UAE Corporate Tax: 2026 rates, scope, Small Business Relief, free zones and filing
UAE Corporate Tax for tax periods in 2026: who is taxable including individuals with business turnover, the zero-rate band and standard rate, Small Business Relief conditions and its extension, qualifying free zone persons and the de minimis test, deductions, losses, interest limitation, transfer pricing, domestic minimum top-up tax, registration deadlines, returns, payment and penalties.
Applicable period 2026Written by the OpenAccountants team· Last updated Sep 25, 2026
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Written by the OpenAccountants team. Written and source-checked by the OpenAccountants team from the official sources it links.
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All taxable income that is not Qualifying Income (no AED 375,000 band)
9%
Non-resident with no permanent establishment or nexus
UAE-sourced income, as withholding tax
0%
The full Guide
Tax year 2026. In the UAE the tax period is the business's financial year, so "2026" here means tax periods running in 2026 (for most businesses, the calendar year 1 January to 31 December 2026). The rules below are the law as published on tax.gov.ae and mof.gov.ae on 25 September 2026. A short dated section covers returns for periods ending in 2025, which are being filed now.
This Guide covers federal Corporate Tax under Federal Decree-Law No. 47 of 2022 for:
UAE companies and other juridical persons, including free zone companies, and foreign companies effectively managed and controlled in the UAE. These are taxable from the first dirham of taxable income. There is no turnover threshold for a juridical person (Corporate Tax Law, Article 11(3)).
Individuals (natural persons) running a business in the UAE: sole establishments, freelancers and other self-employed people. They are taxable only when their total business turnover is more than AED 1,000,000 in a calendar year (Cabinet Decision No. 49 of 2023, Article 2).
Small businesses deciding whether to elect Small Business Relief.
A summary of the domestic minimum top-up tax for large multinational groups. The detailed work is referred out.
There is no UAE tax on an individual's wages. Wages, personal investment income and real estate investment income are not business income for an individual, whatever the amount, and do not count towards the AED 1,000,000 test (Cabinet Decision No. 49 of 2023, Article 2(2)).
The Guide does not cover VAT, excise tax, Emirate-level taxes, tax groups, business restructuring relief, or the detailed top-up tax computation.
Ask the client first
What kind of person is the business? A company (LLC, free zone company, branch), a sole establishment or freelancer (natural person), or a partnership? A juridical person is in scope from the first dirham; a natural person only above AED 1,000,000 of business turnover in a calendar year. (Cabinet Decision No. 49 of 2023)
Financial year end and first tax period. This sets the return and payment deadline (9 months after the period ends).
Revenue for this period and for every earlier tax period. Small Business Relief fails permanently once any period's revenue has been over AED 3,000,000. (Ministerial Decision No. 73 of 2023)
Is the business part of a multinational group? Ask for group consolidated revenue. A constituent company of a multinational group, as defined in Cabinet Decision No. 44 of 2020 (groups with consolidated revenue of at least AED 3.15 billion), cannot use Small Business Relief (Ministerial Decision No. 73 of 2023, Article 3; Small Business Relief Guide). Groups with EUR 750 million or more may be in scope of top-up tax. (Cabinet Decision No. 142 of 2024)
Free zone? Which free zone, what activities, who the customers are (free zone persons, mainland businesses, individuals), whether audited accounts exist, and whether the company has elected out of the QFZP regime.
Corporate Tax registration. The date registered, the registration deadline, and whether a late registration penalty was imposed.
Losses brought forward, the period they arose in, and any ownership change of more than 50% since then. (Corporate Tax Law)
Interest expense and EBITDA, if net interest is large.
Related party and connected person transactions: owners, directors, family members, group companies, and payments to them.
Entertainment, fines, owner drawings and personal expenses in the accounts.
Returns already filed or due, especially for periods ending 31 December 2025 (due 30 September 2026).
The method, step by step
Decide whether the person is a Taxable Person. A juridical person resident in the UAE is always one, including a free zone company. A natural person is one only if their business turnover is more than AED 1,000,000 in the calendar year, not counting wages, personal investment income or real estate investment income. Check exemptions (government entities, qualifying public benefit entities, qualifying funds and others under Article 4) and refer them out. (Cabinet Decision No. 49 of 2023)
Check registration. Every Taxable Person registers on EmaraTax by the deadline in FTA Decision No. 3 of 2024 (table below), including businesses that will claim Small Business Relief and free zone companies.
Fix the tax period. It is the financial year, meaning the Gregorian calendar year or the 12-month period for which financial statements are prepared (Article 57). Changing it needs an application to the FTA (Article 58).
Test Small Business Relief for a resident person. Revenue must be AED 3,000,000 or less in this period and in every previous period. The period must end on or before 31 December 2029. The person must not be a QFZP or a constituent company of a multinational group. If eligible and the client wants it, elect it on the return. Taxable income is then treated as nil and a simplified return is filed. (Ministerial Decision No. 73 of 2023)
For a free zone company, test QFZP status: adequate substance, qualifying income, the de minimis test, arm's length compliance with transfer pricing documentation, audited financial statements, and no election out. If any condition fails, it is taxed like a mainland company for that period and the next four.
Compute taxable income (Article 20): start from accounting net profit under IFRS (or IFRS for SMEs where allowed). Remove exempt income (for example qualifying dividends and participation income, Articles 22-23). Add back non-deductible items: 50% of entertainment, fines, bribes, owner drawings, Corporate Tax itself, recoverable input VAT, and donations to bodies that are not qualifying public benefit entities (Articles 28, 32, 33). Apportion mixed personal and business costs. (Corporate Tax Law)
Apply the interest limitation if net interest expense is more than AED 12,000,000: the deduction is the higher of AED 12,000,000 and 30% of tax-adjusted EBITDA. The excess carries forward for 10 periods. (Ministerial Decision No. 126 of 2023)
Adjust related party and connected person transactions to arm's length (Articles 34-36).
Deduct brought-forward losses, oldest first, up to 75% of taxable income before loss relief (Article 37). (Corporate Tax Law)
Apply the rates: 0% on the first AED 375,000 of taxable income and 9% on the rest. A QFZP pays 0% on qualifying income and 9% on all other taxable income, with no AED 375,000 band. (Corporate Tax Law)
Take credits (foreign tax credit, capped at the UAE tax on the same income; withholding tax credit) and compute tax payable.
File and pay within 9 months of the end of the period on EmaraTax, and keep records for 7 years.
All taxable income that is not Qualifying Income (no AED 375,000 band)
9%
Non-resident with no permanent establishment or nexus
UAE-sourced income, as withholding tax
0%
The AED 375,000 band is given once per Taxable Person per tax period, however many businesses it runs. Splitting a business artificially to get more than one band is treated as tax avoidance (Cabinet Decision No. 116 of 2022, Article 2).
A multinational group in scope of top-up tax pays extra tax so that its effective rate in the UAE reaches 15% (Corporate Tax Law, Article 3(3)). See the top-up tax section.
A Resident Person that is a Taxable Person, natural or juridical
Revenue test
Revenue of AED 3,000,000 or less in the current tax period and in every previous tax period; one period over the threshold ends eligibility for good
Periods covered
Tax periods starting on or after 1 June 2023 and ending on or before 31 December 2029 (extended from 31 December 2026 by Ministerial Decision No. 131 of 2026, issued 29 July 2026)
Excluded
A Qualifying Free Zone Person; a constituent company of a multinational group under Cabinet Decision No. 44 of 2020 (group consolidated revenue of at least AED 3.15 billion)
How
Register, then elect in the tax return for each period; it is not automatic
Effect
Treated as having no taxable income; simplified return; no Corporate Tax
What switches off
Exempt income, reliefs, deductions, tax loss relief and transfer pricing documentation (Article 55) do not apply in a relief year. Transactions must still be at arm's length when measuring revenue
Losses
A loss of a relief year cannot be carried forward. Losses from earlier non-relief years cannot be used in a relief year but survive for later non-relief years
Interest
Net interest expenditure of a relief year cannot be carried forward; earlier disallowed interest survives for non-relief years
Anti-splitting
Artificially splitting a business to stay under AED 3,000,000 is treated as tax avoidance
Accounts
Cash-basis financial statements are allowed when revenue does not exceed AED 3,000,000
Revenue means gross income under the accounting standards applied, not profit (Small Business Relief Guide). The FTA's small business bulletin still says periods ending on or before 31 December 2026. Ministerial Decision No. 131 of 2026 replaces that text, so rely on the Decision.
A Free Zone Person is a juridical person incorporated, established or registered in a free zone. Individuals and unincorporated partnerships cannot be Free Zone Persons. A Free Zone Person is a QFZP only while it meets all of these conditions (Corporate Tax Law, Article 18):
It keeps adequate substance in the free zone or designated zone: core income-generating activities carried on there, with adequate assets, qualified full-time staff and operating costs. Outsourcing is allowed only within a free zone and under adequate supervision.
It derives Qualifying Income.
It has not elected to be taxed at the standard rates.
It complies with the arm's length principle and keeps transfer pricing documentation.
It prepares audited financial statements.
Its non-qualifying revenue does not exceed 5% of total revenue or AED 5,000,000, whichever is lower (the de minimis test in Ministerial Decision No. 229 of 2025, Article 3).
Qualifying Income is income from transactions with other Free Zone Persons (who must be the beneficial recipients), except income from Excluded Activities. It also includes income from transactions with anyone for Qualifying Activities, qualifying intellectual property income, and other income while the de minimis test is met.
Qualifying Activities (MD 229 of 2025): manufacturing and processing of goods or materials; trading of qualifying commodities; holding shares and other securities for investment; ownership, management and operation of ships; reinsurance; fund management; wealth and investment management; headquarter services and treasury and financing services to related parties or for its own account; aircraft financing and leasing; distribution of goods or materials in or from a designated zone; logistics services; and ancillary activities.
Excluded Activities are always non-qualifying:
transactions with natural persons, except for ships, fund management, wealth management and aircraft leasing;
banking;
insurance, other than reinsurance and captive insurance within headquarter services;
finance and leasing, subject to the exceptions in MD 229;
ownership or exploitation of immovable property, other than commercial property in a free zone let to a Free Zone Person.
Always taxed at 9% even for a QFZP: income of a domestic or foreign permanent establishment (for example a mainland branch), most immovable property income, and non-qualifying intellectual property income.
Consequence of failing: a QFZP that fails any condition, or elects out, is taxed at the standard rates from the start of that tax period and for the four following tax periods.
A QFZP distributing goods in or from a designated zone also needs an agreed-upon procedures report from its auditor, for periods starting on or after 1 January 2026 (FTA Decision No. 6 of 2026).
Tax losses carry forward with no time limit. The set-off in a later period is capped at 75% of that period's taxable income before loss relief.
The oldest losses go first. Losses must be used to the fullest extent possible each period; the client cannot choose to use less.
No relief for losses from before Corporate Tax started, from before the person became taxable, or from exempt activities.
After an ownership change of more than 50%, losses survive only if the same or a similar business continues. This test does not apply to listed companies.
Transfer of losses to a group company needs 75% common ownership, both resident juridical persons, neither exempt nor a QFZP, the same year end and the same accounting standards. The 75% cap applies to own and transferred losses together.
For how losses interact with Small Business Relief, see that section.
Interest expense (including amounts carried forward) minus taxable interest income
Safe amount
No limit where net interest expenditure does not exceed AED 12,000,000 for a 12-month period (pro-rated for longer or shorter periods)
Above the safe amount
Deduct the higher of AED 12,000,000 and 30% of EBITDA (excluding exempt income)
Disallowed excess
Carried forward for the next 10 tax periods, oldest first
Not applied to
Banks, insurance providers, and natural persons carrying on a business
Separate rule
Interest on related party loans used for dividends, capital returns, capital contributions or acquisitions of related parties is not deductible, unless the taxpayer can show the main purpose of the loan and the transaction is not to gain a Corporate Tax advantage. No advantage is deemed where the related party lender is itself subject to Corporate Tax, or a similar foreign tax, on the interest at a rate not less than 9% (Article 31(1)-(3))
Transactions with related parties must be at arm's length, priced with one of the five OECD methods (CUP, resale price, cost plus, TNMM, profit split) or another method where none of those works. This applies to domestic transactions as well as cross-border ones.
Related parties include:
individuals related to the fourth degree of kinship or affiliation;
an individual and a company where the individual, alone or with related parties, owns 50% or more or controls it;
companies with 50% or more common ownership or control;
a person and its permanent establishment;
partners in the same unincorporated partnership;
trustees, founders and beneficiaries of trusts and foundations.
Control includes the ability to exercise 50% or more of voting rights, appoint 50% or more of the board, or receive 50% or more of profits.
Connected persons are the owners, directors and officers, and their related parties. Payments to them are deductible only at market value. This does not apply to listed or regulated taxpayers.
Disclosure in the return: complete the related party schedule when the total value of all related party transactions is more than AED 40 million, and disclose each category over AED 4 million. Complete the connected person schedule where transactions with a connected person total more than AED 500,000.
Master file and local file: required where the taxpayer's revenue in the period is AED 200,000,000 or more, or it belongs to a multinational group with consolidated revenue of AED 3,150,000,000 or more. Documents must be produced within 30 days of an FTA request.
Who: UAE constituent entities of a multinational group whose ultimate parent's consolidated financial statements show annual revenue of EUR 750 million or more in at least two of the four fiscal years immediately before the tested year.
From when: fiscal years beginning on or after 1 January 2025.
What: a top-up tax so that the group's effective tax rate in the UAE reaches 15%, following the OECD GloBE rules.
Registration: within 7 months after the end of the first fiscal year in scope. Entities with a fiscal year ending before 30 April 2026 register on or before 30 November 2026.
Top-up tax return: due 15 months after the end of the fiscal year, or 18 months for the fiscal year that is the first transition year (Article 8.1.2).
Pillar Two information return: due 15 months after the end of the fiscal year. The decision gives no longer first-year period for this return (Article 15.4). The FTA may change these requirements, so check before relying on them.
The computation is specialist work, so refer it out (see "When to refuse or refer").
The amounts are illustrations. Each case uses a calendar-year tax period unless stated.
Freelance consultant, Small Business Relief.
Facts: a Dubai mainland sole establishment owner had business revenue of AED 1,400,000 in 2024; in 2025 it was AED 2,600,000 and in 2026 it was AED 2,900,000. Turnover passed AED 1,000,000 in 2024, so she was a Taxable Person and had to register by 31 March 2025.
Relief: revenue has been AED 3,000,000 or less in 2026 and in every earlier period, the 2026 period ends before 31 December 2029, and she is not in a multinational group. So she can elect Small Business Relief on her 2026 return, due 30 September 2027. Taxable income is treated as nil and the tax is nil.
If she forgets to elect: with taxable income of AED 900,000, tax is (AED 900,000 − AED 375,000) × 9% = AED 47,250 (Cabinet Decision No. 116 of 2022).
Relief lost for good; standard computation.
Facts: an Abu Dhabi engineering LLC had revenue of AED 3,200,000 in 2025 and AED 4,200,000 in 2026. Its 2026 taxable income after all adjustments is AED 2,380,000.
Relief: if revenue fell to AED 2,400,000 in 2027, Small Business Relief would still not be available, because 2025 revenue exceeded the threshold (Ministerial Decision No. 73 of 2023).
Loss cap and entertainment.
Add-backs: a company's 2026 accounting profit is AED 800,000. It includes AED 60,000 of client entertainment and an AED 5,000 traffic fine. Add back 50% of the entertainment (AED 30,000) and the whole fine: AED 800,000 + AED 30,000 + AED 5,000 = AED 835,000.
Loss cap: it has AED 700,000 of losses from 2024 and 2025. The cap is AED 835,000 × 75% = AED 626,250. Taxable income becomes AED 835,000 − AED 626,250 = AED 208,750, which falls inside the AED 375,000 0% band, so the tax is nil. The remaining AED 73,750 of losses carries forward.
If it had elected Small Business Relief instead: had its revenue allowed it to elect the relief in 2026, none of the AED 700,000 could be used in 2026, but all of it would survive for later non-relief years (FTA losses bulletin).
Interest limitation.
Facts: a property developer has net interest expenditure of AED 20,000,000 and tax-adjusted EBITDA of AED 50,000,000.
Limit: 30% of EBITDA is AED 50,000,000 × 30% = AED 15,000,000, which is higher than AED 12,000,000, so AED 15,000,000 is deductible. The other AED 5,000,000 carries forward for up to 10 periods (Ministerial Decision No. 126 of 2023).
QFZP that passes de minimis, with a mainland branch.
De minimis test: a free zone distributor has total revenue of AED 20,000,000 (excluding its mainland branch), all from Qualifying Activities except AED 800,000 of sales to individuals. The de minimis limit is the lower of AED 20,000,000 × 5% = AED 1,000,000 and AED 5,000,000, so it is AED 1,000,000. AED 800,000 does not exceed it, so the test is met. If it meets the other conditions, its qualifying income is taxed at 0%.
Branch: the branch's AED 500,000 of taxable income is taxed at 9% with no AED 375,000 band: AED 500,000 × 9% = AED 45,000.
If the test had failed: had sales to individuals been AED 1,200,000, it would fail and be taxed at the standard rates for 2026 and the four following periods (Free Zone Persons bulletin).
Free zone software house selling to the mainland.
Facts: a free zone software company earns AED 5,000,000, all from mainland companies.
Outcome: software development is not a Qualifying Activity, so all of that revenue is non-qualifying and far above the de minimis limit. It is not a QFZP. It pays 0% on the first AED 375,000 of taxable income and 9% above that, like a mainland company (Ministerial Decision No. 229 of 2025).
Late registration waived.
Facts: a company incorporated on 10 February 2026 with a 31 December year end had to register within 3 months, by 10 May 2026. It registered in August 2026, so the AED 10,000 late registration penalty applies.
Waiver: if it files its first return (period ending 31 December 2026) within 7 months, by 31 July 2027, the FTA waives the penalty, or refunds it to the EmaraTax account if it was paid. The tax itself is still due within 9 months, by 30 September 2027 (CTP006).
Freelancer below the threshold, and a salaried landlord.
Freelancer: a freelance designer with AED 750,000 of business turnover in 2026 is not subject to Corporate Tax and does not register. Monitor turnover, because once it exceeds AED 1,000,000 in a calendar year she must register by 31 March of the next year.
Salaried landlord: an employee who owns two flats and rents them out without a licence has no Corporate Tax at all. Wages and real estate investment income are not business income (Cabinet Decision No. 49 of 2023).
Late return and late payment.
Facts: the return for the year ended 31 December 2025 was due 30 September 2026 but was filed, with AED 100,000 of tax paid, on 15 December 2026.
Late filing: AED 500 is charged on 1 October, 1 November and 1 December: 3 × AED 500 = AED 1,500.
Late payment: 14% a year, charged monthly for each month or part, on the unpaid tax. That is about AED 100,000 × 14% ÷ 12 × 3 = AED 3,500. EmaraTax computes the exact amount, so confirm it there (Cabinet Decision No. 75 of 2023).
When to refuse or refer
Business structure unknown. Stop until you know whether the client is a juridical person, a natural person, a partnership or a branch. The rules differ at every step.
Salaried employee asking about income tax on salary. There is no Corporate Tax on wages; answer that and stop.
QFZP determinations where the activities, customer mix or substance are unclear, or where the de minimis test is close. Never apply 0% without evidence of every condition and audited accounts. Refer to an FTA-registered tax agent. (Corporate Tax Law)
Top-up tax for groups with EUR 750 million or more of revenue: the scope, the computation, the safe harbours and the information return. Refer to a Pillar Two specialist. (Cabinet Decision No. 142 of 2024)
Tax groups, loss transfers, qualifying group transfers, business restructuring relief, and participation exemption claims.
Transfer pricing documentation, advance pricing agreements, or related party transactions near the disclosure thresholds.
Non-residents: permanent establishment or nexus questions, effective management and control, withholding tax and treaty relief.
UAE juridical person incorporated on or after 1 March 2024, including a free zone company
3 months from incorporation or establishment
Foreign company effectively managed and controlled in the UAE (from 1 March 2024)
3 months from the end of its financial year
Non-resident with a permanent establishment (from 1 March 2024)
6 months from the date the permanent establishment exists
Non-resident with a nexus (from 1 March 2024)
3 months from the date of the nexus
Resident individual whose business turnover exceeds AED 1,000,000 in a calendar year (2024 onwards)
31 March of the following year
Non-resident individual with turnover above the threshold
3 months from meeting the conditions
UAE juridical persons existing before 1 March 2024
Deadlines by licence month ran from 31 May to 31 December 2024 and have passed
Businesses claiming Small Business Relief and free zone companies must register too. Registering for VAT does not register the business for Corporate Tax.
File the return and pay the tax within 9 months of the end of each tax period, on EmaraTax. Businesses electing Small Business Relief file a simplified return by the same date.
Audited financial statements are required for a Taxable Person (not a tax group) with revenue exceeding AED 50,000,000 in the period, and for every QFZP. This applies to periods starting on or after 1 January 2025.
Keep records for 7 years after the end of the tax period they relate to.
The same rates, the AED 375,000 band and the Small Business Relief conditions apply to 2025 periods. For a 2025 period, the Small Business Relief threshold also applied under the original 31 December 2026 end date, so the extension changes nothing for 2025. Audited statements are required above AED 50,000,000 of revenue for periods starting on or after 1 January 2025.
AED 10,000. Waived (or refunded) if the first return is filed within 7 months of the end of the first tax period, instead of 9; applies to the first tax period only
Late return
AED 500 a month or part month for the first 12 months, then AED 1,000 a month or part month
Late payment
14% a year, charged monthly for each month or part, on the unpaid tax from the day after the due date
Incorrect return corrected before the filing deadline
No penalty; otherwise AED 500
Voluntary disclosure of an error
1% of the tax difference for each month or part from the original due date
Error found by the FTA without a voluntary disclosure
15% of the tax difference, plus 1% a month
Failure to keep records
AED 10,000, or AED 20,000 for a repeat within 24 months
Late deregistration application
AED 1,000 a month, up to AED 10,000
Failure to update the tax record
AED 1,000, or AED 5,000 for a repeat within 24 months
Business structure and residence confirmed; natural person turnover test (more than AED 1,000,000) applied, excluding wages and investment income.
Registration date checked against the deadline; late registration waiver considered.
Tax period and filing deadline (end + 9 months) recorded.
Small Business Relief tested on current and all previous periods' revenue (AED 3,000,000), period end on or before 31 December 2029, no MNE or QFZP status; election made on the return if wanted.
Free zone: every QFZP condition evidenced, de minimis test computed (lower of 5% or AED 5,000,000), branch and property income taxed at 9%.
Entertainment limited to 50%; fines, owner drawings, personal costs and Corporate Tax added back.
Interest limitation applied above AED 12,000,000.
Related party and connected person transactions at arm's length; disclosure schedules and master/local file thresholds checked.
Losses applied oldest first, capped at 75%; ownership changes checked.
Rates applied: 0% up to AED 375,000, 9% above; QFZP non-qualifying income at 9% with no band.
Audited statements obtained where revenue exceeds AED 50,000,000 or the person is a QFZP.
Top-up tax scope checked for multinational groups (EUR 750 million) and referred out.
Return filed and tax paid on EmaraTax; records kept for 7 years.
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