Corporate Tax in the UAE: 9% simply explained
Since June 2023 the UAE has levied a Corporate Tax. The 9% rate sounds moderate. What matters, however, is the allowance, the special rules for small businesses and correct profit calculation.
Who pays Corporate Tax and how much?
- 0% on taxable profit up to AED 375,000.
- 9% on the portion of profit exceeding AED 375,000.
- Applies to mainland companies, free zone companies and qualifying freelancers.
Small Business Relief
If your revenue in a tax period is at most AED 3 million, you can elect Small Business Relief: you're treated as having no taxable profit, so effectively AED 0 Corporate Tax. The rule applies to tax periods ending on or before 31 Dec 2026. Registration and filing of the return remain mandatory nonetheless.
Free Zone: 0% possible, but with conditions
Qualifying Free Zone Persons (QFZP) can pay 0% on qualifying income. Requirements include, among others, adequate economic substance, qualifying activities, the de-minimis threshold and audited financial statements. This should be checked with a tax advisor.
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Try free for 1 monthDeductibility of expenses
- Entertainment costs are only 50% deductible.
- Fines and penalties are not deductible.
- Larger acquisitions are capitalized and depreciated over their useful life instead of being fully deducted immediately.
Deadlines
The Corporate Tax return is due within 9 months after the end of the financial year. For a calendar-year financial year that means: filing by the end of September of the following year.
Frequently asked questions
Do I have to register even if I pay 0%?
Yes. Registration and the annual filing of the return are generally mandatory, even if the final tax is AED 0.
Note: This article is for general information only and does not replace individual tax advice.
