UAE Corporate Tax Rate: 0%, 9% and Who Pays

The short answer

UAE corporate tax is charged at 0% on the portion of taxable income up to AED 375,000, and at 9% on the portion above it. The rate is tiered, not a cliff. If your taxable income is AED 500,000, you do not pay 9% on the whole amount. You pay 0% on the first AED 375,000 and 9% on the remaining AED 125,000, which is AED 11,250.

The tax applies for financial years starting on or after 1 June 2023. Which tax period you fall into depends on your own financial year, so a business with a January to December year and a business with a July to June year will have different first filing dates.

There is also a separate 15% Domestic Minimum Top-up Tax that applies to very large multinational groups with global revenue at or above EUR 750 million. If you are running a shop, a restaurant, a small warehouse or a growing online store in the UAE, that rate is not aimed at you.

This is general information and not tax advice. Rates, thresholds and elections change, so confirm your position with the Federal Tax Authority (FTA) or a qualified UAE tax professional.

Corporate tax is not VAT, and the difference matters

Plenty of UAE owners meet corporate tax already thinking in VAT terms, and that causes confusion. VAT in the UAE is 5% and it is charged on your sales, collected from your customers, and paid over to the FTA in a VAT201 return. You are a collector. The money was never really yours.

Corporate tax is different. It is charged on what is left after your costs, on your profit. Nobody hands it to you. It comes out of the business, so every legitimate expense you record correctly, and every expense you fail to record, moves the number directly.

The practical consequence is that corporate tax rewards good bookkeeping in a way VAT does not. A missing AED 4,000 supplier invoice does not change your VAT much, but it inflates your profit by AED 4,000 and, above the threshold, costs you AED 360 in tax you did not owe. Multiply that by a year of lost receipts and it stops being small.

• VAT: 5%, on sales, collected on behalf of the FTA, filed as VAT201.
• Corporate tax: 0% or 9%, on annual taxable profit, paid by the business itself.
• Both require registration with the FTA, and they are separate registrations.
• Being under the VAT registration threshold does not exempt you from corporate tax.

Small Business Relief: the part most owners miss

This is the single most useful thing for a small UAE business to know. If your revenue in a tax period is at or below AED 3,000,000, and you meet the conditions, you can elect Small Business Relief. If you do, you are treated as having no taxable income for that period. Not a lower rate. No taxable income.

It is an election, which means you have to claim it in your tax return. It is not applied automatically because you are small. If you skip the election, you are assessed normally.

The relief is available for tax periods ending on or before 31 December 2026 under the current rules, and the AED 3,000,000 revenue test applies to the current tax period and to all previous tax periods. So if you cross AED 3,000,000 in one year, you cannot go back to the relief in a later year even if revenue drops.

There are exclusions. Qualifying Free Zone Persons and members of large multinational groups cannot use it. If you elect the relief, you also generally cannot use tax losses or certain other reliefs from that period later on, which is worth thinking through if you are loss making and expect strong profits soon.

Because the eligibility conditions and the end date can change, treat this section as an orientation and confirm your specific position with the FTA or a qualified UAE tax professional.

Free zone businesses

Free zone companies are not automatically outside corporate tax. What exists is a 0% rate on Qualifying Income for a Qualifying Free Zone Person, with 9% applying to income that does not qualify.

To be a Qualifying Free Zone Person you generally need to maintain adequate substance in the UAE, earn Qualifying Income, comply with transfer pricing rules and documentation, keep audited financial statements, and stay under the de minimis limits for non qualifying revenue. Fall outside those conditions and you can lose the 0% treatment for the current tax period and following ones.

The category definitions of what counts as Qualifying Income are technical and have been updated more than once. If you operate from a free zone, this is the one part of the topic where paying a qualified UAE tax professional for an hour of their time is genuinely good value. Do not assume your licence alone settles it.

Working out the number: a simple example

Take a small retail business in Dubai with a single shop. Revenue for the year is AED 2,400,000. Cost of goods sold is AED 1,450,000. Rent, salaries, utilities, bank charges and other running costs come to AED 780,000. Accounting profit is AED 170,000.

Taxable income starts from that accounting profit and is then adjusted for items the law treats differently, such as disallowed entertainment costs, certain fines and penalties, and adjustments for related party transactions. Assume the adjustments here are small and taxable income lands at AED 180,000.

Because AED 180,000 is under AED 375,000, the tax is nil even before any relief is considered. And with revenue of AED 2,400,000, this business is also under the AED 3,000,000 Small Business Relief threshold and could elect that relief instead.

Now change one thing. Suppose the same shop had a strong year and taxable income is AED 620,000. The first AED 375,000 is taxed at 0%. The remaining AED 245,000 is taxed at 9%, giving AED 22,050. That is the whole calculation. What is not simple is arriving at a defensible AED 620,000, which is where your records do the work.

What you actually have to do

1. 1

   Register for corporate tax

   Register with the Federal Tax Authority through EmaraTax and obtain a corporate tax registration number. This applies even if you expect to pay nothing, and the FTA has issued deadlines with administrative penalties for late registration.

2. 2

   Confirm your tax period

   Your tax period follows your financial year. Write the start and end dates down, because your filing deadline is set from your period end, not from a single national date.

3. 3

   Keep proper accounting records

   Corporate tax starts from financial statements prepared under accepted accounting standards. That means real books, not a spreadsheet of bank movements. Records generally need to be retained for at least seven years.

4. 4

   Capture every expense as it happens

   Photograph supplier invoices, cash purchases and fuel receipts on the day. Anything that is not recorded is treated as profit you made, and above the threshold that costs you 9% of it.

5. 5

   Separate business and personal spending

   Owner drawings, family expenses and personal card use blur the profit figure and are the most common cause of a messy first corporate tax year. Run a business account and code personal items out clearly.

6. 6

   File the return and pay

   The corporate tax return is filed within nine months of the end of the tax period, and the tax due is paid by the same date. There is one return per tax period, so a year with clean monthly books is a quiet nine months.

How Tallium AI helps you get to the right number

Corporate tax is decided by the quality of your bookkeeping across twelve months, not by what you assemble in a panic before the deadline. That is the problem Tallium AI is built for.

It is one app rather than a stack. Accounting, invoicing, POS, inventory, e-commerce, and the Tallium AI suite's Marketing and CRM all sit under a single account, so your shop sales, your online orders and your supplier bills land in the same ledger instead of three systems you reconcile by hand in December.

The AI side does the tedious part. Photograph a supplier invoice or a cash receipt with your phone and Tallium AI reads it, categorises it and files it against the right expense account. That is how you stop losing the AED 4,000 invoices that quietly push your taxable profit up. AI insights flag unusual spending and margin drift during the year, while there is still time to act on it.

It also handles your UAE VAT alongside this, so your 5% VAT position and your corporate tax records come from the same set of books rather than two versions of the truth.

Every plan includes unlimited users with no per seat fees. Your accountant, your shop staff, your warehouse team and your bookkeeper can all be in the same account without the bill moving. Pricing is one flat monthly USD price per unit: a shop or store is $79 per month, an online store is $159, a warehouse is $99, and a factory is $269. Every unit includes the full core, which covers accounting, VAT and tax handling, expenses and receipt scanning, reports, the mobile app, AI insights and email support. Billed monthly from signup, cancel any time. See /pricing for the full breakdown.

Common mistakes to avoid

• Assuming a free zone licence means no corporate tax. The 0% rate applies only to Qualifying Income for a Qualifying Free Zone Person, and conditions apply.
• Skipping registration because you expect to owe nothing. Registration is separate from liability and late registration carries administrative penalties.
• Thinking 9% applies to revenue. It applies to taxable income above AED 375,000, which is a profit figure after allowable costs.
• Assuming Small Business Relief is automatic. It is an election you make in your return.
• Leaving bookkeeping until the deadline. Missing expenses inflate profit, and the nine month filing window feels short with a year of unsorted receipts.
• Mixing personal spending into business accounts, which makes taxable income difficult to defend if the FTA asks questions.
• Ignoring related party and connected person rules if you trade with your own other companies or pay yourself through the business.