How UAE corporate tax is calculated
Worked example
Revenue AED 2.5m, accounting profit AED 600,000, no adjustments. Without relief: (600,000 − 375,000) × 9% = AED 20,250. Because revenue is under AED 3m, electing Small Business Relief reduces this to AED 0 (you still file a return). At AED 4m revenue the relief is unavailable and AED 20,250 is payable.
Key rules
- Rates: 0% to AED 375,000 of taxable income; 9% above. 15% DMTT for MNE groups with consolidated revenue ≥ €750m (from 1 January 2025).
- Registration: all taxable persons must register with the FTA, including those expecting zero tax. Late registration penalty AED 10,000.
- Filing: one return per tax period, due within 9 months of period end.
- Interest cap: net interest expense deductible up to 30% of tax-EBITDA (safe harbour AED 12m).
- Losses: carried forward indefinitely, offset up to 75% of taxable income per period.
- Free zones: 0% on qualifying income for a Qualifying Free Zone Person; 9% otherwise.
Frequently asked questions
What is the UAE corporate tax rate?
0% on taxable income up to AED 375,000 and 9% on taxable income above AED 375,000, for financial years starting on or after 1 June 2023. Large multinationals (global revenue ≥ €750m) are subject to a 15% Domestic Minimum Top-up Tax from 2025.
How is the AED 375,000 threshold applied?
It is a 0% band, not an exemption threshold. If taxable income is AED 500,000, tax = (500,000 − 375,000) × 9% = AED 11,250 — only the slice above AED 375,000 is taxed.
What is Small Business Relief?
A UAE-resident business with revenue of AED 3 million or less in the current and all previous tax periods can elect to be treated as having no taxable income, so no corporate tax is due. It applies to tax periods ending on or before 31 December 2026 and is not available to Qualifying Free Zone Persons or members of large multinational groups. You still have to register and file.
Do free zone companies pay UAE corporate tax?
A Qualifying Free Zone Person pays 0% on qualifying income (e.g. transactions with other free zone persons, certain qualifying activities) and 9% on non-qualifying income such as mainland sales, subject to de minimis limits (lower of AED 5m or 5% of revenue). Most small free-zone businesses trading with the mainland pay the normal rates.
Is taxable income the same as accounting profit?
No. Start with accounting net profit under IFRS, then adjust: add back non-deductible expenses (fines, 50% of entertainment, interest above the 30% EBITDA cap), remove exempt income (qualifying dividends and participation gains) and deduct available tax losses (up to 75% of taxable income).
Do freelancers and sole traders pay UAE corporate tax?
Natural persons conducting business are within scope only if their business turnover exceeds AED 1 million in a calendar year. Employment income, personal investments and personal real estate income are outside scope.
When are returns and payments due?
Within nine months of the end of the tax period. For a 31 December year-end, the return and payment are due by 30 September of the following year.
Are salaries paid to owners deductible?
Yes, if they are at arm's length for services actually performed. Excessive owner remuneration can be challenged under transfer pricing rules.