UAE corporate tax rate: who pays 9% and who pays 0%

Yes, the UAE has a federal corporate tax, set by Federal Decree-Law No. 47 of 2022. For tax periods starting on or after 1 June 2023, a business pays 0% on taxable income up to AED 375,000 and 9% on the part above it. Qualifying free zone persons pay 0% on qualifying income, and large multinational groups are topped up to a 15% effective rate.

Key takeaways

• Corporate tax applies to tax periods starting on or after 1 June 2023, so a calendar-year business was first taxed for 2024.
• Taxable income up to and including AED 375,000 in a tax period is taxed at 0%, and only the part above it at 9%.
• The tax is charged on taxable income, which starts from accounting profit, not on revenue.
• A qualifying free zone person pays 0% on qualifying income and 9% on its other taxable income.
• UAE entities of multinational groups with global revenue of EUR 750 million or more are topped up to a 15% effective rate.

On this page 13 sections

Does the UAE have corporate tax?

Yes. Corporate tax is a direct tax on the net income of companies and other businesses, called corporate income tax or business profits tax in some other countries. The UAE introduced it through Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, issued on 3 October 2022 and made public on 9 December 2022.

When corporate tax started

Tax Periods starting on or after 1 June 2023

The Corporate Tax Law applies to Tax Periods commencing on or after 1 June 2023, so a business first becomes subject to Corporate Tax from the start of its first financial year beginning on or after that date.

A tax period is normally the business’s financial year: the calendar year, or the 12-month period for which it prepares financial statements (Article 57). A business that was already trading, with a financial year from January to December, therefore had its first tax period from 1 January to 31 December 2024.

The tax is self-assessed. The business works out its own taxable income and tax and pays it through the corporate tax return it files with the Federal Tax Authority (FTA), generally once a year. Corporate tax is separate from VAT, which has its own rates and exemptions.

The two rates: 0% and 9%

There are two rates, and they work as bands: 0% on the first AED 375,000 of taxable income in a tax period and 9% on the rest. Article 3 of the law sets the 9% rate and leaves the size of the 0% band to the Cabinet, which fixed it in Cabinet Decision No. 116 of 2022.

Standard corporate tax rate

9%

UAE Corporate Tax is charged at 9% on the part of a Taxable Person's Taxable Income that exceeds the threshold set by Cabinet Decision, and at 0% on the part up to that threshold.

Upper limit of the 0% band

AED 375,000

The 0% Corporate Tax band covers Taxable Income up to and including AED 375,000 in a Tax Period; Taxable Income above AED 375,000 is taxed at 9%. The band applies once per Taxable Person, regardless of how many businesses it carries on.

How the 0% band works

The band is not a threshold that switches the whole income to 9% once it is crossed. A business taxed at the standard rates keeps the band however large its income, and 9% applies only to the part above AED 375,000. Taxable income of exactly AED 375,000 gives no tax; taxable income of AED 375,001 gives 9% of AED 1, which is 9 fils.

This is why the headline 9% overstates the tax on smaller incomes. The effective rate, meaning the tax divided by the whole taxable income, is always below 9% and comes close to it only at high incomes.

One band per taxable person

The band is given once per taxable person in each tax period, not once per business or licence. An individual who runs two licensed businesses has one AED 375,000 band for their combined taxable income. Branches work the same way: a UAE branch of a resident company is treated as the same taxable person as the company (Article 11(5)), so the branch’s income shares the company’s band.

Worked example: tax on AED 500,000 and AED 2,000,000

On taxable income of AED 500,000 the tax is AED 11,250, an effective rate of 2.25%. On AED 2,000,000 it is AED 146,250, an effective rate of about 7.31%.

Worked example

Taxable income of AED 500,000 in one tax period

The income figure is an illustration, for a business taxed at the standard rates.

1. The first AED 375,000 falls in the 0% band: tax AED 0.
2. The part above the band is AED 500,000 minus AED 375,000, which is AED 125,000.
3. Tax on that part is AED 125,000 × 9% = AED 11,250.
4. The effective rate is AED 11,250 ÷ AED 500,000 = 2.25%.

Corporate tax due: AED 11,250, an effective rate of 2.25%.

Worked example

Taxable income of AED 2,000,000 in one tax period

The income figure is an illustration, for a business taxed at the standard rates.

1. The first AED 375,000 falls in the 0% band: tax AED 0.
2. The part above the band is AED 2,000,000 minus AED 375,000, which is AED 1,625,000.
3. Tax on that part is AED 1,625,000 × 9% = AED 146,250.
4. The effective rate is AED 146,250 ÷ AED 2,000,000 = 7.3125%, about 7.31%.

Corporate tax due: AED 146,250, an effective rate of about 7.31%.

The same arithmetic at other levels shows the effective rate climbing towards 9% without reaching it. All income figures in the table are illustrations, and the effective rates are rounded to two decimal places.

These figures assume a business that pays the standard rates: not a qualifying free zone person, not using small business relief and not in scope of the top-up tax.

Taxable income is not revenue

The rates apply to taxable income, not to sales. Under Article 20 of the law, taxable income is worked out separately for each taxable person from its standalone financial statements, prepared under accounting standards accepted in the UAE. The starting point is accounting income, meaning net profit or loss before tax. That figure is then adjusted where the law requires, among other things for exempt income, reliefs, deductions, transactions with related parties and connected persons, and relief for tax losses. Two limits show that deductions and past losses cannot always reduce taxable income as far as the accounts alone would suggest:

Cap on using carried-forward tax losses

75%

Tax Losses carried forward can reduce the Taxable Income of a later Tax Period by no more than 75% of that period's Taxable Income before loss relief; losses from before Corporate Tax started, or before the person became a Taxable Person, cannot be used.

Cap on net interest deductions

Higher of 30% of EBITDA or AED 12,000,000

Net interest expenditure is deductible up to the higher of 30% of adjusted EBITDA or a safe-harbour amount of AED 12 million for the Tax Period; disallowed net interest can be carried forward for up to 10 Tax Periods.

Who pays corporate tax

Corporate tax is paid by taxable persons: companies and other persons resident in the UAE, and non-residents with a taxable connection to the UAE. Individuals are taxable only for business income above a turnover threshold.

Who is a taxable person

Resident Persons and Non-Resident Persons

A Taxable Person is either a Resident Person (a juridical person incorporated, established or recognised in the UAE including a Free Zone Person, a foreign juridical person effectively managed and controlled in the UAE, or a natural person conducting a Business or Business Activity in the UAE) or a Non-Resident Person with a Permanent Establishment, State Sourced Income or a nexus in the UAE.

Companies, including free zone companies

Every company set up in the UAE is a resident taxable person unless it is exempt, whether it holds a mainland or a free zone licence. A resident company is taxed on its income from the UAE and from abroad (Article 12(1)). Free zone companies must register for corporate tax like any other taxable person; the rate they pay depends on whether they are qualifying free zone persons. Mainland vs free zone compares the two set-ups more widely.

Individuals and freelancers

Individuals pay corporate tax only on income from a business, and only above a turnover threshold.

Turnover threshold for individuals

AED 1,000,000 turnover per calendar year

An individual carrying on a Business or Business Activity in the UAE is subject to Corporate Tax and must register only if the combined turnover of those activities exceeds AED 1 million in a calendar year; salary, personal investment income and unlicensed real estate income are out of scope.

The Ministry of Finance gives this example: a UAE resident whose online business has a combined annual turnover above AED 1 million is taxed on the income from that business, while their rental income and personal investments stay outside corporate tax. The AED 1 million test only decides whether an individual is in scope. Once in scope, the tax is worked out on the taxable income of the business, with the same 0% and 9% bands as a company.

Foreign companies and non-residents

A foreign company that is effectively managed and controlled in the UAE counts as a resident person and is taxed like a UAE company (Article 11(3)). Any other foreign company pays UAE corporate tax only on income linked to the UAE. A non-resident person is taxed on the taxable income of its permanent establishment in the UAE, or of a nexus set by Cabinet decision, under Article 12(3). Other income it earns from UAE sources falls under withholding tax.

Withholding tax rate

0%

UAE-sourced income of a Non-Resident Person that is not attributable to a Permanent Establishment or nexus in the UAE is subject to Withholding Tax at 0%, unless the Cabinet sets other rates for specific categories.

Withholding tax is a form of corporate tax collected at source by the payer on behalf of the recipient. At 0%, the amount withheld is nil. Who has to register, and by when, is explained in how to register for corporate tax.

Who is exempt

Some persons are exempt from corporate tax altogether. Article 4 of the law lists them:

• government entities, and government controlled entities named in a Cabinet decision;
• extractive and non-extractive natural resource businesses that meet the conditions of the law;
• qualifying public benefit entities;
• qualifying investment funds;
• public pension and social security funds, and private ones regulated in the UAE;
• UAE companies wholly owned and controlled by a government entity, a government controlled entity, a qualifying investment fund or a pension or social security fund, where the company carries on all or part of that owner’s activity, only holds assets or invests funds for it, or carries on only ancillary activities;
• any other person the Cabinet adds by decision. Cabinet Decision No. 55 of 2025, for example, extended the exemption to certain foreign companies wholly owned by such exempt owners, subject to conditions.

Exemption is not always automatic. Investment funds, pension and social security funds, wholly owned subsidiaries and persons added by the Cabinet must apply to the FTA to be exempt (Article 4(3)). An exempt person that fails a condition at any time during a tax period stops being exempt from the start of that period, unless the Minister has set conditions for it to continue (Article 4(5) and (6)). The exemption also has edges: a government entity that runs a business under a licence from a licensing authority is taxed on that business (Article 5(2)), a government controlled entity is taxed on business outside its mandated activities (Article 6(2)), a natural resource business can be taxed on other businesses it carries on (Articles 7 and 8), and the FTA may ask certain exempt persons to register.

Free zone companies: 0% on qualifying income

A free zone company pays 0% only if it is a qualifying free zone person, and then only on its qualifying income.

Qualifying free zone person rates

0% on Qualifying Income; 9% on other Taxable Income

A Qualifying Free Zone Person pays Corporate Tax at 0% on its Qualifying Income and at 9% on Taxable Income that is not Qualifying Income, provided it keeps meeting all the conditions (adequate substance, Qualifying Income, no election into the standard regime, transfer pricing compliance, audited financial statements, de minimis test).

Article 3(2) sets these rates in a clause of their own, with no AED 375,000 band. A free zone company that does not meet the conditions, or that elects under Article 19 to be taxed at the standard rates, pays 0% and 9% like a mainland company. Which activities and income qualify is set out in the qualifying free zone person rules.

Small businesses: relief until 2029

A small resident business can choose to be treated as having no taxable income, which means no corporate tax, while its revenue stays within this limit:

Small business relief revenue limit

AED 3,000,000 revenue

A resident Taxable Person can elect Small Business Relief, and be treated as having no Taxable Income, for a Tax Period in which its Revenue, and its Revenue in every previous Tax Period, does not exceed AED 3 million; once Revenue exceeds AED 3 million in any Tax Period, the relief is no longer available.

Tax periods covered by the relief

Tax Periods ending on or before 31 December 2029

Small Business Relief applies to Tax Periods starting on or after 1 June 2023 and to later Tax Periods that end on or before 31 December 2029, extended from the original end date of 31 December 2026.

The relief is an election, not an exemption: a business that uses it is still a taxable person, so it registers and files a return. It is not open to qualifying free zone persons or to members of multinational groups with consolidated revenue of AED 3.15 billion or more. In a period where it is elected, exempt income, reliefs, deductions and tax loss relief do not apply (Article 21(2)). The conditions and the election are explained in small business relief.

Large multinational groups: the 15% top-up tax

Only the UAE entities of very large multinational groups face a 15% effective rate, through the Domestic Minimum Top-up Tax.

Domestic Minimum Top-up Tax

15% minimum effective rate; EUR 750 million group revenue

The UAE Domestic Minimum Top-up Tax applies, for financial years starting on or after 1 January 2025, to UAE entities of multinational groups with annual global revenue of EUR 750 million or more in at least two of the four preceding financial years, topping their effective tax rate up to 15%.

The top-up tax rests on Article 3(3) of the law, added by Federal Decree-Law No. 60 of 2023, and is closely aligned with the OECD’s global minimum tax rules, known as Pillar Two. Investment entities are outside it, and so are groups in the initial phase of international activity where no Income Inclusion Rule applies to any of their UAE entities. At this stage the UAE has decided not to apply an Income Inclusion Rule. The Ministry of Finance explains that the domestic top-up tax keeps other countries from collecting top-up tax on the UAE profits of in-scope groups.

Is the rate different in Dubai or Abu Dhabi?

Not for corporate tax. Corporate tax is a federal tax under a federal decree-law and is administered by the FTA, so the same rates apply in Dubai, Abu Dhabi and every other emirate. A business taxed at the standard rates pays 0% up to AED 375,000 of taxable income and 9% above it, and a qualifying free zone person pays 0% on qualifying income, whichever emirate or free zone it is in. Registration, the return and payment all go to the FTA, wherever the business holds its licence.

A few businesses are taxed at emirate level instead of, or as well as, corporate tax. Oil, gas and other natural resource businesses are exempt from corporate tax only where they are effectively taxed under the legislation of an emirate (Articles 7 and 8). Dubai taxes foreign banks operating in the emirate, including in its free zones, under its own Law No. 1 of 2024: 20% of taxable income, less the federal corporate tax rate the bank pays. Returns under that law go to the Dubai Department of Finance, not the FTA, and it does not cover the income that foreign banks licensed in the Dubai International Financial Centre earn from their business there.

Registration, returns and deadlines

Taxable persons, including free zone persons and businesses that use small business relief, must register with the FTA and obtain a corporate tax registration number. The return must then be filed, and the tax paid, within nine months after the end of each tax period, unless the FTA sets another date (Articles 48 and 53). What the return contains and how it is filed is covered in the corporate tax return and its deadline. Late registration, filing and payment can lead to administrative penalties, which are set under the Tax Procedures Law and its implementing decisions (Article 60) and explained in corporate tax penalties. Every guide on the subject is listed on the corporate tax guides page.