Taxes in the UAE for companies: what you pay and what does not exist here
The UAE's reputation as a tax-free country was earned before 2018 and has gone out of date twice since: first VAT arrived, then corporate tax. The burden is still among the lowest in the world — but a low burden and no tax at all are different things. Below is everything a UAE company actually pays, with thresholds and deadlines, and separately the taxes that genuinely do not exist here.
- Corporate tax
- 0% and 9%
- VAT
- 5%
- Personal income tax
- none
- Withholding tax
- none
What the UAE does not tax
Start with what genuinely does not exist here — this is the real reason businesses relocate:
- No personal income tax. Salaries, dividends and personal investment income are not taxed. For staff it means the figure in the contract and the figure on the card are the same.
- No withholding tax. Dividends, interest and royalties paid abroad leave the country in full — nothing is deducted at source. How that works in practice is covered in our guide to paying dividends.
- No capital gains tax for individuals. For companies, gains on asset disposals fall into the corporate tax base like any other profit.
- No mandatory social contributions for expatriate staff. They apply only to UAE and GCC nationals.
"No tax" is not the same as "no obligations". The absence of personal income tax does not remove the company's bookkeeping and filing duties, and it does not override tax in the country where the owner remains resident. The UAE withholds nothing — and exempts you from nothing abroad.
Corporate tax: 0% and 9%
In force for financial periods starting on or after 1 June 2023. It is charged on taxable profit — accounting profit adjusted under the tax rules — not on turnover.
| Item | Value |
|---|---|
| Rate | 0% on the first AED 375,000 of taxable income, 9% above it |
| Registration with the FTA | mandatory for almost everyone, free zones and loss-making companies included |
| Registration deadline | 3 months from incorporation, for companies incorporated from 01.03.2024 |
| Late registration penalty | AED 10,000 |
| Return and payment | 9 months after the end of the tax period |
| Small Business Relief | revenue up to AED 3m — taxable income treated as nil; available until periods ending 31.12.2029 |
| Audit required | revenue above AED 50m, and for any QFZP regardless of revenue |
A free zone address does not exempt you. It opens the door to the 0% rate on so-called qualifying income, provided the company meets the conditions of QFZP status — a Qualifying Free Zone Person. The conditions are strict, the status makes an audit mandatory whatever the revenue, and it rules out Small Business Relief.
The most expensive mistake is assuming that nil profit means nothing to do. Registration does not depend on how much you earned, and the return is filed even when the tax due is zero. That is where most penalties come from. The full breakdown, including how the late registration penalty can be waived, is in our corporate tax guide.
VAT: 5%
In force since 1 January 2018. The rate is one of the lowest anywhere, but the administration is a full one: registration, quarterly returns, input recovery and penalties for being late.
| Item | Value |
|---|---|
| Rate | 5%; some supplies are zero-rated or exempt |
| Mandatory registration | taxable turnover above AED 375,000 over any rolling 12 months |
| Deadline to apply | 30 days from crossing the threshold, then a AED 10,000 penalty |
| Voluntary registration | from AED 187,500 — taxable expenses count towards this threshold |
| Return and payment | by the 28th of the month following the tax period |
| Nil return | mandatory: AED 1,000 for the first miss, AED 2,000 for a repeat within 24 months |
| Late payment interest | a flat 14% per year charged monthly — the regime in force since 14 April 2026 |
The FTA assigns your tax period at registration: quarterly for most businesses, monthly for large ones, and quarters end in different months for different taxpayers. There is no single deadline that applies to everyone — check yours in EmaraTax.
Keep the move to electronic invoicing on the radar as well: the pilot started on 1 July 2026, businesses with revenue from AED 50m appoint an accredited service provider by 30 October 2026 and go live on 1 January 2027, everyone else by 31 March and 1 July 2027 respectively.
Excise tax: narrow by design
Excise tax was introduced on 1 October 2017 and hits a short list of goods. If your company does not produce, import or stockpile these categories, excise does not concern you at all. Rates under Cabinet Decision No. 52 of 2019:
| Category | Rate |
|---|---|
| Tobacco products | 100% |
| Energy drinks | 100% |
| Electronic smoking devices | 100% |
| Liquids used in those devices | 100% |
| Carbonated drinks | 50% |
| Products with added sugar or other sweeteners | 50% |
Customs duty on imports
Duty is not a tax on profit, but for a trading company it is the first line of cost. The common GCC rate is 5% of the customs value, usually on CIF terms: goods plus freight and insurance. Some categories carry a higher rate and some essentials are zero-rated, so the commodity code is worth checking before the deal, not after the container lands.
Import VAT of 5% is charged on top of the duty. If the importer is VAT-registered and the import is cleared under its tax number, the VAT is not paid in cash at the border: it is reported in the return and recovered in the same return. An importer that is not registered pays it before release and cannot recover it.
What you pay outside the tax authority
These are not called taxes, yet they arrive every year and, for a small company, weigh more than corporate tax does:
- Trade licence renewal — annual; the amount depends on the zone and the activities on the licence.
- Office or desk space — in a free zone this is often a licence condition rather than a matter of convenience.
- Visas and medical insurance for staff, per head.
- Municipality fees on rent and in the service sector. Rates and mechanics differ from emirate to emirate, so they are checked where the company is registered.
- Audit, where it is required by revenue, by QFZP status, or by the free zone at licence renewal.
The full annual budget with figures and three scenarios is in our breakdown of what a UAE company costs every year.
Payroll: not a tax, but an obligation with teeth
Since 1 June 2026 salaries must be paid through the Wage Protection System by the 1st of the month following the one worked; the previous 15-day grace period has been removed. Consequences start on day two: notifications, then a block on new work permits, then fines from AED 1,000 per employee. At least 85% of the payroll must go through the system. The day-by-day escalation is in our guide to payroll and WPS.
What a typical company ends up paying
Take an ordinary case: a free zone company, AED 1.5m revenue a year, AED 400,000 of profit, no physical goods, nothing in the excise categories.
- Corporate tax. Without relief — 0% on the first AED 375,000 and 9% on the remaining 25,000, so AED 2,250. With Small Business Relief (revenue up to AED 3m) taxable income is treated as nil and no tax arises at all. The return is filed either way.
- VAT. Turnover is above AED 375,000, so registration is mandatory. What is actually payable depends on who the clients are: services supplied to customers outside the UAE are often zero-rated, in which case input VAT comes back rather than going out.
- Everything else — licence, premises, visas, bookkeeping, and audit where it applies.
For a small company the tax itself is rarely the main item. The obligations are: register on time, file even when the tax is nil, and keep the documents in order. Failing any one of those costs more than the tax.
