Corporate Tax Threshold UAE: The AED 375,000 Rule

What the AED 375,000 threshold actually means

The UAE introduced a federal corporate tax on business profits for financial years starting on or after 1 June 2023. It is administered by the Federal Tax Authority (FTA), the same authority that handles VAT.

The headline threshold is AED 375,000 of taxable income in a tax period. Taxable income up to AED 375,000 is taxed at 0%, and the portion above AED 375,000 is taxed at the standard 9% rate.

It helps to think of this as a band, not a cliff. If your business has AED 500,000 of taxable income, you do not pay 9% on the whole amount. You pay 0% on the first AED 375,000 and 9% only on the AED 125,000 above it, which works out to AED 11,250 in this simple example.

This is general information. Confirm the current rules, rates and any reliefs with the Federal Tax Authority (FTA) or a qualified local tax professional before you file.

Taxable income is not the same as revenue

The threshold is measured against taxable income, which is broadly your accounting profit adjusted for specific tax rules, not your total sales. A shop can turn over well above AED 375,000 in sales and still land below the threshold once salaries, rent, stock and other allowable costs are deducted.

That is why clean bookkeeping matters so much here. If your expenses, receipts and income are not properly recorded, you cannot show the FTA how you arrived at your taxable income, and you risk paying more than you should.

Getting your accounts right during the year, rather than scrambling at filing time, is the single biggest thing a small business can do to stay in control of its corporate tax position.

Small Business Relief and the AED 3 million line

There is a separate measure many owners confuse with the threshold: Small Business Relief. If your business revenue is AED 3 million or less in the relevant tax period and all previous tax periods, you may elect to be treated as having no taxable income for that period, which means no corporate tax to pay.

This relief has its own conditions and time limits set by the FTA, and it is an election you make in your return rather than something applied automatically. It also does not remove your duty to register and file.

Because these figures and end dates can change, treat this as general information and confirm your eligibility with the Federal Tax Authority (FTA) or a qualified local tax professional.

Do you still need to register and file?

Yes, in most cases. Being under the AED 375,000 threshold, or qualifying for Small Business Relief, generally does not exempt you from registering for corporate tax with the FTA and obtaining a Corporate Tax Registration Number.

You then file one corporate tax return per tax period, usually due within nine months of the end of that period, and keep supporting records. The 0% band and any relief are claimed through that return, not by simply staying quiet.

• Register with the FTA and get your Corporate Tax Registration Number.
• Keep accurate books, invoices and receipts for every tax period.
• File your corporate tax return, generally within nine months of your financial year end.
• Remember corporate tax is separate from VAT (charged at 5%), which has its own registration and returns.

How to stay filing-ready all year

1. 1

   Record income as it happens

   Log every sale and invoice through one system so your revenue figure is always current and you can see when you are approaching the AED 375,000 or AED 3 million lines.

2. 2

   Capture every expense

   Scan and store receipts and supplier bills so allowable costs reduce your taxable income accurately, rather than being lost in a drawer.

3. 3

   Reconcile your bank regularly

   Match transactions to your bank feed each month so your profit figure is real and defensible if the FTA ever asks.

4. 4

   Review profit before year end

   Check your running taxable income a few months before your financial year closes so there are no surprises at filing time.

5. 5

   File and keep records

   Submit your corporate tax return within the FTA deadline and retain the reports and documents that support it.

How Tallium AI keeps you ready for the threshold

Tallium AI is one all-in-one app that brings accounting, invoicing, POS, inventory and e-commerce, plus the wider Tallium AI suite with Marketing and CRM, together under a single account. That means your sales, expenses and profit live in one place, so seeing where you sit against the AED 375,000 threshold is straightforward.

It is built for non-technical owners. AI receipt scanning and automatic categorisation turn a pile of paperwork into clean books, expenses reduce your taxable income correctly, and reports show your profit and tax position in real time. VAT handling is built in for your 5% obligations too.

Every plan includes unlimited users with no per-seat fees, so your accountant, manager and staff can all work in the same system without extra cost. Pricing is one simple flat monthly price in US dollars: the shop or store plan is $79, the online store plan is $159, the warehouse plan is $99 and the factory plan is $269 per month, billed monthly with no free trial and cancel anytime. See the full breakdown on our pricing page.