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The United Arab Emirates introduced a federal corporate tax through Federal Decree-Law No. 47 of 2022, and the regime has applied to financial years beginning on or after 1 June 2023. Three years on, the picture has shifted considerably: small business relief has been extended, the qualifying activity list for free zone entities has been rewritten, a 15% minimum tax now applies to large multinational groups, and the administrative penalty framework was rebuilt in April 2026. What follows are the rates, thresholds, deadlines and obligations a company operating in Dubai and the wider UAE needs to work with in 2026, each tied to its official source.
Table of Contents
1. What Is UAE Corporate Tax and Who Pays It?
2. Dubai Corporate Tax Rates in 2026
3. Small Business Relief Extended to 2029
4. Do Free Zone Companies Really Pay 0%?
5. Domestic Minimum Top-up Tax: The 15% Rate
6. What Foreign Shareholders Often Overlook
7. Exempt Persons and Exempt Income
8. Corporate Tax Registration and EmaraTax
9. Filing Calendar and Key 2026 Dates
10. The New Penalty Regime from 14 April 2026
11. Transfer Pricing and Tax Groups
12. Accounting, Audit and Record Keeping
13. Priority Compliance Steps
Sources
Corporate tax is a direct tax charged on the adjusted accounting profit of legal persons and of natural persons carrying on a business. The starting point is the net profit shown in the financial statements, to which the exemptions, deductions and adjustments set out in the law are applied.
Cabinet Decision No. 49 of 2023 provides that a natural person becomes subject to corporate tax only where business turnover exceeds AED 1,000,000 within a Gregorian calendar year. Wage income, personal investment income and real estate investment income that does not require a licence fall outside the scope entirely, so an individual earning only from these three sources is not required to register regardless of the amounts involved.
Rather than a single flat rate, the UAE operates a tiered structure that varies with the profile of the taxpayer and the source of the income.
| Taxable Person / Tax Base | Rate | Legal Basis |
|---|---|---|
| Taxable income up to AED 375,000 | 0% | Decree-Law 47/2022, Art. 3 |
| Portion of taxable income above AED 375,000 | 9% | Decree-Law 47/2022, Art. 3 |
| Qualifying income of a Qualifying Free Zone Person | 0% | Decree-Law 47/2022, Art. 18 |
| Non-qualifying income of a QFZP | 9% | Ministerial Decision 229/2025 |
| MNE groups with consolidated revenue of EUR 750m or more | 15% | Domestic Minimum Top-up Tax |
The threshold is the first band of a tiered calculation, not an all-or-nothing exemption. For a Dubai mainland company with taxable income of AED 900,000, the first AED 375,000 is taxed at zero and the remaining AED 525,000 at 9%, producing a liability of AED 47,250 — an effective rate of 5.25%. Where profit stays below AED 375,000 no tax arises, but the obligations to register and to file a return remain.
Small Business Relief treats a UAE resident taxable person with revenue of no more than AED 3,000,000 as having no taxable income for the relevant tax period and grants simplified compliance. The scheme was originally due to end on 31 December 2026.
On 7 August 2026 the Ministry of Finance issued Ministerial Decision No. 131 of 2026, keeping the revenue threshold unchanged and extending eligibility to tax periods ending on or before 31 December 2029. The measure directly affects the small taxpayers that make up more than 94% of businesses in the UAE. Our Small Business Relief guide covers the mechanics in detail.
The relief is not automatic. The taxpayer must elect for it in the return, revenue must remain below the threshold in every relevant period, and the entity must not be a Qualifying Free Zone Person or a member of a large multinational group.
Being registered in a free zone does not by itself secure the zero rate. It applies only to the qualifying income of an entity that holds and maintains Qualifying Free Zone Person (QFZP) status.
Under Ministerial Decision No. 229 of 2025, non-qualifying revenue must not exceed the lower of 5% of total revenue or AED 5,000,000. Breaching the limit costs the status, and the entity is then taxed at 9% on all of its income for that period and the following four tax periods.
Qualifying activities include manufacturing and processing of goods, trading in qualifying commodities, holding shares and securities, ship ownership and operation, reinsurance, fund management, wealth and investment management, headquarter services to related parties, treasury and financing services, aircraft financing and leasing, distribution of goods in designated zones, and logistics services.
Excluded activities cover transactions with natural persons (with limited exceptions), banking, insurance other than reinsurance, finance and leasing activities, and income from immovable property other than commercial property located in a free zone. Our QFZP guide sets out how to protect the status in practice.
| Criterion | Mainland | Free Zone (QFZP) |
|---|---|---|
| Corporate tax rate | 9% above AED 375,000 | 0% on qualifying income |
| Selling into the UAE market | Unrestricted | Counts as non-qualifying revenue |
| Audit requirement | Conditional | Mandatory for the status |
| Small Business Relief | Available | Not available |
| Substance requirement | General rules | Mandatory within the zone |
For the practical side of the structuring decision, see our article on how corporate tax is applied in Dubai.
In line with the OECD Pillar Two framework, the UAE brought the Domestic Minimum Top-up Tax into force for financial years beginning on or after 1 January 2025. It applies to UAE constituent entities of multinational groups whose ultimate parent reported consolidated global revenue of EUR 750 million or more in at least two of the four preceding financial years, topping the effective tax rate up to 15%.
Small and medium-sized businesses, purely domestic companies and groups below the threshold are unaffected; the applicable rate for them remains 9%.
A low UAE tax bill is not the end of the analysis for shareholders who are tax resident elsewhere. Most European jurisdictions operate controlled foreign company rules that attribute the undistributed passive profits of a low-taxed foreign subsidiary back to the resident shareholder. Germany's rules under sections 7 to 14 of the Foreign Tax Act, for example, are triggered where a resident holds more than 50% of a foreign company whose passive income bears an effective tax burden below 15% — a test a 0%-rated free zone holding company can meet without difficulty, while an operating business taxed at 9% usually will not.
Place of effective management is the second issue. Where a UAE company is in substance directed from abroad, the shareholder's home jurisdiction may treat it as resident there and tax its worldwide profits. Structuring decisions therefore need to be tested against both UAE law and the residence rules that apply to the owners.
Withholding tax on cross-border and domestic payments of royalties, interest and dividends is set at 0%, and a foreign tax credit is available for taxes paid abroad.
Registration is completed through the Federal Tax Authority's EmaraTax portal and results in the issue of a Tax Registration Number (TRN). Taxpayers whose profit falls below the threshold, and those claiming Small Business Relief, must still register.
Failure to register on time attracts an administrative penalty of AED 10,000. Our article on corporate tax registration in Dubai walks through the process and the errors that most often delay it.
The corporate tax return is due within nine months of the end of the relevant tax period, and payment falls due within the same window. There is no separate provisional filing; the period closes with a single return.
| Financial Year End | Filing and Payment Deadline |
|---|---|
| 31 December 2025 | 30 September 2026 |
| 31 March 2026 | 31 December 2026 |
For companies on a calendar financial year, the 2025 return is due by 30 September 2026. Closing the books, reviewing related party transactions and making any elections all need to be completed before that date.
On electronic invoicing, the UAE opens its pilot and voluntary participation phase on 30 October 2026, with mandatory adoption rolled out in later stages according to revenue size.
Cabinet Decision No. 129 of 2025 replaced the 2017 administrative penalty framework with a single proportionate structure covering corporate tax, VAT and excise tax, effective 14 April 2026.
| Situation | Consequence |
|---|---|
| Late registration | AED 10,000 administrative penalty |
| Late payment | 14% per annum, calculated monthly and non-compounding |
| Voluntary disclosure before audit notice | 1% per month on the shortfall |
| Error identified on audit | 15% of the shortfall plus late payment charges |
The logic is straightforward: self-correction is cheap, discovery is expensive. Our article on the most costly corporate tax mistakes in Dubai covers the errors that trigger these charges most often.
All transactions with related parties and connected persons must satisfy the arm's length principle and be supported on request. Ministerial Decision No. 97 of 2023 ties the master file and local file obligation to two thresholds: taxpayer revenue of AED 200 million or more in the relevant tax period, or consolidated group revenue of AED 3.15 billion or more.
A UAE resident parent and its subsidiaries may form a single tax group where the parent holds at least 95% of share capital, voting rights and profit entitlement, the members share the same financial year and accounting standards, and none is an exempt person or a QFZP. The group files one return, intra-group transactions are eliminated and losses can be offset within the group.
Financial statements are prepared under IFRS as a general rule; taxpayers with revenue not exceeding AED 50 million may apply IFRS for SMEs. Those with revenue not exceeding AED 3 million may elect the cash basis of accounting.
For companies on a calendar financial year, the 2025 return is due by 30 September 2026. Making the status election, tracking the de minimis ratio and documenting related party transactions before that date measurably reduces both penalty exposure and the effective tax burden.
Taxable income up to AED 375,000 is taxed at 0% and the portion above that at 9%. The qualifying income of a Qualifying Free Zone Person is taxed at 0%. UAE entities of multinational groups with consolidated revenue of EUR 750 million or more are topped up to an effective rate of 15% under the Domestic Minimum Top-up Tax.
The tax base starts from net accounting profit in the financial statements, adjusted as the law requires. For a mainland company with taxable income of AED 900,000, the first AED 375,000 is taxed at zero and the remaining AED 525,000 at 9%, giving a liability of AED 47,250 — an effective rate of 5.25%.
Being registered in a free zone is not enough on its own. The zero rate applies only to the qualifying income of an entity that maintains Qualifying Free Zone Person status, which requires economic substance, audited financial statements, transfer pricing compliance and staying within the de minimis limit. Where non-qualifying revenue exceeds 5% of total revenue or AED 5,000,000, the status is lost and all income is taxed at 9% for five tax periods.
Ministerial Decision No. 131 of 2026, issued by the Ministry of Finance on 7 August 2026, extended Small Business Relief to tax periods ending on or before 31 December 2029. UAE resident taxpayers with annual revenue of no more than AED 3,000,000 are treated as having no taxable income for the period, provided they elect for the relief in their return.
The return is due within nine months of the end of the tax period, and payment falls due within the same window. For a financial year ending 31 December 2025 the deadline is 30 September 2026; for one ending 31 March 2026 it is 31 December 2026. There is no separate provisional filing.
Failure to register on time attracts an administrative penalty of AED 10,000. Under Cabinet Decision No. 129 of 2025, in force since 14 April 2026, late payment carries 14% per annum calculated monthly on a non-compounding basis. Voluntary disclosure before an audit notice costs 1% per month, while an error found on audit costs 15% of the shortfall.
No personal income tax is charged on salaries or wages. Natural persons carrying on a business become subject to corporate tax once their business turnover exceeds AED 1,000,000 in a Gregorian calendar year. Wage income, personal investment income and real estate investment income that does not require a licence fall outside the scope.
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