UAE Corporate Tax: rates, deadlines and penalties in 2026
Corporate tax has applied in the UAE since financial periods starting on 1 June 2023. The rate is low — 9%, and the first AED 375,000 of profit is not taxed at all. Yet most of the trouble businesses run into has nothing to do with the rate: registration applies even when there is no profit, a return is filed even when the tax is zero, and missing the registration deadline costs AED 10,000.
- Rate
- 0% and 9%
- Tax-free threshold
- AED 375,000 of profit
- Return due
- 9 months after period end
- Late registration penalty
- AED 10,000
Who has to pay and register
Corporate tax covers virtually everyone doing business in the UAE:
- Companies incorporated in the UAE — both mainland and free zone. A free zone licence does not exempt you automatically; it gives you the option to apply 0% if you meet the conditions (more on this below).
- Individuals carrying on a business in the UAE, once turnover from that activity exceeds AED 1 million in a calendar year. Employment income, dividends and personal investment income stay outside the scope.
- Foreign companies with a permanent establishment or another taxable nexus in the UAE.
Registration does not depend on how much you earn. Most companies in the UAE must register for corporate tax regardless of the size of their profit: zero profit, a loss or the 0% rate do not exempt you on their own. Registration happens in EmaraTax and produces a Corporate Tax Registration Number; the AED 375,000 threshold determines the rate, not the obligation to register. This is the most common — and most expensive — misconception.
Rates: 0% and 9%
Tax is charged on taxable income, not on turnover: accounting profit adjusted under the rules of the corporate tax law.
| Taxable income for the period | Rate |
|---|---|
| Up to AED 375,000 | 0% |
| Above AED 375,000 | 9% on the excess |
Example: a company earns AED 500,000 in a year. Only the excess is taxed: 500,000 − 375,000 = AED 125,000. Tax = 9% × 125,000 = AED 11,250. The effective rate at that profit level is 2.25%.
Large multinational groups are a separate story: those with consolidated revenue of EUR 750 million or more have been subject to the 15% domestic minimum top-up tax (DMTT) since 2025. It does not affect small and medium businesses.
Deadlines: when to register and when to file
Registration
Companies incorporated on or after 1 March 2024 must register within three months of the date of incorporation — if you are still at the setup stage, this and the other deadlines are covered in our guide to company formation in the UAE. Companies incorporated earlier followed an FTA schedule tied to the month their licence was issued; those deadlines have already passed. Individuals register by 31 March of the year following the year in which turnover exceeded AED 1 million.
Tax return
The return is filed once a year, within 9 months of the end of the tax period. Payment is due by the same date.
| Financial year end | Filing and payment deadline |
|---|---|
| 31 December 2025 | 30 September 2026 |
| 31 March 2026 | 31 December 2026 |
| 30 June 2026 | 31 March 2027 |
| 31 December 2026 | 30 September 2027 |
A new company's first tax period can be longer or shorter than 12 months — it follows the financial year set in the constitutional documents, not the calendar year.
The AED 10,000 penalty — and how it gets waived
The FTA imposes an administrative penalty of AED 10,000 for filing a registration application late. In 2025 thousands of companies received one, convinced that "there is no profit, so there is nothing to register".
There is, however, a waiver mechanism. If the taxpayer files its first tax return (or annual declaration, for exempt persons) within 7 months of the end of its first tax period, the penalty is cancelled automatically, and any amount already paid is credited back to the tax account. No reconsideration request is required. According to the FTA, more than 68,600 taxpayers had used the mechanism by mid-2026.
Practical takeaway: if you have already missed the registration deadline, do not sit on your first return — the seven-month window is shorter than the usual nine-month filing deadline. File inside it and the penalty disappears.
Late filing and late payment
Filing a corporate tax return late carries a penalty of AED 500 for each month or part of a month for the first 12 months of delay. From the 13th month it rises to AED 1,000 per month. Paying the tax itself late attracts a separate charge — 14% per annum, applied monthly to the unpaid amount. The penalty accrues per started month, so being a few days late costs the same as a full month.
Small Business Relief: the final year
Small Business Relief lets a company with revenue up to AED 3 million elect to be treated as having no taxable income for the period — and pay no tax at all. The conditions:
- revenue did not exceed AED 3 million in the current period or in any previous one — cross the threshold once and you cannot come back to the relief;
- the relief must be elected in the return, separately and for every period — it is never applied automatically;
- the return is still filed: being relieved of tax does not relieve you of reporting;
- the relief is not available to Qualifying Free Zone Persons or to members of multinational groups with consolidated revenue above AED 3.15 billion.
The deadline that matters. Small Business Relief applies to tax periods ending no later than 31 December 2026. For a company on a calendar financial year, 2026 is the last year of the relief. From 2027 those companies move to the standard regime and profit above AED 375,000 starts being taxed at 9%. No extension has been announced.
Free zone companies: 0%, but not by default
A free zone company can pay 0% on qualifying income if it holds Qualifying Free Zone Person status. The status is not granted automatically on registration in a free zone — it has to be maintained by meeting the conditions:
- adequate substance in the UAE: people, assets and expenditure proportionate to the activity;
- income comes from qualifying activities;
- non-qualifying revenue stays within the de minimis threshold — the lower of AED 5 million or 5% of total revenue;
- proper accounts are kept and audited financial statements are prepared;
- transfer pricing rules are complied with.
Non-qualifying income is taxed at 9%. Breach the conditions and the company loses the status — and not only for the current period: getting it back takes time. That is why bookkeeping errors cost more in a free zone than on the mainland.
When an audit is mandatory
| Who | Audited financial statements |
|---|---|
| Revenue above AED 50 million | Mandatory |
| Qualifying Free Zone Person | Mandatory regardless of revenue |
| Everyone else | Not required for corporate tax purposes |
Keep in mind separately that your free zone authority or your bank may ask for audited statements to renew a licence or keep an account open, whatever the tax thresholds say.
Five mistakes that cost real money
- Not registering because "there is no profit". The AED 10,000 penalty does not depend on how much you earned.
- Not filing because the tax is zero. A return is due at 0%, at a loss, and when the relief is applied.
- Personal spending on the company card. The FTA will disallow it: taxable income goes up, interest follows, and input VAT on those purchases will not be recoverable either.
- Doing the books once, at year end. Without source documents and regular closing, the return ends up being built from a bank statement — a direct route to reassessment.
- Forgetting that the relief expires. Companies that have paid no tax for three years under Small Business Relief will meet 2027 with a real tax bill unless they rerun the numbers in advance.
What we do on corporate tax
| Service | Fee |
|---|---|
| Corporate Tax registration | AED 2,000 |
| VAT + Corporate Tax registration as one package | AED 3,000 |
| Tax return, simplified form (up to AED 3M) | AED 2,000 |
| Tax return, full form (above AED 3M) | AED 4,500 |
| Monthly bookkeeping retainer | from AED 2,000 per month |
VAT is covered separately: registration, returns and penalties. We work remotely through EmaraTax and cloud accounting software — neither you nor our team needs to be physically present in the UAE. The company is registered in Dubai under Meydan Free Zone licence No. 2651982.01; accounting and tax consultancy are licensed activities.
Free bookkeeping health check
We will confirm whether you are registered with the FTA, whether a penalty is at risk, when your return is due and whether you qualify for the relief. The review takes one working day.
Frequently asked questions
This material is for general information only and is not tax advice. The data is current as of 11 August 2026; UAE tax regulation changes, so please confirm deadlines and relief conditions with the Federal Tax Authority at tax.gov.ae or with us. The worked examples are simplified and do not account for the specific circumstances of your company.
