UAE Corporate Tax 2026: What Every Business Owner Needs to Know
The UAE corporate tax came into effect for financial years starting on or after 1 June 2023. If your business year started January 2024, your first tax filing was due in 2025. For most businesses on a calendar year, 2026 means your third year of compliance.
The headlines — 9% above AED 375,000, free zones at 0% — are accurate but incomplete. Here is a more complete picture.
The basic structure
UAE corporate tax is levied on the net taxable income of UAE businesses under Federal Decree-Law No. 47 of 2022.
| Taxable income | Rate |
|---|---|
| AED 0 – 375,000 | 0% |
| Above AED 375,000 | 9% |
| Multinationals (Pillar Two) | 15% (if applicable) |
Net taxable income means revenue minus deductible expenses. Not revenue itself. A company earning AED 2 million in revenue but spending AED 1.7 million on costs has a taxable income of AED 300,000 — which falls entirely in the 0% band.
The Corporate Tax Calculator lets you input revenue and deductible expenses to estimate your liability quickly.
Who is subject to UAE corporate tax?
Every business that generates income in the UAE is potentially subject, including:
Not subject to UAE corporate tax:
Free zones: the important distinction
Free zones still offer tax advantages — but not blanket 0% on everything anymore.
A free zone business pays 0% on Qualifying Income and 9% on Non-Qualifying Income.
Qualifying Income generally includes:
Non-Qualifying Income generally includes:
If a free zone company derives any significant income from the UAE mainland, it risks losing its Qualifying Free Zone Person status entirely — making all income subject to 9%. Getting this classification right is important and worth professional advice.
Small Business Relief
Businesses with annual revenue of AED 3 million or less can elect for Small Business Relief, which effectively reduces their tax liability to AED 0 regardless of profit. This relief applies for tax periods from January 2023 to December 2026, and must be actively elected in the tax return.
This is significant for startups, freelancers, and small consultancies. A profitable AED 2.5M revenue business can elect for relief and pay nothing — but they must still register and file.
What counts as a deductible expense?
Common deductible expenses include:
Not deductible:
Transfer pricing
If your company has related-party transactions — loans to/from shareholders, services from group companies, intercompany pricing — these must be at arm's length and documented. The UAE follows OECD transfer pricing guidelines. This is an area where many small businesses are unexpectedly non-compliant.
Key dates and compliance
FAQ
Q: I'm a freelancer on a freelance permit. Do I owe corporate tax?
Possibly. If your annual revenue exceeds AED 1 million, you are required to register. If it exceeds AED 3 million (meaning Small Business Relief no longer applies) and you have taxable profit above AED 375,000, you owe 9% on the excess. Below AED 3M revenue, elect for Small Business Relief.
Q: My free zone company sells to UAE mainland customers. What's my tax position?
Income from mainland customers is typically Non-Qualifying Income. If this forms a significant part of revenue, you may lose Qualifying Free Zone Person status. Seek FTA guidance or professional advice specific to your activity.
Q: Does corporate tax affect personal savings or investments?
No. Personal income in the UAE remains entirely untaxed. Corporate tax only applies at the entity level. Dividends paid from after-tax profits to individual shareholders are not taxed again at the personal level.
Q: What if I miss the filing deadline?
The FTA charges penalties for late registration (AED 10,000), late filing (AED 1,000–10,000 escalating), and late payment (2% monthly on unpaid tax). Register early and file on time.