Corporate Tax Rate for UAE Companies
What this page covers
Corporate Tax Rate for UAE Companies
In the UAE, the standard corporate tax rate is 9% on taxable profits, with a 0% rate applying to the first AED 375,000 under the general corporate tax framework.
Free zone companies may still access a 0% rate on qualifying income, but this is not automatic. The business must meet the conditions for Qualifying Free Zone Person status and maintain the required substance and compliance.
In brief
- For most UAE companies, the corporate tax rate is 9% on taxable profits, with a 0% rate applying to the first AED 375,000 under the standard framework.
- A free zone company may benefit from a 0% rate on qualifying income only if it meets the rules for a Qualifying Free Zone Person.
- The final tax rate depends on factors such as where the company is based, the type of income it earns, its business activity, and ongoing tax compliance.
What to do
The main issue for most businesses is whether they fall under the standard 9% regime or may qualify for 0% treatment on certain free zone income. This depends on how the company is set up, how it operates, and whether its income is treated as qualifying income under the rules.
For a free zone company, registration alone is not enough. The company generally needs to be established in a recognized free zone, avoid electing into the standard corporate tax regime, and maintain adequate substance in the UAE that matches its activities.
Income type also matters. Based on current guidance, qualifying income may include income from other free zone businesses and clients outside the UAE, while some qualifying activities may include manufacturing, logistics, distribution from designated zones, holding company activities, and certain regulated financial services.
What to keep in mind
The 0% free zone rate is conditional, not guaranteed. If a company does not meet the requirements for Qualifying Free Zone Person status, it may instead be taxed at the standard 9% rate.
Substance and compliance remain important. Businesses may need an adequate UAE presence that matches their activity and income, and they may still need to register with the Federal Tax Authority and file tax returns even where no tax is ultimately payable.
A company’s operating model can change the outcome. If a free zone business earns too much non-qualifying income, carries on too much mainland business, or fails to meet ongoing conditions, its access to 0% treatment may be affected.