A clear breakdown of UAE Corporate Tax for small businesses — the 0% and 9% rates, the AED 375,000 threshold, who has to register, and how taxable income is worked out.
For decades, the UAE was known as a place where most businesses paid no tax on their profits. That changed when federal Corporate Tax took effect for financial years beginning on or after 1 June 2023. If you own or run a company here, it now affects you — but for most small businesses, the system is more generous and more manageable than the headlines suggest.
Here is what Corporate Tax actually involves, who it applies to, and how the numbers work.
What is UAE Corporate Tax?
Corporate Tax is a direct tax on the net profit of businesses. Unlike VAT, which is charged on transactions and collected from customers, Corporate Tax is paid by the business itself on what it earns after expenses. It is administered by the Federal Tax Authority through the EmaraTax portal, the same system used for VAT.
The tax was introduced to align the UAE with international standards while keeping the country highly competitive. The rates reflect that balance.
The Corporate Tax rates
There are two headline rates for ordinary businesses:
- 0% on taxable income up to AED 375,000
- 9% on taxable income above AED 375,000
So a company with AED 500,000 of taxable income pays nothing on the first AED 375,000 and 9% on the remaining AED 125,000 — a bill of AED 11,250, not 9% of the whole amount. That tiered design deliberately protects smaller businesses.
A third rate exists but rarely touches local SMEs: a 15% Domestic Minimum Top-up Tax applies to very large multinational groups with global revenue of at least EUR 750 million, in line with the OECD’s global minimum tax rules. If that is not your business, you can set it aside.
Who has to register for Corporate Tax?
This is where many owners get caught out, so it is worth being precise. Registration and the obligation to pay are two different things.
Almost every business must register, even if it will ultimately pay 0%. That includes:
- Mainland companies (LLCs and others)
- Free zone companies, including those that qualify for the 0% free zone rate
- Sole establishments and civil companies carrying on a business
Natural persons — individuals — are treated a little differently. An individual is only within Corporate Tax if their total turnover from business or business activity exceeds AED 1 million in a calendar year. Salary from employment, personal investment income and personal real estate income are generally outside the scope.
The key point: being below AED 375,000 in profit, or planning to claim relief, does not exempt you from registering. You still need a Corporate Tax registration number, and there are registration deadlines with a penalty for missing them.
How taxable income is calculated
Corporate Tax starts from your accounting profit — the net profit shown in financial statements prepared under accepted accounting standards. From there, specific adjustments are made to reach taxable income. Common adjustments include:
- Adding back expenses that are not deductible (for example, certain fines or non-business costs)
- Applying the rules on entertainment expenses, which are only partly deductible
- Applying interest deduction limitations where relevant
- Removing income that is exempt from Corporate Tax
For a straightforward small business with clean books, the gap between accounting profit and taxable income is often small. For more complex structures, the adjustments matter and are worth getting right.
Exempt income and exempt persons
Not everything is taxed. Certain bodies are exempt outright, such as government entities, qualifying public benefit organisations and qualifying investment funds, usually subject to conditions. There are also categories of exempt income designed to avoid double taxation, including qualifying dividends and certain gains from substantial shareholdings under the participation exemption.
Most trading SMEs will not rely on these, but they explain why two businesses with similar revenue can have very different tax positions.
Free zone companies
Free zones keep a meaningful advantage. A business that meets the conditions to be a Qualifying Free Zone Person can pay 0% on its qualifying income and 9% only on income that does not qualify. The conditions are detailed — they cover the nature of your income, having adequate substance in the zone, and not having elected out — so free zone businesses should confirm their status carefully. We cover this in our guide to Corporate Tax for free zone companies.
Small Business Relief
If your business is resident and your revenue is AED 3 million or less, you may be able to elect for Small Business Relief, which treats you as having no taxable income for the period. It is available for tax periods ending on or before 31 December 2026. You still register and file, but you pay no Corporate Tax while you qualify. Our article on Small Business Relief explains how to claim it.
Filing and payment deadlines
Corporate Tax works on an annual cycle tied to your tax period, which usually matches your financial year. You must file one Corporate Tax return and pay any tax due within nine months of the end of the tax period.
For a company with a financial year ending 31 December 2024, the first return and payment are due by 30 September 2025. There is a single deadline for both filing and payment — there are no separate provisional or quarterly Corporate Tax payments for most businesses.
Keeping the right records
Because taxable income is built from your accounts, good bookkeeping is now a tax requirement, not just good practice. You are expected to keep financial records and supporting documents that allow your Corporate Tax position to be verified, generally for at least seven years. Our guide to record-keeping for UAE tax sets out what to keep and for how long.
What this means for your business
For the typical UAE small business, Corporate Tax comes down to a short checklist:
- Register with the FTA and get your Corporate Tax number, regardless of profit.
- Keep proper accounts through the year so your taxable income can be calculated.
- File one return within nine months of your year-end, applying any relief you qualify for.
- Pay 9% only on taxable income above AED 375,000 — and often nothing, thanks to the threshold or Small Business Relief.
How Tax Assist UAE can help
Corporate Tax is new enough that even experienced owners have questions about where they stand. We handle Corporate Tax registration from AED 100 and prepare and file Corporate Tax returns from your accounts, applying every relief you are entitled to. If you are unsure whether you need to register, or when your deadline falls, message us with your trade licence details and we will give you a clear answer.
Tax Assist UAE takes care of VAT and Corporate Tax registration and filing for UAE small businesses — for a clear fixed fee.
This article is general information, not tax advice. UAE tax rules, rates and deadlines are set by the Federal Tax Authority and can change. Confirm your position with the FTA or a qualified advisor before acting.
