.
3. Consider Small Business Relief if revenue is at or below AED 3,000,000: it is elected in the return, not automatic.
4. Test QFZP status if you are in a free zone, before your year end while the position can still be influenced.
5. Budget for the payment, which falls due with the return: 30 September 2026 for a December year end.

Related questions

Frequently Asked Questions

Last reviewed 27 July 2026. Rates, thresholds and deadlines change, the e-invoicing provider deadline has already moved once. Confirm current requirements with the Federal Tax Authority before acting, or ask us to check your position.