Buyer Guides · 4 min read
UAE Corporate Tax Explained: What Business Owners Need to Know (2026)
The EQT Private Office · RERA-registered brokerage · Published August 28, 2026 · Updated September 24, 2026
The UAE charges federal corporate tax at a headline rate of 9% on business profits, for financial years starting on or after 1 June 2023. The first AED 375,000 of taxable profit is taxed at 0%, and only profit above that threshold at 9%. A free zone business with real substance can still pay 0% on qualifying income if it meets strict conditions. The tax covers mainland and free zone companies, and individuals who run a business above set revenue limits. Almost every taxable person must register with the Federal Tax Authority and file an annual return, even when no tax is due. Company-held property is covered below.
Key takeaways
- •The standard rate is 9% on taxable profit above AED 375,000, and 0% on the first AED 375,000.
- •It applies to financial years beginning on or after 1 June 2023, administered by the Federal Tax Authority through EmaraTax.
- •Mainland and free zone companies are in scope, along with individuals whose business turnover passes AED 1 million in a calendar year.
- •A Qualifying Free Zone Person can keep a 0% rate on qualifying income, but only if it meets all the conditions.
- •Small Business Relief lets eligible resident businesses treat taxable income as zero, but only for tax periods ending on or before 31 December 2026.
- •Registration and annual filing are compulsory for most taxable persons, even when the tax payable is zero.
The 9% rate and the AED 375,000 threshold
UAE corporate tax has two bands. The first AED 375,000 of taxable profit in a tax period is taxed at 0%, and anything above AED 375,000 at the standard rate of 9%.
The threshold protects start-ups and small businesses, so a company with a modest profit can owe nothing. With AED 500,000 of taxable profit, for example, you pay 0% on the first AED 375,000 and 9% on the remaining AED 125,000.
Taxable profit starts from the accounting profit in financial statements prepared under accepted standards, adjusted for specific items the law sets out. It is not revenue or turnover, so keep careful books.
When it took effect and who administers it
Federal Decree-Law No. 47 of 2022 introduced corporate tax for financial years beginning on or after 1 June 2023. A business with a 1 January to 31 December financial year, for example, entered the regime on 1 January 2024.
The Federal Tax Authority (FTA) runs the tax through its online EmaraTax portal, handling registration, returns, payment, queries and audits.
Since the start date follows each company's own financial year, two similar companies can have different first tax periods.
Who it applies to
Corporate tax reaches most businesses operating in or from the UAE. Mainland companies are in scope, and so are free zone companies, even where some of their income may end up taxed at 0%.
Individuals fall in scope only when they carry on a business or business activity. A natural person must register once the combined turnover of their business activities passes AED 1 million in a Gregorian calendar year.
Some personal income sits outside the tax entirely: employment salary, dividends from shares, and income from real estate an individual holds privately do not count as business income. Government entities, certain qualifying public benefit bodies and some other categories may also be exempt, subject to conditions.
Free zone qualifying income at 0%
The UAE kept a version of the old free zone incentive through the Qualifying Free Zone Person (QFZP). A QFZP pays 0% on qualifying income and 9% on non-qualifying income.
Getting and keeping QFZP status comes with conditions. In broad terms the business must maintain adequate substance in the UAE, earn qualifying income as the rules define it, comply with transfer pricing requirements, not have elected out of the regime, and stay within the permitted limits for non-qualifying revenue.
A free zone address alone does not exempt a company. Miss a condition, or earn income outside the qualifying categories, and the standard 9% rate can apply. The detail is heavy enough that specialist advice pays for itself here.
Registration, filing, and small business relief
Most taxable persons must register for corporate tax with the FTA and obtain a tax registration number, even if they expect to owe nothing. Registration deadlines depend on your category and, for many businesses, the month the licence was issued.
You file once a year. The return is due within nine months of the end of the tax period, and you pay any tax in the same window. You still file when no tax is payable.
Small Business Relief is an elective relief for UAE resident persons with revenue at or below AED 3 million in the relevant tax period. If you claim it, the business is treated as having no taxable income for that period, though you must still register, file and keep records. Under current rules it covers only tax periods ending on or before 31 December 2026, so eligible businesses should plan for the standard regime after that date.
How it interacts with owning property through a company
Many buyers in Dubai hold real estate through a company for succession, privacy or portfolio reasons. Corporate tax can change how that structure is treated, so understand it before you buy.
When a company earns income from UAE property, such as rent, that income forms part of its taxable profit and can be taxed at 9% above the AED 375,000 threshold. An individual who holds property personally as a private investment, and not as a business, falls outside corporate tax on that property income.
The right structure depends on your goals, how many properties you hold and their value, financing, and your tax position at home. The answer differs from owner to owner, so take advice before you choose.
Our private office works alongside clients' tax and legal advisers to make sure a Dubai property purchase fits the ownership structure they need. If you would like an introduction or a discreet conversation about a purchase, we are happy to help.
None of this is tax advice, and it does not cover every situation. Rules change, so confirm your position, including your first tax period, with the Federal Tax Authority at tax.gov.ae or a qualified tax adviser before you act.
Frequently asked
What is the UAE corporate tax rate in 2026?+
The standard rate is 9% on taxable profit above AED 375,000, and the first AED 375,000 is taxed at 0%. A Qualifying Free Zone Person can pay 0% on qualifying income where it meets all the conditions.
When did UAE corporate tax come into effect?+
It applies to financial years starting on or after 1 June 2023, under Federal Decree-Law No. 47 of 2022. Your first tax period depends on when your own financial year begins, so it can differ from another company's.
Do free zone companies pay corporate tax?+
Free zone companies are inside the regime. A Qualifying Free Zone Person can pay 0% on qualifying income if it meets all the conditions, such as adequate substance and transfer pricing compliance. Non-qualifying income can be taxed at 9%.
Do individuals pay corporate tax in Dubai?+
Only when they carry on a business. A natural person must register once the combined turnover of their business activities passes AED 1 million in a calendar year. Salary, share dividends and income from privately held real estate do not count as business income.
Is there any relief for small businesses?+
Yes. Small Business Relief lets eligible UAE resident persons with revenue at or below AED 3 million treat their taxable income as zero for a period. It is elective, you still register and file, and under current rules it covers only tax periods ending on or before 31 December 2026.
Is rental income from property taxed under corporate tax?+
That depends on who holds the property. Rent earned by a company forms part of its taxable profit and can be taxed at 9% above the AED 375,000 threshold. An individual holding property personally as a private investment is outside corporate tax on that income. A qualified adviser can confirm your position.
