UAE corporate tax: what businesses in Dubai need to know in 2026
9% above AED 375,000, but the expensive mistakes lie elsewhere: Small Business Relief now ends on 31 Dec 2029, and a Free Zone breach costs 9% for five years.
Corporate tax in Dubai is 9% on profits above AED 375,000, and everything below that stays at 0%. That is the answer you find everywhere, and it is correct. It just almost never costs you money.
The expense comes from three other places: Small Business Relief, which ends on 31 December 2029. The Free Zone exemption, whose loss hits you retroactively for five years. And your home country tax position, which the UAE does not settle for you. That is what this article is about.
How high is corporate tax in the UAE really?
Since 1 June 2023, a two tier rate has applied across the UAE:
| Taxable profit | Rate |
|---|---|
| up to AED 375,000 | 0% |
| above AED 375,000 | 9% |
The decisive word is taxable profit, not turnover. The basis is the book profit determined under IFRS, adjusted for tax purposes. If your bookkeeping is not clean, you simply cannot substantiate this figure.
The rate applies to Mainland and Free Zone companies alike. The Free Zone is not an exemption from tax, it is a separate set of conditions under which 0% is possible. More on that below.
To see what that means for a specific profit figure, including the zero band below 375,000 AED, use the UAE corporate tax calculator.
Who has to register, and by when?
This is where the most common and costliest mistake happens: the obligation to register does not depend on profit.
Every company in the UAE must register for corporate tax with the Federal Tax Authority. Including the company with no turnover. Including the company that exists only on paper. Including the company below the tax free threshold.
- Registration: mandatory for everyone, typically within around three months for new companies
- Tax return: within nine months of the financial year end
- Payment: due on the same date
- Penalty for late registration: AED 10,000
For a financial year ending on 31 December, the deadline is 30 September of the following year. Anyone who assumes that no turnover means no obligation pays AED 10,000 for a form that would have taken half an hour.
The registration application itself, the licence-month deadlines and the AED 10,000 penalty waiver are covered step by step under corporate tax registration in the UAE.
Small Business Relief: extended to 2029, but still conditional
Small Business Relief is the most effective relief in the system, and it is ending.
A UAE resident company with turnover of no more than AED 3 million can elect to be treated for a tax period as if it had no taxable income. The result: 0% corporate tax and a significantly simplified return.
Three details that are regularly overlooked:
1. It ends on 31 December 2029. The relief only applies to tax periods ending on or before that date. The original cut-off was 2026 and was extended by three years in August 2026. For the first financial year after the cut-off, tax is due in the normal way. If you have built your planning on it, the extension buys time rather than removing the problem.
2. It is not automatic. The relief has to be actively elected in the tax return. No advance application, no approval, but no automatic grant either. Forget it and you are taxed in the normal way.
3. Over the line once, out for good. The AED 3 million limit applies to the current and every previous tax period since corporate tax was introduced. A company that once hit AED 3.5 million turnover in 2024 is permanently excluded, even if it later falls back to AED 1 million.
And a trade off almost nobody mentions: if you elect the relief, you lose that period’s losses. Loss carry forwards can neither be built up, used nor transferred in an election year. For a year with high start-up investment, the relief can therefore be the worse deal, the loss would have been worth more in later years.
Does a Free Zone mean no tax?
No. This is the most expensive sentence in Dubai, right after “I’ll deal with that later”.
A Free Zone company only pays 0% as a Qualifying Free Zone Person (QFZP). For that, all of the following conditions must be met at the same time:
- sufficient substance in the Free Zone: staff, assets, real operating expenditure, core activity on the ground
- Qualifying Income from permitted activities
- compliance with the transfer pricing rules, including documentation
- an audited IFRS financial statement: a statement you or your adviser prepare yourself is not enough
- non qualifying revenue within the de minimis threshold: the lower of AED 5 million or 5% of total turnover
And now the part that hurts: break a single condition and you lose QFZP status from the start of that tax period and for the following four, a total of five periods at 9% on all income. Including the income that would otherwise have qualified at 0%.
An exceeded de minimis figure is not a rounding error. It is a five year problem.
What international entrepreneurs also need to keep in mind
This is where Dubai ends and your home country begins, and it is exactly at this edge that most people lose money.
Paying 9% in the UAE does not automatically settle your tax question at home. If you remain tax resident in another country, that country may continue to assess you on your worldwide income under its own rules. Whether relief is available depends on the double taxation treaty between that country and the UAE, and coverage varies from country to country. Some countries have a treaty in force, some have let theirs lapse, and some have none at all.
To be completely clear: we are your point of contact for the UAE side, bookkeeping, registration, corporate tax, VAT and annual financial statements. The home country side, moving your residence, tax residence and any anti deferral or controlled foreign company rules, belongs with a tax adviser in your own country. Anyone who tells you that a company in Dubai settles your home country tax question by itself is selling you something.
The five most expensive mistakes
- Not registered because there was no turnover, AED 10,000 for nothing
- Relied on the Free Zone without checking the QFZP conditions, five years at 9% on everything
- No audited statement, the 0% collapses on the audit condition
- Forgot to elect Small Business Relief, taxed in the normal way even though 0% was possible
- Assumed Dubai settles the home country tax question, without a treaty your home country’s rules still apply
What should you do before your next filing?
The 9% is not the problem. The problem is the deadlines, the conditions and the assumption that “Free Zone” means “tax free”. Small Business Relief runs until the end of 2029, after which many companies will face real corporate tax for the first time. Anyone with clean, audit ready bookkeeping by then decides calmly. Anyone without it decides under pressure.
Corporate tax sits at company level. Your own position as an individual is a separate question, and the document that settles it is explained in Tax Residency Certificate for UAE residents.
We take over the UAE side in full: bookkeeping to IFRS, FTA registration, corporate tax and VAT, at fixed prices.
Talk to us, the initial consultation is free.
As of July 2026. This article is general information and is no substitute for advice in an individual case.
Read on: Qualifying Free Zone Person · Small Business Relief UAE · Tax regulations in Dubai · UAE corporate tax filing deadline explained
Frequently asked questions
How high is corporate tax in Dubai?
0% on taxable profits up to AED 375,000, and 9% on every dirham above that. The rate has applied since 1 June 2023 to Mainland and Free Zone companies alike. Free Zone companies can reach 0% under strict conditions.
Do I still have to register if I make no profit?
Yes. The obligation to register with the Federal Tax Authority applies regardless of profit. Even a company with no turnover must register and file a tax return. Late registration carries a penalty of AED 10,000.
When does the corporate tax return have to be filed?
Within nine months of the end of the financial year. For a financial year ending on 31 December, the deadline is 30 September of the following year. The tax is due on the same date.
Does a Free Zone automatically mean no tax?
No. This is the most expensive misunderstanding. A Free Zone company only pays 0% if it meets all the conditions of a Qualifying Free Zone Person, including an audited IFRS financial statement and sufficient substance on the ground. Break one condition and you pay 9% on all income for five years.
What is Small Business Relief and how much longer will it be available?
A UAE resident company with turnover of no more than AED 3 million can elect to be treated for a tax period as if it had no taxable income, that is 0% corporate tax. The relief only applies to tax periods ending on or before 31 December 2029, extended from 2026 by the UAE Ministry of Finance in August 2026. After that, tax is due in the normal way.
Does my home country have a double taxation treaty with the UAE?
It depends on the country. The UAE has more than 130 double taxation treaties, but coverage varies, and some countries have no treaty in force or have let one lapse. Because your home country situation is decisive, this question belongs with a tax adviser in your country of residence.