UAE Corporate Tax Rate: What Rate Applies to You?

What Is the Standard Corporate Tax Rate in the UAE?

The standard corporate tax rate is 9% on taxable income exceeding AED 375,000 . The first AED 375,000 of taxable profit is taxed at 0%. This applies to mainland companies, branches of foreign companies, and individuals doing business in the UAE with turnover above AED 1 million .

A Quick Example to Make It Concrete

Say your mainland trading company makes AED 1 million in taxable profit. You don’t pay 9% on the whole million. You pay 0% on the first AED 375,000, then 9% on the remaining AED 625,000. That’s AED 56,250 in tax . The threshold is based on profit, not revenue.

The Free Zone Corporate Tax Rate: 0% Is Conditional

Free zone companies can access a 0% corporate tax rate on “Qualifying Income.” But this is not automatic, and it is not a blanket exemption. You must qualify as a Qualifying Free Zone Person (QFZP) .

How the QFZP Rate Really Works

A QFZP pays 0% on qualifying income and 9% on non-qualifying income . The catch is that failing a single condition can strip your QFZP status for the entire tax period. That means the 9% rate applies to all your income, not just the problematic portion . This is the most misunderstood part of the free zone corporate tax rate story.

The De Minimis Rule That Trips People Up

Non-qualifying income must stay below the lower of AED 5 million or 5% of total revenue . Cross that line and you lose QFZP status. The corporate tax rate you planned around disappears.

A Side-by-Side Look at UAE Corporate Tax Rates

Business Situation Corporate Tax RateTaxable profit up to AED 375,000 0%Taxable profit above AED 375,000 9%QFZP qualifying income 0%QFZP non-qualifying income 9%Large multinational groups (EUR 750m+ revenue) 15% minimum top-upThe 15% rate applies to large multinationals under the OECD Pillar Two framework, effective for financial years starting on or after 1 January 2025 .

Small Business Relief: A Different Way to Reach 0%

There’s another path to a 0% effective corporate tax rate. Small Business Relief lets eligible resident businesses elect to be treated as having no taxable income . If you qualify, you pay nothing, even if your profit exceeds AED 375,000.

Who Qualifies for the Relief?

Your revenue must be AED 3 million or less in the current period and every previous period . Revenue means sales before expenses, not profit. A business with AED 3.2 million in revenue but only AED 200,000 profit does not qualify . QFZPs cannot claim this relief.

Why the Corporate Tax Rate Isn’t the Whole Story

The UAE’s 9% rate is competitive globally. Saudi Arabia sits at 20%, and Oman at 15% . But chasing the lowest headline corporate tax rate can be a mistake. Compliance costs, audit requirements, and free zone conditions can eat into the savings . A mainland business paying 9% with simple compliance may end up better off than a free zone company fighting to maintain 0% status.

The Compliance You Can’t Skip

Every taxable person must register with the Federal Tax Authority and file a return within nine months of the tax period end. Small Business Relief reduces your tax to zero, but it does not remove your filing obligations . You still need to elect the relief in your return and keep supporting records.

How Al Bab Tax Helps You Navigate the Corporate Tax Rate

We’ve worked with Dubai businesses since 2017 on corporate tax, VAT, and audit matters. The corporate tax rate question is rarely just about the percentage. It’s about your license type, your income mix, your revenue history, and your growth plans. Getting the analysis right before you file is far cheaper than fixing it after an FTA query. If you’re unsure which corporate tax rate applies to your business, that’s a conversation worth having before your deadline, not after.

Frequently Asked Questions

What Is the Corporate Tax Rate for Small Businesses in the UAE?

There is no special small business rate. The standard 0%/9% structure applies. However, Small Business Relief can reduce your liability to zero if revenue stays at or below AED 3 million .

How Does the Free Zone Corporate Tax Rate Work?

Qualifying Free Zone Persons pay 0% on qualifying income and 9% on non-qualifying income. You must meet substance, income, and de minimis conditions every period .

Why Do Some Companies Pay 15% Instead of 9%?

Large multinational groups with consolidated revenue of at least EUR 750 million pay a 15% Domestic Minimum Top-Up Tax under Pillar Two rules .

How Is the 9% Corporate Tax Rate Calculated?

You start with accounting net profit, adjust for exempt income and non-deductible expenses, then apply 0% to the first AED 375,000 of taxable income and 9% to the rest .

Why Does the Free Zone 0% Rate Disappear for Some Businesses?

Breaching a QFZP condition, like the de minimis threshold, removes the 0% rate for the entire tax period. All income is then taxed at 9% .

About Us

Albab Tax is a trusted Accounting & Tax Consultancy FZE-LLC, established in 2017, providing professional accounting, auditing, and tax consultancy services across Dubai and the UAE, with tailored solutions in Corporate Tax, VAT, Bookkeeping, AML Compliance, and Audit Services. Your Success, Our Priority! Visit albabtax.com to discuss your business needs.