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UAE Corporate Tax Guide 2026: Everything Businesses Need to Know

Updated 16 March 2026

The UAE introduced federal corporate tax in June 2023. For a country that built its reputation partly on zero taxes, this was a significant shift.

The good news: for most small businesses and freelancers, the practical impact is limited. The 9% rate only kicks in above AED 375,000 in taxable income, and free zone companies on qualifying income still pay zero.

The bad news: everyone needs to register and file, regardless of whether they owe anything.

Here’s what you actually need to know.

The Basics

Rate: 9% on taxable income above AED 375,000 per year.

0% rate: Income up to AED 375,000 is taxed at 0%.

Effective from: Financial years beginning on or after 1 June 2023. If your financial year starts 1 January, you became subject to corporate tax from 1 January 2024.

Administered by: The Federal Tax Authority (FTA) — the same body that manages UAE VAT.

Legal basis: Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.

Who Pays UAE Corporate Tax?

Corporate tax applies to:

  • UAE-incorporated companies (mainland and free zone)
  • Foreign companies effectively managed from the UAE (management decisions made in UAE)
  • Individuals with UAE business income above AED 1 million/year (freelancers operating without a trade licence fall into this if turnover is high enough)

This covers the vast majority of businesses operating in the UAE.

Who Is Exempt?

Government entities: UAE federal and emirate-level government bodies are exempt.

Qualifying public benefit entities: Charities, foundations, and public interest organisations on the approved list.

Qualifying investment funds: Regulated investment funds meeting specific criteria.

UAE sourced dividends and capital gains: In most cases, dividends from UAE subsidiaries and capital gains on UAE investments are not taxed at the holding company level.

Extractive businesses: Oil, gas, and natural resource companies are subject to emirate-level taxation, not federal corporate tax.

The Free Zone Question

Free zone companies have a separate regime, and it’s more nuanced than “you don’t pay tax.”

Qualifying Free Zone Persons (QFZPs) pay 0% on “qualifying income” — income from:

  • International transactions
  • Transactions with other free zone companies
  • Qualifying activities (manufacturing, processing, certain financial services)

Non-qualifying income is taxed at 9%. This includes:

  • Income from UAE mainland clients or customers
  • Passive income below certain thresholds
  • Income from excluded activities (retail, real estate to individuals, banking to consumers)

If your free zone company earns even a small amount of non-qualifying income, your entire income can become subject to the 9% rate — this is the “tainted income” issue. Getting this right requires advice from a UAE tax professional if your situation is mixed.

Practical rule of thumb: If you’re a free zone company doing entirely international business, you’re likely fine at 0%. If you have mainland UAE clients, get proper advice.

Small Business Relief

This is the most important exemption for small businesses.

If your revenue is below AED 3 million for the tax period, you can elect for Small Business Relief. Under this relief, your taxable income is treated as zero — meaning you pay no corporate tax.

Important: You still need to register and file a tax return. You just elect for the relief and pay nothing.

Deadline: Small Business Relief is available for tax periods ending on or before 31 December 2026. The FTA has not announced an extension beyond this date yet — this is worth monitoring.

For the overwhelming majority of UAE freelancers, consultants, and small company owners, Small Business Relief means zero corporate tax liability for now.

How to Register for Corporate Tax

All businesses must register, even if they expect to pay zero. Non-registration is a violation that carries a AED 10,000 penalty.

How to register:

  1. Go to the FTA EmaraTax portal: eservices.tax.gov.ae
  2. Create or log in with your UAE Pass account
  3. Select “Corporate Tax Registration”
  4. Complete the registration form (entity details, trade licence, financial year start date)
  5. Submit and receive your Tax Registration Number (TRN)

Registration deadlines vary based on your licence issuance date. The FTA issued a series of deadlines throughout 2023-2024. If you haven’t registered yet and your business was active before June 2023, register immediately — late registration penalties apply.

New businesses: register within 3 months of your financial year start.

Filing Your Tax Return

After registration, you file an annual corporate tax return.

Deadline: Within 9 months of the end of your financial year.

So if your financial year ends 31 December 2024, your return is due by 30 September 2025.

What you need:

  • Audited or unaudited financial statements (depending on your entity size)
  • Calculation of taxable income
  • Any elections made (Small Business Relief, etc.)

Filing: All through the EmaraTax portal. The FTA has guidance documents on the portal, and there’s an active ecosystem of UAE tax advisors who can handle this for AED 2,000-8,000 depending on company size.

What About VAT?

Corporate tax and VAT are separate systems. If your business turnover exceeds AED 375,000, you’re likely already registered for VAT (or should be). The corporate tax registration is a separate process even if you have a VAT TRN.

See our detailed guide on the VAT side: UAE VAT Registration Guide

Transfer Pricing

If your UAE business has transactions with related parties (e.g., your UAE company pays a licence fee to your offshore holding company), those transactions must be at arm’s length — meaning market rate.

The UAE has adopted OECD transfer pricing guidelines. If your related-party transactions exceed AED 40 million, you’ll need a formal transfer pricing disclosure. Below that, the arm’s length principle still applies but the documentation requirements are lighter.

Penalties Summary

ViolationPenalty
Failure to registerAED 10,000
Late tax return filingAED 500-20,000 depending on delay
Failure to keep recordsAED 10,000-50,000
Underpayment of tax14% annualised on unpaid amount

The FTA has indicated a degree of leniency for first-time filers during the transition period, but penalties are real and escalate with time.

Practical Summary

You’re a freelancer or small company under AED 3 million revenue: Register for CT, elect Small Business Relief, file your return on time, pay nothing. Cost is time (a few hours) or a small accountant fee.

You’re a growing mainland company above AED 375,000 profit: You pay 9% on the income above AED 375,000. Get an accountant to handle your filings properly.

You’re a free zone company doing international business only: You’re likely at 0% as a qualifying free zone person. Still register and file.

You’re a free zone company with UAE mainland clients: Get professional advice before your first filing — the qualifying income rules are detailed and getting them wrong is expensive.

For general UAE business structure questions, the foundation is here: Mainland vs Freezone in UAE: Which Should You Choose?