Corporate tax is federal and applies in every emirate at 0% up to AED 375,000 and 9% above, with a 0% rate on qualifying income for Qualifying Free Zone Persons and a 15% top-up tax for multinational groups with revenue of EUR 750 million or more. There is no withholding tax in practice (0%) and VAT is 5%. Registration, nine-month return filing, transfer pricing documentation and, for some taxpayers, audited accounts are the main compliance burdens.
Corporate tax: who pays and at what rate
Corporate tax applies to financial years starting on or after 1 June 2023 at 0% on the first AED 375,000 of taxable income and 9% above that. It is a federal tax that applies equally in all seven emirates, and emirate-level taxes cannot be credited against it. Government entities, qualifying public benefit entities, qualifying investment funds and certain pension funds are exempt persons.
Free zone entities are taxed at the same rates unless they meet all the conditions of a Qualifying Free Zone Person: adequate substance in the zone, qualifying income, no election out and compliance with transfer pricing rules. Qualifying income is then taxed at 0% and other income at 9%. Failing a condition removes the status from the start of the tax period, which can affect several years, so the conditions need monitoring rather than a one-off check.
Small businesses with revenue of AED 3 million or less in the current and all previous periods can elect Small Business Relief and be treated as having no taxable income, but only for tax periods ending on or before 31 December 2026. Qualifying Free Zone Persons and members of large multinational groups cannot use it.1234567
Large groups: domestic minimum top-up tax
The UAE amended its corporate tax law to allow a top-up tax bringing large multinational groups to a 15% effective rate, and Cabinet Decision No. 142 of 2024 implemented a domestic minimum top-up tax for financial years starting on or after 1 January 2025. It applies to groups with consolidated revenue of EUR 750 million or more in at least two of the four preceding years. For these groups the 0% free zone rate and the 9% headline rate do not determine the final UAE tax cost.
Top-up tax returns and payment are due within 15 months after the year end, or 18 months for the transitional year. The FTA published a scope and registration guide in August 2026 that groups should review for registration timing.89
Withholding tax, VAT and filing
UAE-sourced dividends, interest, royalties and service fees paid to non-residents are subject to withholding tax at 0%, so profit extraction does not attract UAE withholding. The foreign recipient's home-country tax position still needs checking.
VAT is charged at 5%. Resident businesses must register once taxable supplies and imports exceed AED 375,000 over 12 months, and may register voluntarily above AED 187,500. Non-resident businesses making taxable supplies in the UAE must register regardless of value.
Every taxable person must register for corporate tax, even if already VAT-registered, and file a return within nine months of the tax period end. Individuals are within corporate tax only if they conduct a business in the UAE. Related-party transactions must be priced at arm's length; larger taxpayers must keep a master file and local file and produce documentation within 30 days of an FTA request. The Minister can require certain taxpayers to keep audited financial statements.10111213141516
| Tax | Rate or threshold | Applies to |
|---|---|---|
| Corporate tax | 0% up to AED 375,000; 9% above | Mainland and free zone taxable persons, all emirates |
| Qualifying Free Zone Person | 0% on qualifying income; 9% on other income | Free zone persons meeting all conditions |
| Domestic minimum top-up tax | Top-up to 15% effective rate | Groups with revenue of EUR 750 million or more, financial years from 1 January 2025 |
| Small Business Relief | Revenue of AED 3 million or less | Resident persons, tax periods ending on or before 31 December 2026 |
| Withholding tax | 0% | UAE-sourced payments to non-residents |
| VAT | 5%; mandatory registration above AED 375,000; voluntary above AED 187,500 | Taxable supplies and imports |
How it works, step by step
- Register for corporate tax and obtain a tax registration number.11Federal Tax Authority
- Assess VAT registration against the AED 375,000 and AED 187,500 thresholds, or register immediately as a non-resident making taxable supplies.13Federal Tax Authority
- For free zone entities, document substance and qualifying income each period to support Qualifying Free Zone Person status.3Taxpayer; Federal Tax Authority on review
- Prepare transfer pricing disclosures and, where required, the master file and local file.12Federal Tax Authority
- File the corporate tax return and pay within nine months of the tax period end.11Federal Tax Authority
No timings or fees are shown unless an official source states them.
Documents usually needed
- Corporate tax registration certificate (tax registration number)
- VAT registration certificate where applicable
- Financial statements prepared under accounting standards applied in the UAE, audited where required
- Related-party transactions disclosure, master file and local file where thresholds are met
- Free zone substance evidence (premises, employees, operating expenditure) for Qualifying Free Zone Person status
Common mistakes
- Assuming a free zone licence automatically means 0% corporate tax; the Qualifying Free Zone Person conditions must be met every period.
- Not registering for corporate tax because profits are below AED 375,000 or the business is VAT-registered; registration is still required.
- Planning on Small Business Relief beyond tax periods ending 31 December 2026 without checking for an extension.
- Ignoring domestic related-party transactions between mainland and free zone group companies, which are within the transfer pricing rules.
- For large groups, modelling UAE tax at 9% or 0% without the 15% domestic minimum top-up tax.
When the business crosses borders
- 0% withholding tax means dividends, interest and royalties can be paid abroad without UAE tax deduction, but the recipient's country may tax them or apply controlled foreign company rules.
- A non-resident with a UAE permanent establishment, such as a branch, is taxed on profits attributable to it; a purely preparatory or auxiliary presence is excluded.
- Transfer pricing applies to cross-border and domestic related-party transactions, including mainland to free zone dealings.
- Groups within Pillar Two in other countries should coordinate UAE top-up tax with income inclusion rules applied by parent jurisdictions.
Questions businesses ask
Is a free zone company exempt from corporate tax?
Not automatically. A free zone person pays 0% only on qualifying income and only if it meets all Qualifying Free Zone Person conditions, including adequate substance. Other income is taxed at 9%, and failing a condition removes the status from the start of that tax period.3
Is there withholding tax on dividends or royalties paid abroad?
The withholding tax rate on UAE-sourced income paid to non-residents is 0%, unless the income is attributable to a UAE permanent establishment.10
When is the corporate tax return due?
Within nine months of the end of the tax period. For calendar-year 2025 the FTA set 30 September 2026 as the deadline for filing and payment.11
What this guide does not yet confirm
These points need checking with a qualified local professional in the United Arab Emirates before you rely on them.
- Audited financial statement thresholds (understood to be revenue above AED 50 million, plus all Qualifying Free Zone Persons, under Ministerial Decision No. 82 of 2023) were not confirmed on an official page.
- Transfer pricing master file and local file thresholds (Ministerial Decision No. 97 of 2023) were not confirmed.
- Qualifying activities, excluded activities and the de minimis test for Qualifying Free Zone Persons were not reviewed.
- The domestic minimum top-up tax was confirmed only from a secondary source; registration deadlines and any income inclusion or undertaxed profits rule were not confirmed.
- The double tax treaty network size, VAT zero-rating and exemption categories, excise tax and the federal e-invoicing timetable (Ministerial Decisions of 2025) were not confirmed and are not stated here; e-invoicing is covered in the data area.
- Whether Small Business Relief has been extended beyond 31 December 2026 was not confirmed.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
Corporate tax is charged at 0% on taxable income up to AED 375,000 and at 9% on taxable income above AED 375,000. Federal; applies in all seven emirates and to mainland and free zone businesses unless the Qualifying Free Zone Person regime applies. Exempt persons are listed in ae-tax-017.
Rates set by Article 3(1) of Federal Decree-Law No. 47 of 2022 with the threshold fixed by this Cabinet Decision.
Corporate tax applies to financial years starting on or after 1 June 2023, so a business with a calendar financial year became subject to it from 1 January 2024. Federal.
A Qualifying Free Zone Person pays corporate tax at 0% on qualifying income and 9% on other taxable income, provided it keeps adequate substance, earns qualifying income, has not elected to be taxed at standard rates and meets transfer pricing requirements. Free zone persons only (mainland entities cannot use this regime). Failing any condition removes the status from the start of that tax period. The incentive period may be extended but cannot exceed 50 years. Detailed qualifying activities and de minimis rules are in Cabinet and Ministerial Decisions not reviewed here.
Resident persons with revenue of AED 3,000,000 or less in the current and all previous tax periods may elect Small Business Relief and be treated as having no taxable income for that period. Not available to Qualifying Free Zone Persons or to members of multinational groups with consolidated revenue above AED 3.15 billion. The election is made per tax period and other reliefs cannot be used in that period.
Small Business Relief is available only for tax periods ending on or before 31 December 2026. Applies to tax periods starting on or after 1 June 2023.
Secondary source; the FTA topic page does not state the end date. Check whether the relief has been extended before relying on it for periods after 2026.
Federal corporate tax applies in every emirate, and emirate-level taxes paid cannot be credited against federal corporate tax. Federal corporate tax and any emirate-level tax are separate; which activities bear emirate-level tax depends on emirate legislation not reviewed here.
Exempt persons outside the corporate tax charge include government entities, government controlled entities, qualifying extractive and non-extractive natural resource businesses, qualifying public benefit entities, qualifying investment funds and certain pension and social security funds. Exemptions are conditional; a government entity remains taxable on business carried on under a licence or outside its mandated activities.
The corporate tax law was amended to introduce a top-up tax on multinational enterprises, with rules to be set by Cabinet decision so that their total effective tax rate is 15%. Federal. Applies only to multinational enterprise groups defined by Cabinet decision.
Federal Decree-Law No. 60 of 2023, issued 2 October 2023.
A domestic minimum top-up tax at 15% applies to multinational groups with consolidated revenue of EUR 750 million or more in at least two of the four preceding financial years, for financial years starting on or after 1 January 2025, under Cabinet Decision No. 142 of 2024. Large multinational groups only. The return and payment are due within 15 months after the financial year end (18 months for the transitional year).
Secondary source; the Cabinet Decision text could not yet be checked. The FTA published a Top-up Tax Scope and Registration guide (TTGREG1, August 2026) on its guides page, but the PDF could not be fetched, so registration deadlines and whether an income inclusion rule or undertaxed profits rule applies were not confirmed.
Withholding tax on UAE-sourced income paid to non-residents is set at 0%. Covers dividends, interest, royalties and service fees paid to non-residents, unless the income is attributable to a UAE permanent establishment or nexus; the Cabinet may set other rates.
Every taxable person must register for corporate tax and file a corporate tax return no later than nine months after the end of the relevant tax period. Federal. The Minister may prescribe registration exceptions. Registration is required even where the business is already VAT-registered.
The FTA Corporate Tax page carries a news item that returns and payment for financial years ended 31 December 2025 were due by 30 September 2026.
Taxpayers must disclose related-party transactions with the tax return when required, keep a master file and local file where Ministerial conditions are met, and provide transfer pricing documentation within 30 days of an FTA request. Applies to transactions with related parties and connected persons, domestic or cross-border, whether the parties are on the mainland, in a free zone or abroad (FTA Corporate Tax FAQs).
The revenue thresholds for master file and local file are set by Ministerial Decision (understood to be Ministerial Decision No. 97 of 2023) and were not confirmed here.
VAT registration is mandatory when taxable supplies and imports exceed AED 375,000 in the previous 12 months or are expected to exceed it in the next 30 days, and voluntary registration is available above AED 187,500. Federal. The mandatory threshold does not apply to non-resident businesses, which must register regardless of value when they make taxable supplies in the UAE. Supplies within designated zones follow special rules.
The standard VAT rate is 5%. Federal. Zero-rated and exempt supplies apply under the VAT law and executive regulation.
The FTA page shows the 5% rate through its VAT calculator rather than in a statement of law. The rate is set by Federal Decree-Law No. 8 of 2017, which could not yet be checked here.
The Minister may require specified categories of taxable persons to prepare and keep audited or certified financial statements. Federal. The categories are set by Ministerial Decision (understood to cover taxable persons with revenue above AED 50 million and Qualifying Free Zone Persons) and were not confirmed here.
An individual is subject to corporate tax only if they conduct a business or business activity in the UAE, directly or through a partnership or sole proprietorship. Federal. Employment income alone does not bring an individual within corporate tax; details are set by Cabinet decision.
The FTA FAQ ties individuals' liability to business activity; it does not address employment income directly.
Questions on this topic
17 statements on tax, accounting and statutory reporting in the United Arab Emirates
