Most UAE business owners can tell you the headline: corporate tax is 9%. Far fewer can tell you what they will actually pay — and a great many are about to get a bill they have never had before.
The 9% is not charged on all your profit
This is the most common misunderstanding. The rate structure is:
- 0% on the first AED 375,000 of taxable income
- 9% on everything above it
So on a taxable income of AED 900,000, you pay nothing on the first 375,000 and 9% on the remaining 525,000 — a bill of AED 47,250. That is an effective rate of about 5.3%, not 9%.
Taxable income starts from your accounting profit, with non-deductible items such as fines and half of entertainment spending added back.
See your own number
The UAE Corporate Tax Calculator applies the 0% band, the 9% rate, Small Business Relief and the free zone rules, and shows what you would owe.
Small Business Relief — and the cliff on 31 December 2026
If your revenue is AED 3 million or less, you can elect Small Business Relief and be treated as having no taxable income at all. No corporate tax. You must still register with the FTA, keep records, file a return, and elect the relief each period — but the tax itself is nil.
This relief applies only to tax periods ending on or before 31 December 2026.
After that, the standard rules return for everyone, regardless of size: 0% on the first AED 375,000 and 9% above it. Thousands of small UAE companies that have never paid a dirham of corporate tax will face their first real bill on the following return.
If that is you, the sensible move is to model it now. Run your current numbers through the calculator with the relief and without it — the gap between the two figures is what you should start setting aside every month.
Free zones: 0%, but on a knife edge
A Qualifying Free Zone Person pays 0% on Qualifying Income — broadly, dealings with other free zone persons and international clients. Income from mainland customers is generally not qualifying, and is taxed at 9% with no AED 375,000 relief.
The trap is the de minimis rule. Non-qualifying revenue must stay within the lower of 5% of total revenue or AED 5 million. Cross that line and you lose QFZP status for the current tax period and the next four. The 0% rate disappears on all your income for five years.
It is a cliff, not a slope. Being AED 1 over is as costly as being AED 1 million over. A single mainland invoice, accepted casually, can be the most expensive decision a free zone company ever makes. If you are anywhere near the limit, take advice before you sign the contract.
Registration and filing
Every taxable person must register with the Federal Tax Authority and obtain a Corporate Tax Registration Number — even if the answer is that no tax is due. Returns go through EmaraTax within nine months of your financial year end. For a 31 December year end, that means a 30 September deadline.
Late registration, late filing and late payment all carry penalties. The registration requirement in particular catches out small companies who assume that owing nothing means doing nothing.
What to do now
- Register with the FTA if you have not already — this is not optional.
- Work out your liability under the standard rules, not just under the relief.
- If you are on Small Business Relief, start setting aside the difference before 2027.
- If you are a free zone company, check your non-qualifying revenue against the de minimis cap today.
You may also want the VAT Calculator — corporate tax and VAT are separate regimes with separate thresholds, and being registered for one says nothing about the other.