UAE Corporate Tax for Foreign-Owned Companies
The UAE introduced corporate tax in 2023. For most foreign-owned companies it is 9% on taxable profit above AED 375,000, with a 0% route for some free zone companies and relief for smaller businesses. Here is how it actually works, who has to register, and what the 0% route really involves.
Talk to us about your tax position- Corporate tax is 9% on taxable profit above AED 375,000, and 0% on the first AED 375,000. It is a tax on profit, not on turnover.
- It applies to financial years starting on or after 1 June 2023. Nearly every UAE company has to register, even if it ends up paying nothing.
- A free zone company can keep 0% on its qualifying income if it meets the Qualifying Free Zone Person conditions — but a free zone company is not automatically tax-free.
- Many smaller businesses can elect Small Business Relief and be treated as having no taxable income while revenue stays under AED 3 million.
- A separate 15% minimum tax applies only to very large multinational groups (global revenue over EUR 750 million) — not to an ordinary owner-run business.
- We handle the registration and the return in-house; audit, where it is needed, we run with firms we work with regularly.
What UAE corporate tax actually is
Corporate tax is a federal tax on a company's profit, introduced under Federal Decree-Law 47 of 2022 and applying to financial years that start on or after 1 June 2023. The rate is 0% on the first AED 375,000 of taxable profit and 9% on profit above that. There is one threshold and one rate above it.
It is a tax on profit, not on revenue. A company turning over AED 2 million but making AED 200,000 of profit is taxed on the profit, not the turnover — and only on the part above AED 375,000. It is also separate from VAT, which is a 5% tax on sales and runs on its own registration and returns (we cover that on the accounting page).
Who has to register, and by when
Registration is its own obligation, with its own deadline, separate from filing the return.
- Register first. Almost every UAE company has to register for corporate tax with the Federal Tax Authority, even one that will pay nothing. A company set up on or after 1 March 2024 generally has to register within three months of being established. Late registration carries an AED 10,000 penalty. A company that existed before 1 March 2024 had an earlier deadline, set by the month its licence was issued — all of which fell during 2024 — so a company that has not registered yet is already late and should do so now.
- Submit once a year. You submit one return and pay once, within nine months of the financial year-end — there are no instalments. A company with a year ending 31 December 2025 submits and pays by 30 September 2026.
- Keep books that the return can be built from. The return is only as good as the bookkeeping behind it, which is why the two are best kept together.
The 0% free zone route (Qualifying Free Zone Person)
This is the part most owners ask about, and the part most often misunderstood. A free zone company is not automatically tax-free. It can apply 0% corporate tax, but only on its qualifying income, and only if it meets all the conditions of a Qualifying Free Zone Person (QFZP):
- Real activity and substance in the UAE — staff, premises and decisions actually here.
- Income of a qualifying type (broadly, dealings with businesses outside the UAE and with other free zone companies; income from the UAE mainland or from individuals usually does not qualify).
- Proper market-rate pricing between related companies (transfer pricing), and audited financial statements.
- Not having elected into the standard 9% system.
In practice, income from selling to businesses outside the UAE or to other free zone companies tends to qualify, while income from UAE-mainland customers or from individual consumers usually does not. It is tested every financial year — it is not granted once. And it is close to all-or-nothing.
A QFZP can earn a small amount of non-qualifying income, but only up to a small allowance: non-qualifying revenue has to stay under whichever is lower, 5% of total revenue or AED 5 million. Stay within it and the qualifying income is taxed at 0%. Go over it and the company loses QFZP status for that year and the next four — and all of its income, including the qualifying part, is taxed at 9%.
What changed in 2025. Ministerial Decision 229 of 2025 updated and clarified which activities count as qualifying income, and replaced the earlier Ministerial Decision 265 of 2023. The practical point is unchanged: what you actually do, and what you invoice through which company, decides whether the 0% holds.
Small Business Relief
Separately from the free zone route, a UAE-resident business with revenue at or below AED 3 million can elect Small Business Relief and be treated as having no taxable income. You elect it each year, and it currently applies to tax periods ending on or before 31 December 2026.
Small Business Relief and the 0% free zone route are alternatives — you use one or the other, not both. A Qualifying Free Zone Person cannot also take Small Business Relief. For a smaller company in its early years, the relief is often the simpler route while revenue stays under the threshold.
The 15% minimum tax — large groups only
You may have read about a 15% rate. That is the Domestic Minimum Top-up Tax, which applies from financial years starting on or after 1 January 2025, and only to multinational groups with global revenue of EUR 750 million or more — the OECD's global minimum tax, brought into UAE law. It does not change the 9% / 0% position for an ordinary owner-run business. If your group is that size, it is a specialist conversation; if it is not, this part does not apply to you.
What it means for a foreign-owned company
For most UK, Irish and Australian owners running a real business from the UAE, one of three positions applies: Small Business Relief while revenue is under AED 3 million, the 0% free zone route if the company genuinely qualifies, or 9% on profit above AED 375,000.
As a rough guide: under AED 3 million of revenue, Small Business Relief is usually the simplest route while you qualify for it; a free zone company with genuine substance, audited accounts and income mostly from outside the UAE or from other free zone companies may hold the 0% route; anything else — including any company selling into the UAE mainland — sits in the standard system, 0% on the first AED 375,000 of profit and 9% above.
It is worth settling which before the first year-end, and it can change as the business grows.
UAE corporate tax is also separate from your tax position back home. A UAE company run from London can raise a UK corporate-residency question, which is a different issue from UAE tax — we flag where it matters, but UK and Australian tax advice is not something we give.
How we handle it
We register the company for corporate tax and handle the tax filing as part of the accounting work, not as a separate charge — the accountant who keeps your books also submits the returns to the Federal Tax Authority (the VAT return each quarter where it applies, and the corporate-tax return once a year).
Where the 0% free zone route depends on audited accounts, audit is a separate statutory job: a basic free zone company audit starts from around AED 4,000 and moves with how much work it takes, and we coordinate it with firms we work with regularly rather than signing off our own numbers. The bookkeeping-and-tax service that prepares and submits the return starts from around AED 1,000 a month for a small business.
What you pay depends on how much goes through the business, so the clearest answer comes from a short conversation with our accountant, who can quote for your company. Either way you deal with the same advisor who handled the setup, so nothing has to be explained from scratch at year-end. The full service is on UAE Accounting, Bookkeeping and VAT.
Frequently asked questions
What is the UAE corporate tax rate?
0% on the first AED 375,000 of taxable profit and 9% on profit above that, for financial years starting on or after 1 June 2023. It is a tax on profit, not turnover.
Who has to pay UAE corporate tax?
Almost every UAE business is within the corporate-tax system and has to register, free zone companies included. Whether you actually pay depends on the profit and the route: nothing on the first AED 375,000, 9% above it, 0% on qualifying free zone income if you meet the conditions, or nothing under Small Business Relief while revenue stays below AED 3 million. A few categories are exempt — government bodies and some regulated or public-interest entities — but an ordinary owner-run business is not.
How is taxable profit worked out?
It starts from your accounting profit — the net profit in your financial statements — adjusted for a few tax rules. Most ordinary business costs incurred wholly for the business are deductible; some are limited (entertainment is 50% deductible, and interest deductions are broadly capped at 30% of earnings before interest, tax, depreciation and amortisation), and some are not deductible at all, such as fines and dividends paid out. Your accountant works the adjustments through when the return is prepared.
Do free zone companies pay corporate tax?
Not on qualifying income, if the company meets the Qualifying Free Zone Person conditions (real UAE substance, qualifying income, transfer-pricing compliance and audited accounts). Any non-qualifying income is taxed at 9%, and a free zone company is not automatically tax-free.
What counts as qualifying income for the 0% rate?
Broadly, income from dealing with businesses outside the UAE and with other free zone companies, on activities the rules treat as qualifying (updated by Ministerial Decision 229 of 2025). Income from UAE-mainland customers or from individual consumers generally does not qualify. It is tested each year, and going over the small non-qualifying allowance loses the 0% rate.
When do I have to register for corporate tax?
A company set up on or after 1 March 2024 generally registers within three months of being established, with an AED 10,000 penalty for late registration. The return is filed once a year, within nine months of the year-end.
Is the UAE still tax-free?
No. There is 9% corporate tax on profit above AED 375,000, and 5% VAT. There is still no personal income tax, and a 0% corporate-tax route for qualifying free zone income, but "tax-free" is no longer accurate.
What is Small Business Relief?
A UAE-resident business with revenue at or below AED 3 million can elect to be treated as having no taxable income, for tax periods ending on or before 31 December 2026. It is not available to a Qualifying Free Zone Person.
Does my company need an audit for corporate tax?
A company relying on the 0% Qualifying Free Zone Person route needs audited financial statements, and some free zones (DMCC, for example) require an audit regardless. A basic free zone company audit starts from around AED 4,000, depending on how much work it takes, and we coordinate audits with firms we work with regularly. The cleanest way to a precise figure is a short conversation with our accountant.
Do I pay UAE corporate tax on income earned abroad?
A UAE company is generally taxed on its profits wherever earned, with reliefs in some cases (for example for a genuine foreign branch or qualifying participations). How it applies depends on the structure, and it is worth checking before you set it up.
Does UAE corporate tax affect my tax at home?
It is separate. But a UAE company run from the UK or Australia can raise a corporate-residency question in that country — a different issue from UAE tax, and one to take home-country advice on.
Where to read next
Not sure where your company stands on tax?
Tell us what the business does, where it is set up and roughly what it turns over, and we will tell you what you have to register for, which route fits, and what you will actually pay.
Talk to us about your tax position