Corporate Tax
UAE Corporate Tax: The Complete 2026 Guide
· 5 min read · By Aureus Worldwide
UAE Corporate Tax reshaped how every business in the Emirates plans its finances. This guide explains the rate, thresholds, free-zone treatment and the practical steps to stay compliant in 2026.
What is UAE Corporate Tax?
Corporate Tax (CT) is a direct, federal tax on the net profit of businesses, administered by the Federal Tax Authority (FTA). It applies to financial years starting on or after 1 June 2023, so most companies have now filed at least one return. The headline design is deliberately simple and competitive by global standards.
- 0% on taxable income up to AED 375,000
- 9% on taxable income above AED 375,000
- A separate rate framework applies to large multinationals in scope of the OECD global minimum tax (Pillar Two)
Taxable income starts from accounting profit prepared under acceptable accounting standards (generally IFRS), then adjusted for specific tax rules such as exempt income, non-deductible expenses and reliefs.
Who is taxable?
Most businesses operating in the UAE fall within scope, including:
- UAE mainland companies and other juridical persons
- Free zone companies (with special rules, see below)
- Individuals carrying on a business or business activity where turnover exceeds the published threshold
- Foreign companies with a permanent establishment or UAE-sourced income
Salaries, personal investment income and most personal real estate income earned by individuals outside a business are not taxed. Always confirm your specific position, as facts change the outcome.
Free zones and the QFZP regime
Free zones remain attractive, but the 0% benefit is conditional. A Qualifying Free Zone Person (QFZP) can apply 0% to its qualifying income and 9% to non-qualifying income, provided it:
- Maintains adequate substance in the UAE
- Earns qualifying income as defined in Cabinet decisions
- Complies with transfer pricing rules and documentation
- Does not elect to be subject to the standard regime
- Meets the de minimis requirements for non-qualifying revenue
If any condition fails, the entity can lose QFZP status and be taxed at 9% on all income for that period and potentially subsequent periods. Free-zone groups should review their income streams carefully. Our transfer pricing guide covers the related-party documentation QFZPs must keep.
Registration and Corporate Tax returns
Every taxable person must register with the FTA and obtain a Corporate Tax registration number, even if expecting to pay 0%. After the financial year ends, you file one Corporate Tax return.
| Step | What happens | Typical timing |
|---|---|---|
| Register | Obtain CT registration number from the FTA | Per FTA-published deadlines |
| Prepare accounts | Financial statements under IFRS / IFRS for SMEs | After year-end |
| Compute tax | Adjust accounting profit to taxable income | Before filing |
| File return | Submit CT return via EmaraTax | Within 9 months of year-end |
| Pay tax | Settle any liability owed | Within 9 months of year-end |
Deadlines depend on your financial year and registration timeline, so confirm current rules with the FTA. See our Corporate Tax deadlines guide for the registration timeline in detail.
Reliefs and exemptions worth knowing
The law includes several reliefs that can materially reduce or defer tax:
- Small Business Relief, eligible resident businesses with revenue within the AED 3,000,000 threshold can elect to be treated as having no taxable income for qualifying periods.
- Qualifying group relief, transfers of assets and liabilities between group members can be tax-neutral if conditions are met.
- Business restructuring relief, mergers and certain reorganisations may defer gains.
- Participation exemption, dividends and capital gains from qualifying shareholdings can be exempt.
- Foreign tax credit, relief for foreign tax paid on income also taxed in the UAE.
Reliefs are elective or conditional. Claiming the wrong one, or missing an election, can be costly, so model the outcome before you file.
Deductible vs non-deductible expenses
Expenses incurred wholly and exclusively for business are generally deductible, but watch the carve-outs:
- Entertainment expenditure is typically deductible at 50%
- Interest deductions are subject to limitation rules (broadly linked to EBITDA, see our EBITDA guide)
- Fines, penalties and bribes are non-deductible
- Donations are deductible only to qualifying public benefit entities
Common pitfalls
- Assuming free-zone status guarantees 0% with no conditions
- Forgetting to register because the business expects to pay nothing
- Ignoring transfer pricing because the business is "small"
- Treating accounting profit as taxable income without adjustments
- Missing the election for Small Business Relief
Tax groups and consolidation
Related UAE companies that meet the conditions can form a Corporate Tax group and be treated as a single taxable person. The parent files one consolidated return covering the whole group, and qualifying intra-group transactions are generally eliminated. This can simplify compliance and allow profits and losses to be offset within the group in the same period. However, forming a tax group is an election with conditions, common ownership of at least the required percentage, the same financial year, and the same accounting standards, and it brings joint and several liability for the group's tax. It is not automatically the best structure, so model the outcome before electing.
Record-keeping and audited accounts
Every taxable person must keep accounting records and supporting documents for the statutory retention period and produce them on request. Larger businesses, and those electing certain reliefs, may be required to maintain audited financial statements. Even where an audit is not mandatory, clean records make your computation defensible and reduce the risk of FTA adjustments. Maintaining IFRS-compliant books throughout the year, rather than reconstructing them at filing time, is the single most effective way to control Corporate Tax risk and cost. Our financial audit guide explains how to keep accounts audit-ready.
How Aureus Worldwide helps
Aureus Worldwide supports UAE businesses across the full Corporate Tax lifecycle, registration with the FTA, impact assessments, free-zone QFZP reviews, taxable income computations and return preparation. Our tax advisory team helps you choose the right reliefs, keep clean documentation and avoid penalties, while our accounting team ensures your financial statements are return-ready. For a tailored review of your Corporate Tax position, contact our advisors.
Frequently asked questions
What is the UAE Corporate Tax rate?
The standard rate is 9% on taxable income above AED 375,000, with 0% applied to taxable income up to that threshold.
Do free zone companies pay Corporate Tax?
A Qualifying Free Zone Person can apply 0% to qualifying income if it meets substance and other conditions; non-qualifying income is taxed at 9%.
Who must register for UAE Corporate Tax?
In principle all taxable persons, including most mainland and free zone businesses, must register with the FTA and obtain a Corporate Tax registration number.