9% above AED 375,000, Small Business Relief, free zone conditions, and the deadlines that trigger penalties — UAE corporate tax explained in plain language.
Introduction
Corporate tax is now a routine part of UAE business life — and routine penalties await companies that ignore it. Here is what actually matters for a small business in 2026, without the jargon.
The Basics
- Rate: 0% on taxable income up to AED 375,000; 9% above that.
- Who: essentially all UAE companies and business activities, mainland and free zone alike — free zone companies still register and file even when they qualify for 0%.
- Registration: mandatory with the Federal Tax Authority; late registration carries a fixed penalty, so new companies should register promptly after licensing.
Small Business Relief
Businesses with revenue under the qualifying threshold can elect Small Business Relief and be treated as having no taxable income for the period — a genuine simplification for micro-businesses. It's an election, not automatic, and it interacts with loss carry-forwards; confirm suitability before choosing it.
Free Zone Companies: The 0% Conditions
A Qualifying Free Zone Person keeps 0% on qualifying income only — with substance requirements, audited financials, and limits on mainland-sourced income (the de minimis rules). Fail a condition and the standard regime applies. This is the area where cheap assumptions cost the most; our mainland vs free zone comparison explains why structure and tax now intertwine.
What You Must Do (Checklist)
- Register for corporate tax with the FTA.
- Keep proper books — accrual accounting for most companies, with records retained for seven years.
- File your return and pay within nine months of your financial year end.
- Check whether you also need VAT registration (mandatory above AED 375,000 taxable supplies).
When to Get Help
Straightforward SMEs manage with a good accountant; anything involving free zone qualification, groups, or international income deserves professional advice. The major firms — KPMG, EY, Grant Thornton, and BDO — all run dedicated SME tax desks, and our guide to accounting firms in the UAE maps the full market.
Frequently Asked Questions
Do freelancers pay corporate tax in the UAE?
Business activity under a license or permit falls within scope, but the 0% band and Small Business Relief mean most modest freelance incomes owe nothing — filing obligations still apply.
Is there still no personal income tax?
Correct — salaries and personal investment income remain untaxed. Corporate tax applies to business profits.
What are the penalties for late filing?
Fixed penalties for late registration and escalating penalties for late returns and payment — compliance is far cheaper than catching up.
Stay Visible While You Grow
Compliance keeps you safe; visibility keeps you growing. List your business free on AE Profile, the UAE business directory.