What Is the Corporate Tax Rate in the UAE?

The UAE corporate tax rate is 9%, and it applies only to taxable income above AED 375,000. Taxable income up to AED 375,000 is taxed at 0%. The regime is set by Federal Decree-Law No. 47 of 2022, applies to financial years starting on or after 1 June 2023, and is administered by the Federal Tax Authority.

The two headline rates

UAE corporate tax uses a simple two-tier structure. The first slice of taxable income is taxed at zero, and only the income above the threshold is taxed at the standard rate.

This structure is deliberately designed to keep the burden light on small businesses and startups, while bringing the UAE into line with international tax norms. The 9% headline rate remains one of the lowest of any major economy.

When the regime took effect

Corporate tax applies to financial years starting on or after 1 June 2023. The start date depends on the business's financial year. A business with a December year-end has its first corporate tax period begin on 1 January 2024. A business whose year runs, say, 1 June to 31 May had its first period begin on 1 June 2023.

Who the corporate tax rate applies to

Corporate tax is not limited to companies. It applies to:

• Juridical persons, meaning UAE incorporated companies, including mainland and free zone companies, and other entities with separate legal personality.
• Natural persons conducting a business or business activity in the UAE, such as sole establishments and individual partners in an unincorporated partnership, but only where their total turnover from that business activity exceeds AED 1 million in a calendar year. Employment income, personal investment income and real estate investment income held in a personal capacity are outside the scope of corporate tax for natural persons.
• Non-resident persons with a permanent establishment in the UAE, or UAE-sourced income, are also brought within the regime on that UAE-connected income.

Registration is mandatory for persons within scope even if the business ultimately pays no tax because its taxable income falls under AED 375,000 or Small Business Relief is elected. The rate structure describes how much is owed once you are in the regime, not whether you need to register.

How the AED 375,000 threshold works

The threshold is a band, not a relief you apply for. Every business within the regime gets its first AED 375,000 of taxable income taxed at 0%, and pays 9% only on the portion above that.

For example, a business with taxable income of AED 500,000 does not pay 9% on the whole amount. It pays 0% on the first AED 375,000 and 9% on the remaining AED 125,000, a corporate tax bill of AED 11,250.

You can estimate your own figure with our free UAE Corporate Tax Calculator.

It is also important to note that the 9% is charged on taxable income, which is broadly your accounting profit adjusted for specific tax rules, not on your revenue. Turnover is not what is taxed, profit is.

Free zones and the 0% qualifying rate

Free zone businesses are not outside the corporate tax system. They must register and file like any other business. A Qualifying Free Zone Person pays 0% on its qualifying income and 9% on income that is not qualifying, and the AED 375,000 zero-rate band does not apply to that non-qualifying income. A free zone person can elect to be taxed under the standard rules instead, and doing so means it is no longer a Qualifying Free Zone Person.

The takeaway is that a free zone licence does not automatically mean no tax. It means a business may access a 0% rate on part or all of its income if it satisfies the conditions, and registration and filing are still mandatory regardless.

Small Business Relief

Small Business Relief is a revenue test, not a profit test. A business with revenue at or below AED 3,000,000 can elect to be treated as having no taxable income, for tax periods ending on or before 31 December 2026. It must be actively elected in the return, and it is not available to Qualifying Free Zone Persons or to members of large multinational groups that fall within the Domestic Minimum Top-up Tax.

The 15% Domestic Minimum Top-up Tax

Large multinational groups face an additional layer. The UAE has introduced a Domestic Minimum Top-up Tax that ensures an effective tax rate of at least 15% for groups with consolidated global revenue of EUR 750 million or more in at least two of the four financial years immediately preceding the relevant financial year. It applies to financial years starting on or after 1 January 2025 and aligns the UAE with the OECD's Pillar Two global minimum tax framework.

This affects only very large multinationals. The vast majority of UAE businesses are not in scope and continue to be taxed under the standard 0% and 9% structure described above. Free zone entities that belong to such a group can still fall within the top-up tax, even where their qualifying income is taxed at 0% under the standard corporate tax rules, because the minimum-tax calculation works differently and looks at the group's effective tax rate as a whole.

What this means for your business

For most businesses in the UAE, the position is straightforward: 0% on the first AED 375,000 of taxable income and 9% above it, with registration and filing obligations that apply regardless of whether any tax is due. The detail that catches businesses out is usually not the rate, it is the registration deadlines, the free zone conditions, and the adjustments that turn accounting profit into taxable income. Our corporate tax services cover registration, return filing and advisory, so nothing is missed.