Corporate Tax, and the elections that matter
The rate is simple. The record-keeping, the elections, the connected-person rules and the nine-month deadline are where UAE businesses actually get caught — including businesses that owe nothing.
UAE Corporate Tax arrived under Federal Decree-Law No. 47 of 2022 and applies to financial years beginning on or after 1 June 2023. Most UAE businesses are now inside a regime they had never dealt with before, and the early filings have made one thing clear: the difficulty is not the rate, it is the record-keeping, the elections and the deadlines.
The regime in one table
| Element | Position |
|---|---|
| Rate | 0% on taxable income up to AED 375,000; 9% above |
| Large multinationals | A Domestic Minimum Top-up Tax of 15% applies to in-scope groups with consolidated global revenue of at least EUR 750 million, for financial years beginning on or after 1 January 2025 |
| Free zones | A Qualifying Free Zone Person can access 0% on qualifying income, subject to strict conditions — see free zone accounting |
| Small Business Relief | Available where revenue does not exceed AED 3 million, for tax periods ending on or before 31 December 2026; the business is treated as having no taxable income but must still register and file |
| Registration | Required for taxable persons regardless of whether tax is payable, within the deadlines set by the FTA |
| Return & payment | Due within nine months of the end of the tax period |
| Records | Retained for seven years after the end of the tax period |
| Accounting basis | IFRS, or IFRS for SMEs below the prescribed revenue threshold; cash basis available for smaller businesses |
Where taxable income diverges from accounting profit
The computation starts from accounting profit and then adjusts. The adjustments that most often matter to owner-managed UAE businesses:
- Non-deductible expenditure — a portion of entertainment costs, fines and penalties, and expenditure not incurred wholly for the business.
- Interest limitation — general interest deduction limitation rules cap net interest expenditure by reference to EBITDA above a de minimis threshold, which bites on debt-funded groups.
- Related-party transactions — must be at arm's length, with a disclosure form and supporting documentation. See transfer pricing.
- Payments to connected persons — owner salaries and benefits are deductible only to the extent they reflect market value for services genuinely provided. This catches many owner-managed businesses.
- Exempt income — dividends and qualifying participation income, and foreign permanent establishment elections.
- Tax losses — carried forward subject to conditions and an offset cap, with continuity-of-ownership requirements.
Businesses assuming that Small Business Relief or the free zone 0% rate means "nothing to do". Both are elections or statuses that require registration, filing, and — in the free zone case — audited financial statements and genuine substance. A business that stops at "we don't pay tax" and files nothing is exposed to penalties on a return that would have shown no tax due.
What we do
Registration; the year-end computation from your management accounts; election modelling — whether Small Business Relief helps, whether a Tax Group is worthwhile, whether the free zone conditions are actually met; the return prepared and filed; related-party disclosures; and the record file behind it all, kept in a form that survives an FTA query two years later.
Reviewed 18 August 2026 by Ahmed Nabil Selim. UAE tax rates, thresholds and deadlines change — confirm the position for your period before relying on it.
UAE Corporate Tax — frequently asked questions
Yes. Registration is an obligation for taxable persons regardless of whether any tax is payable, and it applies to businesses claiming Small Business Relief and to free zone entities benefiting from the 0% rate. Failure to register within the applicable deadline attracts administrative penalties independent of the tax position. A business with no taxable income still registers and still files a return.
Where revenue does not exceed AED 3 million in the current and all previous relevant tax periods, a resident taxable person can elect to be treated as having no taxable income for that period. It is available for tax periods ending on or before 31 December 2026. It simplifies compliance substantially but has consequences worth modelling: you cannot carry forward tax losses arising in a period where the relief is claimed, and interest limitation carry-forwards are also affected. For a growing business heading past AED 3 million, electing in an early loss-making year can be actively unhelpful.
Within nine months of the end of the tax period, with payment due by the same date. For a business with a calendar financial year ending 31 December, that means the following 30 September. There is no separate payment-on-account regime — the liability falls due with the return, which makes cash planning during the year the responsibility of the business rather than a scheduled instalment.
Only to the extent it corresponds to the market value of services actually performed for the business. Payments to a connected person — an owner, a director, or a related party of either — are deductible only where they meet that test, and the burden is on the business to support it. An owner drawing a large salary from a business that would pay a third party far less for the same role should expect the excess to be disallowed, and should document the basis for the figure before the return, not after a query.
No — they are within the regime, but a Qualifying Free Zone Person can apply a 0% rate to qualifying income. The conditions are demanding: adequate substance in the free zone, qualifying income as defined, no election to be taxed at the standard rates, compliance with transfer pricing requirements, audited financial statements, and non-qualifying revenue kept within the de minimis limits. Fail a condition and the entity generally loses QFZP status for that period and subsequent periods. See free zone accounting.
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