The UAE introduced federal corporate tax (CT) for financial years starting on or after 1 June 2023. For most UAE businesses, this means their first CT return was due in 2024 or 2025 — and many SME owners are still getting to grips with what it means for them.
This guide explains who pays UAE corporate tax, how the 9% rate works, what deductions are allowed, who qualifies for Small Business Relief or free zone exemptions, and when your CT return is due.
UAE corporate tax rules are complex and continue to evolve through FTA decisions and public clarifications. This guide is for general information. Always consult the FTA website or a licensed UAE tax advisor for your specific situation before filing.
UAE corporate tax is a direct tax levied on the net taxable income (profit) of UAE businesses. It applies to most companies incorporated in the UAE and foreign companies with a permanent establishment (PE) in the UAE.
Before June 2023, the UAE had no federal corporate income tax (with the exception of foreign banks and oil companies taxed at the emirate level). The introduction of CT is a significant change for the UAE business environment — but the rates are designed to keep the UAE competitive.
Note: a 15% top-up tax may apply to large multinational groups under the OECD Pillar Two rules, but this only affects groups with global revenues above EUR 750 million and is outside the scope of most UAE SMEs.
UAE corporate tax applies to taxable persons — broadly:
CT is not simply 9% of your bank balance or revenue. It is calculated on your taxable income, which starts from your accounting profit and then applies a series of CT adjustments.
Your accounting profit is the net profit shown in your financial statements, prepared under an acceptable accounting standard (IFRS or IFRS for SMEs are most commonly used in the UAE).
| Adjustment Type | Effect on Taxable Income | Examples |
|---|---|---|
| Add back non-deductible expenses | Increases taxable income | Fines and penalties, entertainment exceeding 50% limit, personal expenses charged to the business |
| Exempt income deduction | Reduces taxable income | Qualifying dividends from UAE subsidiaries, qualifying capital gains on subsidiary disposals |
| Interest limitation rule | May increase taxable income | Net interest expense exceeding 30% of EBITDA is non-deductible (group financing transactions) |
| Transfer pricing adjustment | Varies | Related party transactions must be priced at arm's length — adjustments if not |
| Tax loss relief | Reduces taxable income | Carry forward of prior year CT losses (up to 75% of current year taxable income) |
After CT adjustments, you have your taxable income. The first AED 375,000 is taxed at 0%. The remainder is taxed at 9%.
Example: A mainland Dubai LLC with taxable income of AED 800,000 pays CT on AED 425,000 (AED 800,000 minus AED 375,000) = AED 38,250 in corporate tax.
Taxable income, adjustments, and the 9% rate are calculated from your accounting records — no manual CT spreadsheet needed.
Small Business Relief (SBR) is a significant concession for small UAE businesses. If you elect for SBR, you are treated as having zero taxable income for the period — meaning zero CT to pay and simplified compliance obligations.
If your revenue exceeds AED 3 million in any tax period, you cannot elect for SBR for that period and may lose it for future periods. Plan ahead if you are approaching the threshold.
Free zone companies are subject to CT, but Qualifying Free Zone Persons (QFZPs) can benefit from a 0% rate on qualifying income.
A QFZP is a free zone entity that meets all of the following conditions:
Income from mainland UAE customers or activities outside the free zone is generally non-qualifying income taxed at 9%. ETaxFlow tracks the qualifying/non-qualifying income split automatically for QFZP companies.
Expenses are generally deductible if they are:
The CT return must be submitted and CT must be paid within 9 months of the end of the financial year.
| Financial Year End | CT Return & Payment Deadline |
|---|---|
| 31 December 2024 | 30 September 2025 |
| 31 March 2025 | 31 December 2025 |
| 30 June 2025 | 31 March 2026 |
| 31 December 2025 | 30 September 2026 |
You must register for UAE corporate tax through EmaraTax before your registration deadline — which is separate from your CT return filing deadline. Penalties for late registration apply from AED 10,000.
The corporate tax return is filed through the FTA's EmaraTax portal. To complete it accurately you need:
Use the free UAE corporate tax calculator to estimate your 9% CT liability and check Small Business Relief eligibility before filing.
If you use UAE corporate tax software like ETaxFlow, your accounting profit flows directly into the CT calculation module. Adjustments are applied systematically, SBR eligibility is flagged automatically, and the final CT position is calculated — all within the same system as your day-to-day accounting.
ETaxFlow tracks taxable income, applies CT adjustments, and flags SBR eligibility — integrated with your VAT and payroll.
The federal corporate tax applies a standard 9% rate on taxable business profits that exceed AED 375,000. Net earnings below this limit remain taxed at 0% to support early-stage business growth across the UAE.
Identify your tax status: Determine if your entity operates as a Resident, Non-Resident, or a specialized Free Zone organization. Each status carries different registration obligations, filing timelines, and income treatment rules under the UAE Corporate Tax Law.
Adjust your accounting profits: Calculate your final taxable income by factoring in disallowed items — specific corporate entertainment caps, fines and penalties payable to government bodies, and non-business personal expenses cannot be deducted from taxable income.
Apply QFZP rules where relevant: Free zone entities meeting the Qualifying Free Zone Person conditions pay 0% on qualifying income. Non-qualifying income remains taxable at 9%. The split must be tracked at transaction level throughout the year.
File through EmaraTax: The CT return is due within 9 months of your financial year-end. ETaxFlow prepares your CT300 return data, depreciation schedules, and transfer pricing disclosures ready for direct upload to the EmaraTax portal.
Government entities and government-controlled entities are automatically exempt. Natural resource extraction businesses pay emirate-level taxes instead of federal CT. Qualifying Public Benefit Entities, qualifying investment funds, and public pension or social security funds may also be exempt subject to conditions. Individuals earning personal income not through a business are outside the scope of CT.
Yes, but Qualifying Free Zone Persons (QFZPs) can benefit from a 0% rate on qualifying income. To qualify, the free zone entity must maintain adequate substance in the free zone, derive qualifying income, comply with transfer pricing rules, and not have elected to be subject to regular CT. Non-qualifying income is taxed at 9%.
Small Business Relief allows businesses with revenue of AED 3 million or less (for tax periods ending on or before 31 December 2026) to elect to be treated as having zero taxable income. This removes CT compliance obligations for very small businesses. The election must be made on the CT return.
Most UAE resident businesses must register for corporate tax by the deadline set by the FTA for their category. The FTA has issued staggered registration deadlines based on licence issue date and entity type. Check the FTA's EmaraTax portal for your specific registration deadline.
UAE VAT is a transaction tax charged at 5% on taxable supplies and collected from customers — it is largely passed through. UAE corporate tax is a tax on business profit calculated on your net taxable income after deducting allowable expenses. You pay CT out of your own profits, not from customers. They are two separate taxes with separate registration and filing requirements.