UAE Corporate Tax Guide
9% Corporate Tax — who pays, how much, and the free zone trap that costs companies their 0% status for 5 years.
Corporate Tax Basics
What is UAE Corporate Tax?
A 9% federal tax on business profits exceeding AED 375,000, introduced under Federal Decree-Law No. 47 of 2022. Effective for financial years starting on or after 1 June 2023.
Source: Federal Decree-Law No. 47 of 2022, Article 3
Who pays Corporate Tax?
All UAE companies (mainland and free zone), branches of foreign companies, individuals with business income > AED 1 million/year, and partnerships. Government entities, pension funds, and qualifying investment funds are exempt.
Source: Federal Decree-Law No. 47 of 2022
What are the tax rates?
0% on taxable income up to AED 375,000. 9% on taxable income above AED 375,000. QFZP: 0% on qualifying income, 9% on non-qualifying income.
Source: Federal Decree-Law No. 47 of 2022, Article 3
What about Small Business Relief?
Businesses with revenue under AED 3 million can elect for Small Business Relief — treated as having zero taxable income. Available until tax periods starting before 1 January 2027. Cannot be used if part of a multinational group with consolidated revenue > AED 3.15 billion.
Source: Ministerial Decision No. 73 of 2023
Registration
When must I register?
Within the timeframe specified by FTA based on your licence issuance date. Late registration penalty: AED 10,000.
Source: FTA Public Clarification CTPCL1
Is the AED 10,000 penalty waived?
Yes — if you file your first corporate tax return within 7 months of the end of your first tax period. The FTA will refund the penalty if already paid.
Source: FTA Penalty Waiver Decision
Do freelancers need to register?
Yes, if your annual business revenue from freelance activities exceeds AED 1 million. Assessed on a calendar-year basis (Jan-Dec). Many freelancers are unaware of this requirement.
Source: Federal Decree-Law No. 47 of 2022, Article 51
Free Zone Companies (QFZP)
HIGH RISKCan free zone companies pay 0% tax?
Only if they qualify as QFZP. NOT automatic. Must meet ALL 5 conditions: adequate substance, qualifying income, de minimis test, no mainland election, transfer pricing compliance.
Source: FTA Guide CTGFZP1
What happens if I fail one condition?
You lose QFZP status for the ENTIRE entity for up to 5 years. All income becomes taxable at 9%. This is the most punitive consequence in the corporate tax framework.
Source: Federal Decree-Law No. 47 of 2022, Article 19
Is an audit now mandatory?
Yes. Starting with tax periods beginning 1 January 2025, ALL free zone entities claiming QFZP status must undergo a mandatory audit — regardless of revenue.
Source: FTA Guide CTGFZP1, 2025 update
Is QFZP worth the compliance cost?
Depends. AED 10M taxable income × 9% = AED 900K tax. QFZP compliance ~AED 50-100K. Clear saving. But AED 1M taxable income × 9% = AED 90K. Compliance ~AED 30-50K. Marginal saving + 5-year risk. Consider Small Business Relief if revenue < AED 3M.
Source: Calculation
Filing & Returns
When must I file?
Within 9 months from the end of your financial year. For a Dec year-end, the deadline is 30 September of the following year.
Source: Federal Decree-Law No. 47 of 2022
What if I file late?
Late filing: AED 500/month for the first 12 months, then AED 1,000/month thereafter (per Cabinet Decision No. 129 of 2025, effective April 14, 2026).
Source: Cabinet Decision No. 129 of 2025
Deductions & Non-Deductible
What expenses are deductible?
Business expenses incurred wholly and exclusively for business purposes: salaries, rent, utilities, professional fees, depreciation, bad debts (if specific conditions met).
Source: Federal Decree-Law No. 47 of 2022
What is NOT deductible?
Per Article 33: fines and penalties, bribes, donations (unless to approved entities), entertainment (50% limit), personal expenses of owners, and any expense related to exempt income.
Source: Federal Decree-Law No. 47 of 2022, Article 33
What about interest deductions?
General Interest Deduction Limitation Rule: net interest expenditure is limited to 30% of EBITDA. Specific rules apply to related party financing.
Source: Federal Decree-Law No. 47 of 2022
Last verified: 1 May 2026
Sources: Federal Decree-Law No. 47/2022, Ministerial Decision No. 73/2023, Cabinet Decision No. 129/2025, FTA Guide CTGFZP1. Always check tax.gov.ae.