Last reviewed: July 2026. Rates, thresholds and deadlines are checked monthly against Federal Tax Authority guidance.

Most guides to UAE corporate tax for small business flatten the system into “0% or 9%” or drown founders in Cabinet Decision numbers. Neither helps you file correctly. This page covers who must register, how the two rates apply, what Small Business Relief does and does not cover, how free zone companies are taxed differently from mainland ones, and the deadlines that carry real penalties. As part of Dubai’s push toward a diversified, knowledge-based economy, corporate tax compliance is now routine for small businesses here, not an edge case.

Who Must Register for UAE Corporate Tax?

Registration is mandatory, and it is separate from whether you end up owing anything. You must register with the Federal Tax Authority (FTA) if you are:

  • A mainland UAE company, LLC, or branch of a foreign company
  • A free zone company, including one that expects a 0% rate as a Qualifying Free Zone Person
  • A freelancer or sole proprietor whose UAE business turnover exceeded AED 1,000,000 in a calendar year (salary, personal investment income and personal real estate income are excluded from this test)
  • A foreign company with a permanent establishment or UAE-sourced income

There is no revenue floor that exempts you from registering. A dormant company still registers and files a nil return, which is the part of uae company registration fees and obligations that catches out small operators the most: no tax due does not mean no filing due.

How the 0% and 9% Rates Work

Under Federal Decree-Law No. 47 of 2022, every taxable person pays 0% on the first AED 375,000 of taxable income and 9% on taxable income above that figure. This band is not a separate personal-style allowance sitting outside your return; it is a bracket calculated inside the same corporate tax return.

For example, a consultancy with AED 750,000 in taxable income pays 0% on the first AED 375,000 and 9% on the remaining AED 375,000, giving a bill of AED 33,750, not AED 67,500. Taxable income is your accounting net profit, adjusted for exempt income, disallowed expenses and any reliefs you elect. This AED 375,000 threshold is permanent and applies whether you are on the mainland or in a free zone, though free zone companies layer a different regime on top, covered below.

Small Business Relief: Eligibility and Exclusions

Small Business Relief (SBR) is a separate, temporary concession under Ministerial Decision No. 73 of 2023. Where the AED 375,000 band reduces your tax rate on part of your profit, SBR lets an eligible business be treated as having zero taxable income altogether, even if profit is well above AED 375,000.

To elect SBR for a tax period, a business must meet all of the following:

  • Be a UAE resident taxable person, whether a natural person (freelancer, sole trader) or a juridical person (LLC, company)
  • Have revenue at or below AED 3,000,000 in the current tax period and in every previous tax period since 1 June 2023
  • Not be a Qualifying Free Zone Person and not belong to a multinational group with consolidated group revenue above AED 3.15 billion

Three details trip people up. First, the AED 3,000,000 revenue test is cumulative and permanent: a business that recorded AED 3.5 million once is disqualified for every later period, even if revenue later falls back under the threshold. Second, SBR must be actively elected on your corporate tax return in EmaraTax each year; it is never automatic. Third, electing SBR forfeits the right to carry forward tax losses and disallowed interest from that period, so fast-growing or currently loss-making businesses should run the trade-off before ticking the box. SBR is only available for tax periods ending on or before 31 December 2026, after which every business files under the standard 0%/9% rules.

Free-Zone Companies and Qualifying Income

A free zone licence does not itself create a 0% tax outcome. Only the income that meets the Qualifying Free Zone Person (QFZP) conditions does. To keep QFZP status, a free zone entity must:

  • Maintain adequate substance in the free zone: real staff, assets and operating expenditure matched to the business
  • Derive Qualifying Income from Qualifying Activities (for example, manufacturing, qualifying trading, fund and wealth management, or transactions with other free zone persons) and avoid Excluded Activities such as most dealings with natural persons, standard banking, insurance and UAE real estate outside a free zone
  • Not elect into the standard corporate tax regime
  • Comply with transfer pricing and arm’s length rules, and keep audited financial statements
  • Keep non-qualifying revenue within the de minimis limit: the lower of AED 5,000,000 or 5% of total revenue

Qualifying income is taxed at 0%; everything else the entity earns is taxed at 9%, with no AED 375,000 cushion for QFZPs. Breach any condition and the entity is pushed to 9% on all income for that period plus the following four. This is why free zone corporate tax UAE is really a compliance conversation, not a location choice, and a QFZP cannot also elect SBR since the two regimes are mutually exclusive. If you are still choosing between a free zone and a mainland structure, our guides on mainland vs free zone company setup and the best free zones for startups cover that decision in full.

Deductible and Non-Deductible Expenses

Taxable income starts from accounting profit and is then adjusted. An expense is deductible if it is incurred wholly and exclusively for the business, falls within the relevant tax period, and is not specifically disallowed. Common restrictions:

  • Client entertainment (meals, hospitality, event tickets for customers or suppliers) is only 50% deductible; staff-only events remain fully deductible
  • Net interest expense above AED 12,000,000 is capped at 30% of tax-adjusted EBITDA, with the excess carried forward up to ten years
  • Fines and penalties, including FTA penalties, are never deductible
  • Dividends and profit distributions are not deductible, since they are an appropriation of profit rather than a cost of earning it
  • Donations only qualify if made to an approved Qualifying Public Benefit Entity
  • Related-party payments above arm’s length pricing are disallowed for the excess

Keeping entertainment costs, interest and related-party transactions in clearly labelled accounts from day one avoids most of the adjustments that create disputes at filing time.

Registration, Accounting Period and Return Deadlines

Registration deadlines are tied to your licence issuance month for existing entities and to your incorporation date for new ones; natural persons whose turnover crossed AED 1,000,000 in 2025 had to register by 31 March 2026. Missing registration carries a fixed AED 10,000 penalty under Cabinet Decision No. 10 of 2023, though the FTA currently waives it if your first corporate tax return is filed within seven months of your first tax period ending, rather than the standard nine.

Filing and payment are treated as one obligation, due nine months after your tax period ends. A company with a financial year ending 31 December 2025 must file and pay by 30 September 2026. Every registered taxable person files annually, even a nil return, even a QFZP claiming 0% on everything. Late filing costs AED 500 a month for the first twelve months and AED 1,000 a month after that; unpaid tax accrues interest separately. The FTA does not currently grant general extensions, so build your compliance calendar around the nine-month rule rather than the calendar year-end itself.

Worked Examples

Solo consultant (mainland), SBR-eligible Revenue AED 1,400,000, well under the AED 3,000,000 SBR threshold. Electing Small Business Relief on the annual return brings taxable income to zero and corporate tax payable to AED 0, provided the election is made every year and no tax group membership applies.

E-commerce company (free zone, QFZP) Total revenue AED 4,200,000. Qualifying income from other free zone customers and approved qualifying activities is AED 3,900,000, taxed at 0%. Non-qualifying revenue from UAE mainland retail customers is AED 300,000, which sits under the de minimis limit and is taxed at 9%, giving AED 27,000 payable while QFZP status stays intact.

Trading company (mainland LLC) Taxable income of AED 900,000 after adjustments. The first AED 375,000 is taxed at 0%, the remaining AED 525,000 at 9%, giving corporate tax payable of AED 47,250.

Corporate-Tax Checklist for New Dubai Businesses

  • Register on EmaraTax as soon as your licence is issued, regardless of expected profit
  • Decide early whether Small Business Relief or QFZP status fits you; the two cannot be combined
  • Separate entertainment, interest and related-party costs in your bookkeeping from month one
  • Diarise your filing deadline as nine months from your tax period end, not the calendar year-end
  • Keep supporting invoices, contracts and bank records for at least seven years
  • Get professional advice before your first return if you hold a free zone entity, a holding company or cross-border income

Frequently Asked Questions

Do I still need to register if my small business makes no profit?

Yes. Registration and annual filing are mandatory for every taxable person, including dormant and loss-making companies, regardless of the corporate tax registration deadline in the UAE that applies to your entity type.

What is the corporate tax rate for a small business in the UAE?

The standard rate is 0% on taxable income up to AED 375,000 and 9% above that. Small Business Relief can bring eligible businesses under AED 3,000,000 in revenue to an effective 0% on all income until 31 December 2026.

Can a free zone company avoid corporate tax entirely?

Only its Qualifying Income can be taxed at 0%, and only if it meets the Qualifying Free Zone Person conditions. Non-qualifying income is taxed at 9%, and every free zone company must still register and file.

Is Small Business Relief automatic?

No. It must be actively elected on the corporate tax return for each tax period through EmaraTax; there is no advance application and no automatic renewal.

What happens if I file my corporate tax return late?

You face AED 500 a month for the first twelve months, rising to AED 1,000 a month after that, plus interest on any unpaid tax. The AED 10,000 late registration penalty is separate and may be waived only if your first return is filed within seven months of your first tax period ending.

Where can I register and file for UAE corporate tax?

Registration, election of reliefs and annual filing are all completed through the FTA’s . Full legislative guidance sits on the Federal Tax Authority’s corporate tax page and the Ministry of Finance’s corporate tax page.

This guide covers the tax layer of starting up; for the setup and bank account steps that come before it, see our guides on how foreign investors open a business in Dubai and opening a business bank account in Dubai.