UAE Corporate Tax at 9%: What Businesses Need to Know

The UAE introduced federal Corporate Tax for financial years starting on or after 1 June 2023, and by now most businesses have gone through at least one filing cycle. Even so, the mechanics — the relief threshold, free zone treatment, and which expenses actually count — remain a common source of confusion. Here is the practical version.

The headline rate

UAE Corporate Tax is charged at 0% on taxable income up to AED 375,000, and 9% on taxable income above that threshold. There is no small-business exemption below this on paper — instead, it works as a tiered rate, so every business gets the first AED 375,000 of profit taxed at 0%, and only the excess is taxed at 9%.

Taxable income is broadly your accounting profit, adjusted for specific items the tax law treats differently — some expenses are disallowed, some income is exempt, and related-party transactions may need arm's-length adjustments.

Small Business Relief

Separate from the 0%/9% tiering, the FTA offers Small Business Relief for resident taxable persons with revenue below a prescribed threshold (AED 3 million per tax period, applicable through specified tax periods). Businesses that elect this relief are treated as having no taxable income for that period — simplifying compliance considerably for very small businesses, though it comes with its own conditions and election requirements, so it is worth checking eligibility each period rather than assuming it carries forward automatically.

Free zone businesses (QFZP)

Free zone entities have a distinct regime. A Qualifying Free Zone Person (QFZP) can benefit from a 0% Corporate Tax rate on Qualifying Income, provided it meets conditions around maintaining adequate substance in the UAE, earning qualifying income as defined by the Cabinet Decision, and satisfying the de minimis requirement (non-qualifying revenue must stay below a set threshold or percentage of total revenue). Income that falls outside the qualifying definition is taxed at the standard 9% rate, and failing the conditions can disqualify the QFZP status entirely for that period. Free zone businesses should treat this as an ongoing compliance question, not a one-time checkbox.

Non-deductible expenses

Not every expense that reduces your accounting profit reduces your taxable income. Common categories that are wholly or partially non-deductible include client entertainment (only 50% deductible), fines and penalties, donations to organizations that are not approved, and certain related-party payments that are not at arm's length. These need to be added back when computing taxable income, and missing them is one of the most common ways businesses under- or over-state their Corporate Tax liability.

Registration and filing timeline

All taxable persons — including many free zone entities — must register for Corporate Tax and obtain a Tax Registration Number, generally regardless of whether tax is ultimately due. Returns are filed once per tax period, within 9 months of the end of that period, and payment is due by the same deadline. Because tax periods generally follow a business's financial year, the concrete filing date depends on your year-end — a calendar-year business with a 31 December year-end, for example, would file and pay by 30 September of the following year.

How The Accounts.ai helps

The Corporate Tax module runs the 0%/9% computation automatically, supports Small Business Relief and QFZP elections, and flags non-deductible expense categories like entertainment and fines as it pulls them from your expense records — so the adjustment lines are provenance-linked back to the original transactions rather than a manual afterthought. When you are ready, it produces an FTA-style computation worksheet you can export and hand to your tax advisor or file directly.

This is general information, not tax advice — consult the FTA or a qualified tax advisor for guidance specific to your business.