How is Corporate Tax Applied in Dubai?

For decades the United Arab Emirates (UAE) was known as a tax-free investment hub. That changed on 1 June 2023, when a federal corporate tax came into effect across all seven emirates, including Dubai. This regime directly affects profit planning, accounting infrastructure and compliance for both local and foreign businesses. In this guide we explain how corporate tax is calculated in Dubai, who is exempt, how registration and filing work, and the rates that apply for 2026.

What Is Corporate Tax in Dubai?

Corporate tax is a direct federal tax levied on the net profit of companies and of individuals carrying out business activities. It applies UAE-wide, not only in Dubai. The tax is administered by the Federal Tax Authority (FTA), and all registration, filing and payment steps are handled through the FTA's digital platform, EmaraTax.

The tax is computed on taxable income, which starts from the accounting profit and is then adjusted for exempt income, non-deductible expenses, transfer pricing adjustments and other items set out in the law.

Dubai Corporate Tax Rates (2026)

The standard regime uses a two-tier structure. The table below summarises the rates in force as of July 2026.

Profit up to AED 375,000 is taxed at 0%; this threshold is not a separate exemption but part of the rate structure. The portion above the threshold is taxed at 9%. From January 2025, large multinational enterprise groups with global consolidated revenue of EUR 750 million or more are subject to a 15% Domestic Minimum Top-up Tax (DMTT) under the OECD Pillar Two framework.

Who Pays Corporate Tax?

Corporate tax applies to UAE-incorporated legal persons, mainland companies and, under certain conditions, free zone companies. Natural persons conducting business under a UAE licence may also become taxable once they exceed a defined revenue threshold.

Exempt Entities

• Government entities and government-controlled entities (for specified activities),
• Businesses engaged in the extraction of natural resources, taxed at the emirate level,
• Qualifying public benefit entities and pension/investment funds (subject to approval).

Free Zone Companies and QFZP Status

A large part of Dubai's appeal comes from its free zones. A free zone company that meets the conditions of a Qualifying Free Zone Person (QFZP) can benefit from a 0% corporate tax rate on its qualifying income. Non-qualifying income remains subject to the standard 9% rate.

QFZP status depends on maintaining adequate economic substance, meeting the qualifying income definition, keeping certain mainland-sourced income below de minimis limits and preparing audited financial statements. You can explore the details in our article Becoming a Qualifying Free Zone Person (QFZP) in Dubai.

Small Business Relief

Update: The United Arab Emirates has extended the Small Business Relief initiative until 31 December 2029. Eligible businesses with annual revenue of up to AED 3 million can continue to benefit from simplified Corporate Tax compliance requirements, reducing administrative burden and focusing on growth.

To ease the burden on start-ups and smaller companies, Small Business Relief allows eligible businesses to be treated as having no taxable income and pay no corporate tax for a tax period.

Eligibility Conditions

• Revenue must be AED 3,000,000 or less in the current and all previous tax periods,
• An election must be made for each tax period,
• As stated on tax.gov.ae, the relief applies to tax periods ending on or before 31 December 2029.

How to Register for Corporate Tax

Corporate tax registration is completed through the FTA's online platform, EmaraTax, and is mandatory for all taxable persons. After registration, the business receives a Tax Registration Number (TRN) used for all tax dealings.

Registration Steps

1. Create an EmaraTax account or log in with an existing one,
2. Enter trade licence, ownership and contact details,
3. Upload the authorised signatory's documents,
4. Obtain approval and receive the TRN.

For the strategic importance of registration and applicable deadlines, see our article The Importance of Corporate Tax Registration in Dubai, UAE.

Filing and Payment Process

Every taxable person must file a corporate tax return and pay any tax due within 9 months of the end of the relevant tax period. The tax period usually aligns with the company's financial year.

Return Preparation

The return must include net income, deductible expenses, exempt items and transfer pricing information. Audited financial statements may be required for businesses above certain thresholds.

Payment

The calculated tax is paid via EmaraTax within the same deadline. Late payments attract penalties and interest.

Non-Compliance Penalties

Administrative penalties apply for late registration, late filing and late payment. Penalties may be fixed amounts for registration delays and cumulative (increasing monthly) for payment delays. Always follow the FTA's official announcements for current penalty amounts.

Common Mistakes

• Missing the registration deadline and risking administrative penalties,
• Assuming a free zone company is automatically taxed at 0% (without meeting QFZP conditions),
• Forgetting to make the period-based election for Small Business Relief,
• Failing to retain accounting records and documents for the statutory period.

References

1. Federal Tax Authority – Corporate Tax and Small Business Relief, tax.gov.ae
2. UAE Ministry of Finance – Domestic Minimum Top-up Tax (DMTT), mof.gov.ae

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