The UAE has long been marketed as a tax-free jurisdiction. That description is no longer accurate. Since 1 June 2023, the UAE applies a federal corporate tax on business profits — the first of its kind in the country's history.

For business owners who have not yet engaged with the new rules, the time to act is now. Registration is mandatory. Deadlines are real. Penalties for non-compliance are already being issued.

The Tax Rates

0% On taxable income up to AED 375,000 per year

Small Business Relief for revenue under AED 3M — but only for tax periods ending on or before 31 December 2026 (Ministerial Decision No. 73 of 2023, Art. 2)

9% On taxable income above AED 375,000

Lower than Singapore (17%), Hong Kong (16.5%), all EU

15% Domestic Minimum Top-up Tax on large multinational groups

Groups with global revenue of €750M or more, for financial years starting on or after 1 January 2025 — Cabinet Decision No. 142 of 2024. This is a separate charge, not a third corporate tax band.

The 9% rate is among the lowest corporate tax rates in the world. The threshold means that businesses with profits below AED 375,000 per year — approximately USD 102,000 — pay no corporate tax at all.

Who Must Pay UAE Corporate Tax?

Corporate tax applies to all juridical persons incorporated in the UAE — mainland and free zone — as well as foreign entities with a permanent establishment in the UAE or UAE-sourced income.

The Free Zone Question: QFZP Status

This is the most important — and most misunderstood — aspect of UAE Corporate Tax for international investors.

Free zone companies are not automatically exempt. They are subject to the same 9% rate as mainland companies unless they qualify as a Qualifying Free Zone Person (QFZP) and earn qualifying income.

"Many business owners assume their free zone company is automatically tax-free. It is not. QFZP status must be assessed, actively maintained, and documented. A company that fails the substance test or earns non-qualifying income will pay 9% — on its entire taxable income."

— Ahmad Yusupov, AMAANpro Consulting

To qualify as a QFZP, a free zone company must meet every one of the following. The first four are set by Article 18 of Federal Decree-Law No. 47 of 2022; the last two are added by Ministerial Decision No. 265 of 2023. Meeting only the first four is not enough — a common and expensive misreading.

01

Maintain adequate substance

Real economic activity — genuine operations, employees, expenditure — commensurate with the business conducted. Shell companies will not qualify.

02

Earn qualifying income

Not all free zone income qualifies. Income from UAE mainland transactions, certain financial assets, and UAE real estate is generally non-qualifying.

03

Not elect the standard rate

Companies can choose to opt out of QFZP status and be subject to the standard 9% rate — useful in some structuring scenarios.

04

Comply with transfer pricing

All related-party transactions must be conducted at arm's length and properly documented. This is a hard requirement, not a best practice.

05

Prepare audited financial statements

Audited financial statements are mandatory for a QFZP, whatever the company's size. Management accounts do not satisfy this.

06

Stay within the de minimis threshold

Non-qualifying revenue must stay below the lower of 5% of total revenue or AED 5 million. Breach it and QFZP status is lost for that tax period and the four that follow.

Registration and Key Deadlines

All UAE businesses must register for corporate tax with the FTA through EmaraTax — regardless of whether they expect to be taxable. Failure to register is itself a violation, subject to penalties of AED 10,000 or more.

1 June 2023
Corporate tax effective date. Applies to financial years starting on or after this date.
Closed in 2024
Phased registration window. Under FTA Decision No. 3 of 2024, entities resident before 1 March 2024 had staggered deadlines set by licence issuance month, the last of which fell on 31 December 2024. If you are still unregistered, you are already late and the penalty is accruing.
3 months
New entities. Companies incorporated on or after 1 March 2024 must register within three months of the date of incorporation.
30 September 2026
Return deadline for the 2025 financial year. Returns are due nine months after the end of the tax period, so a company with a 31 December 2025 year-end must file this month.
With tax return
Transfer pricing disclosure. Companies with related-party transactions must complete and submit a disclosure form alongside their return.

Common Mistakes — and What They Cost

⚠ Avoid these errors

Assuming free zone = tax freeQFZP status must be individually assessed and documented. Do not assume.
Failing to registerRegistration is mandatory for all UAE businesses. Late registration: AED 10,000 penalty minimum.
Not maintaining substanceA flexi-desk with no real activity will not satisfy the substance requirement under scrutiny.
Ignoring transfer pricingRelated-party transactions without arm's length documentation expose the company to audit risk.
Missing the return deadlineAED 500/month for first 12 months, rising to AED 1,000/month — plus potential assessment.
Earning non-qualifying incomeOne non-qualifying revenue stream can disqualify the entire company from QFZP status.

Your Action List

  1. 01Register on EmaraTax immediately if not already done — this is a hard legal obligation for all UAE businesses
  2. 02Assess your QFZP eligibility if you operate through a free zone — do not assume, get a qualified assessment
  3. 03Review your related-party transactions and ensure they are documented at arm's length
  4. 04Confirm your financial year-end and calculate your return filing deadline
  5. 05Engage a qualified adviser if any of the above is unclear — the cost of advice is a fraction of the cost of non-compliance

Sources: Federal Decree-Law No. 47 of 2022; Ministerial Decision No. 73 of 2023; Ministerial Decision No. 265 of 2023; Cabinet Decision No. 75 of 2023; Cabinet Decision No. 142 of 2024; FTA Decision No. 3 of 2024. Positions stated are current as at September 2026. Corporate tax law and its implementing decisions change frequently — confirm your own position before acting on anything here.

How AMAANpro Can Help

AMAANpro Consulting is a licensed Tax Consultancy under IFZA, Dubai Silicon Oasis. We handle UAE Corporate Tax registration, QFZP status assessment, transfer pricing documentation, and annual return preparation. Our clients range from individual entrepreneurs to multi-entity corporate groups with international structures.

If you are unsure of your obligations — or certain you have them and need them handled precisely — we are here.