What is the UAE Corporate Tax rate?

The standard rate is 9%, applied only to taxable income above AED 375,000. Profits at or below AED 375,000 are taxed at 0%. Qualifying Free Zone Persons may secure 0% on qualifying income if strict conditions are met. Confirm current rates with the FTA.

Do individuals pay UAE Corporate Tax?

There is no general personal income tax. But an individual carrying on a business or business activity in the UAE must register for Corporate Tax where annual business turnover exceeds AED 1,000,000, and pays 0% up to AED 375,000 of taxable income and 9% above that. Salaries and most personal investment income stay out of scope.

When did UAE Corporate Tax start?

It applies to financial years beginning on or after 1 June 2023 under Federal Decree-Law No. 47 of 2022. The exact first tax period depends on your financial year.

When is the Corporate Tax return due?

The return must be filed and any tax paid within nine months of the end of the relevant tax period. Registration with the FTA is required for all taxable persons, profitable or not.

Are dividends and capital gains taxed?

Dividends and capital gains from qualifying shareholdings can be exempt under the participation rules where conditions are met (such as holding a sufficient percentage of shares). The detail is technical — confirm with a UAE tax adviser.

Does the UAE have a withholding tax?

Withholding tax currently applies at 0%, although the Cabinet may introduce rates or categories in future. Monitor updates and treaty interactions when structuring cross-border payments.

How are tax losses treated?

Tax losses can generally be carried forward to offset up to 75% of taxable income in future periods, subject to continuity-of-ownership and business tests.

UAE Corporate Tax explained: who pays, the 9% rate and the AED 375,000 threshold

For decades the United Arab Emirates was known as a virtually tax-free home for business. That changed when federal Corporate Tax took effect for financial years beginning on or after 1 June 2023, introduced by Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. The headline rate is a competitive 9%, and a generous profit threshold keeps small businesses at 0%. This guide explains who is caught, how the rate works, how free zones are treated, and what you must file — so you can plan rather than react.

Who has to pay UAE Corporate Tax?

Corporate Tax applies to juridical persons — companies and other legal entities incorporated or otherwise formed in the UAE — and to foreign juridical persons that have a permanent establishment in the UAE or earn UAE-sourced income. It also reaches natural persons (individuals) who carry on a business or business activity in the UAE, but only on income from those activities.

Most salaried employees and private investors stay outside the net. Wages, director's fees, most personal investment income, and many personal real-estate returns are not business income. A self-employed professional, sole proprietor, freelancer or influencer can fall in scope once their activity meets the definition of a "business" under the law.

UAE-incorporated companies and other legal entities
Foreign entities that are effectively managed and controlled in the UAE (treated as resident)
Foreign entities with a UAE permanent establishment or UAE-sourced income (taxed on that income)
Individuals carrying on a business — but only where annual business turnover exceeds AED 1,000,000

How does the 9% rate and the AED 375,000 threshold work?

The standard Corporate Tax rate is 9%, but it only bites on taxable income above AED 375,000. Profits at or below that figure are taxed at 0%, which effectively creates a small-business relief band for lower-income earners. Taxable income starts from accounting net profit prepared under IFRS, then is adjusted for items the law treats differently.

Typical adjustments disallow certain expenses (such as fines and penalties), limit interest deductibility, and apply specific rules to unrealised gains and losses. Tax losses can generally be carried forward to offset up to 75% of taxable income in later periods, subject to ownership-continuity and business tests.

What is the difference between a resident and a non-resident person?

A resident person includes any entity incorporated or otherwise established in the UAE, plus a foreign entity that is effectively managed and controlled in the UAE. Resident persons are taxed on their worldwide income, with relief available for foreign taxes paid.

A non-resident person is taxed only on income from a UAE permanent establishment, income from UAE real estate, or other UAE-sourced income not attributable to a permanent establishment. Whether a foreign entity is "effectively managed and controlled" in the UAE is fact-intensive: board-meeting locations, where key decisions are made, and the residency of directors can all matter. Barrett notes that a company incorporated outside the UAE can still be UAE-resident if its place of effective management is here.

How are free-zone companies treated for Corporate Tax?

One of the most important features of the regime is the Qualifying Free Zone Person (QFZP) status, which can secure a 0% rate on "qualifying income". It is not automatic. To qualify, a free-zone entity must maintain adequate substance in the UAE, derive qualifying income, comply with transfer-pricing rules, not elect to be taxed at the standard rate, and avoid disqualifying mainland dealings.

The modern free-zone regime is defined by Cabinet Decision 100/2023 (Qualifying Income), Ministerial Decision 265/2023 (Qualifying/Excluded Activities), and the FTA Free Zone Persons Guide (May 2024). Fail the conditions in any tax period and the entity is taxed at 9% on all income for that period — and may lose the 0% rate in later years. See our separate guide on free zones vs mainland for the detail.

What about transfer pricing and international rules?

For the first time in UAE tax history, businesses are subject to formal transfer-pricing (TP) rules aligned with the OECD. Related-party and connected-person transactions must be on an arm's-length basis and documented — potentially with a Master File and Local File, plus a TP disclosure form filed with the annual return. The rules apply to both domestic and cross-border dealings, so even transactions between a mainland company and a free-zone group company must comply.

The regime also interacts with the UAE's double-taxation agreements (DTAs) and with the OECD's Pillar Two global minimum tax, which can apply to multinational groups with revenues above EUR 750 million and may reduce the benefit of the 9% rate. Even a small UAE business with a related-party loan or service arrangement can face TP documentation requirements.

What do you have to register, file and pay?

All taxable persons must register for Corporate Tax, file an annual return, and pay any tax due within nine months of the end of the relevant tax period. Financial statements must follow IFRS, and certain entities may need them audited. The Federal Tax Authority (FTA) has broad powers to audit, request records, and impose fixed and percentage-based penalties.

A practical step-by-step is below. The core idea, in the author's framing, is that Corporate Tax "is not just a new line item on the balance sheet" — it changes how you account for income, structure operations, and document transactions.

This is general information, not legal or tax advice. UAE tax rules evolve quickly — confirm thresholds, rates and deadlines with the Federal Tax Authority and a qualified UAE tax professional before acting.

Step-by-step: getting Corporate Tax-ready

A simple sequence keeps most businesses compliant and avoids late-registration and understatement penalties.

1. Confirm scope: are you a taxable person (entity, or individual with business turnover over AED 1,000,000)?
2. Register for Corporate Tax with the FTA through the EmaraTax portal.
3. Set your tax period and align bookkeeping to IFRS-based financial statements.
4. If you operate in a free zone, test your QFZP conditions and document substance and qualifying income.
5. Map related-party transactions and prepare transfer-pricing documentation where required.
6. Calculate taxable income (apply the 0% band up to AED 375,000, 9% above it).
7. File the annual return and pay any tax due within nine months of period end; retain records.

Frequently asked questions

What is the UAE Corporate Tax rate?: The standard rate is 9%, applied only to taxable income above AED 375,000. Profits at or below AED 375,000 are taxed at 0%. Qualifying Free Zone Persons may secure 0% on qualifying income if strict conditions are met. Confirm current rates with the FTA.
Do individuals pay UAE Corporate Tax?: There is no general personal income tax. But an individual carrying on a business or business activity in the UAE must register for Corporate Tax where annual business turnover exceeds AED 1,000,000, and pays 0% up to AED 375,000 of taxable income and 9% above that. Salaries and most personal investment income stay out of scope.
When did UAE Corporate Tax start?: It applies to financial years beginning on or after 1 June 2023 under Federal Decree-Law No. 47 of 2022. The exact first tax period depends on your financial year.
When is the Corporate Tax return due?: The return must be filed and any tax paid within nine months of the end of the relevant tax period. Registration with the FTA is required for all taxable persons, profitable or not.
Are dividends and capital gains taxed?: Dividends and capital gains from qualifying shareholdings can be exempt under the participation rules where conditions are met (such as holding a sufficient percentage of shares). The detail is technical — confirm with a UAE tax adviser.
Does the UAE have a withholding tax?: Withholding tax currently applies at 0%, although the Cabinet may introduce rates or categories in future. Monitor updates and treaty interactions when structuring cross-border payments.
How are tax losses treated?: Tax losses can generally be carried forward to offset up to 75% of taxable income in future periods, subject to continuity-of-ownership and business tests.