The UAE corporate tax rate is 0% on taxable income up to AED 375,000 and 9% on the amount above that. This guide explains how it works in plain language.
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The rates at a glance
- 0% on taxable income up to AED 375,000
- 9% on taxable income above AED 375,000
- 0% on qualifying income of a Qualifying Free Zone Person, subject to conditions
How taxable income is calculated
Corporate tax starts with your accounting profit under accepted accounting standards. You then adjust for items such as non-deductible expenses, exempt income and reliefs to reach taxable income.
A simple example
If your taxable income is AED 575,000, the first AED 375,000 is taxed at 0%. The remaining AED 200,000 is taxed at 9%, so the tax due is AED 18,000.
What small businesses should know
Relief for small businesses may be available to eligible resident businesses below a revenue limit, but conditions and dates apply. Check the current rules before you rely on it.
Free zone companies
A free zone company may qualify for the 0% rate on qualifying income only if it meets all conditions. Other income is taxed at 9%.
The official rules are on the Federal Tax Authority website. See our tax planning service and corporate tax return filing.
UAE corporate tax rate: key points
- The 0% band covers taxable income up to AED 375,000
- The 9% rate applies only to the amount above AED 375,000
- Free zone companies may qualify for 0% on qualifying income
- Taxable income is accounting profit after adjustments
Example of the UAE corporate tax rate for a small company
A company has taxable income of AED 1,200,000. The first AED 375,000 is taxed at 0%. The remaining AED 825,000 is taxed at 9%, so the corporate tax due is AED 74,250.
Real calculations include adjustments for non-deductible expenses, exempt income and reliefs. If you want to understand how the UAE corporate tax rate applies to your business, our consultants can prepare a calculation for you.
Common questions about the UAE corporate tax rate
Owners often ask whether the UAE corporate tax rate applies to them if profit is low. Taxable income below AED 375,000 is taxed at 0%, but you may still have to register and file a return. Losses and carry-forward rules can also change the result, so keep clear records every year.
Another common question is whether a free zone company always pays 0%. It does not. Only qualifying income of a qualifying free zone person can benefit, and the rest is taxed at 9%. That is why the UAE corporate tax rate needs to be checked against your actual income each year.
How to plan your tax position
Good planning starts with knowing your expected profit and the adjustments that apply. Review your expenses, check which income is exempt, and confirm whether any relief is available. Do this before the end of the tax period, while there is still time to organise records and contracts.
- Estimate taxable income each quarter
- Separate exempt and taxable income in your books
- Document related party pricing
- Check free zone and small business rules every year
- Budget cash for the tax due date
Planning also helps your cash flow, because you know in advance how much tax you will need to pay and when. Our tax planning team can help you build this view and keep it updated as your business grows.
Need help?
Our tax consultants in Dubai can help with corporate tax return filing. See our corporate tax return filing service, or call or WhatsApp us on +971 56 860 3549 for a free consultation.
This article is general information, not tax advice. Rules and penalties change, so confirm the current position with the Federal Tax Authority or speak to us about your situation.