Who pays corporate tax in the UAE, and who is exempt

UAE Corporate Tax is paid by companies in the UAE, including free zone companies, by foreign businesses with a taxable presence here, and by individuals whose business turnover exceeds AED 1 million in a calendar year. Exempt Persons, such as Government Entities and approved pension and investment funds, do not pay it, and salaries are not taxed.

Who must pay corporate tax in the UAE?

Corporate Tax is paid by Taxable Persons: companies and other legal entities set up in the UAE, including free zone companies; foreign companies effectively managed and controlled in the UAE; foreign businesses with a permanent establishment or other taxable presence here; and individuals whose UAE business turnover exceeds AED 1 million in a calendar year.

The law has two groups:

• Resident Persons: legal entities incorporated, established or recognised in the UAE, foreign entities effectively managed and controlled here, and individuals conducting a Business here. A resident company is taxed on its income from inside and outside the UAE.
• Non-Resident Persons: others with a permanent establishment or nexus in the UAE, such as a foreign company earning income from UAE real estate, are taxed on the income attributable to it. Other UAE-source income of non-residents currently attracts withholding tax at 0%.

The tax applies to Tax Periods starting on or after 1 June 2023. Every Taxable Person must register with the Federal Tax Authority (FTA) and file a return for each Tax Period, except a non-resident whose only UAE income is subject to withholding tax. For foreign companies trading through a UAE branch, see how Corporate Tax applies to foreign company branches.

Who is exempt from corporate tax in the UAE?

Exempt Persons do not pay Corporate Tax. Some are exempt by law once they meet its conditions: Government Entities, listed Government Controlled Entities, qualifying natural resource businesses and listed Qualifying Public Benefit Entities. Others, such as qualifying investment funds and pension funds, are exempt only if the FTA approves their application.

Exempt without applying to the FTA

• Government Entities: federal and local government bodies, taxable only on Business carried on under a licence from a Licensing Authority.
• Government Controlled Entities listed in a Cabinet decision, taxable on Business outside their Mandated Activities.
• Extractive and non-extractive natural resource businesses, for UAE resources such as oil, gas and minerals, if, among other conditions, they hold a Local Government right, concession or licence, are effectively taxed at emirate level and have notified the Ministry of Finance.
• Qualifying Public Benefit Entities, such as charitable, religious, educational or healthcare bodies, that meet the law's conditions and are listed in a Cabinet decision.

Exempt only on application

• Qualifying Investment Funds that meet the law's conditions.
• Public pension and social security funds, and private ones regulated in the UAE that meet ministerial conditions.
• UAE subsidiaries wholly owned and controlled by a Government Entity, Government Controlled Entity, Qualifying Investment Fund or pension or social security fund, if they carry out the owner's activity, only hold assets or invest funds for it, or only carry out ancillary activities.
• Any other Person specified in a Cabinet decision.

Under FTA Decision No. 15 of 2026, in force from 15 September 2026, these Persons and Qualifying Public Benefit Entities must register. Applicants generally apply for exemption within 90 Business Days after the end of the Tax Period in which they met the conditions.

Failing a condition during a Tax Period generally ends the exemption from the start of that period.

Small businesses are not exempt. A Resident Person with Revenue of AED 3 million or less in the current and each previous Tax Period can, subject to other conditions, elect Small Business Relief (for Tax Periods ending by 31 December 2029) and be treated as having no Taxable Income, but must still register and file; see Small Business Relief extended to 2029.

What are the corporate tax rates in the UAE for 2026?

In 2026 the standard rates are 0% on Taxable Income up to AED 375,000 and 9% above that. A Qualifying Free Zone Person pays 0% on Qualifying Income and 9% on other Taxable Income. Large multinational groups can also owe a top-up tax designed to bring the effective tax rate on their UAE profits up to 15%.

• Standard rates: the 0% band applies once per Taxable Person per Tax Period, however many Businesses it runs; splitting a business artificially to reuse it can be treated as tax avoidance. The band is measured on Taxable Income, not revenue; see what the AED 375,000 threshold means.
• Qualifying Free Zone Persons: the 0% rate requires, among other conditions, adequate substance in the UAE, Qualifying Income, no election for the standard rates and compliance with transfer pricing rules.
• Large multinationals: Cabinet Decision No. 142 of 2024 imposes a Domestic Minimum Top-up Tax (DMTT) on UAE entities of groups with consolidated revenue of EUR 750 million or more in at least two of the four preceding Fiscal Years, for Fiscal Years starting on or after 1 January 2025.

Is the UAE 100% tax-free?

No. The UAE does not levy income tax on individuals, so salaries are not taxed. But businesses pay 9% Corporate Tax on Taxable Income above AED 375,000, VAT at 5% applies to most goods and services, and Excise Tax applies to specific goods that are harmful to health, such as tobacco products and energy drinks.

Free zone companies are Taxable Persons too; the 0% free zone rate applies only to a Qualifying Free Zone Person's Qualifying Income. Imports can attract customs duty, and some emirates charge their own levies, such as Dubai's tax on foreign banks and hotel fees.

Do freelancers and individuals have to pay corporate tax?

Only if they conduct a Business in the UAE and their total turnover from it exceeds AED 1 million in a calendar year. Below that, they need not register or pay; anyone already registered files a nil return. Salaries, personal investment income and real estate investment income that needs no licence are never counted or taxed, whatever the amount.

Turnover combines the year's gross income from all the person's Business activities, such as freelance fees and sole proprietorship sales. It excludes:

• Wages under an employment contract, including allowances and bonuses.
• Personal Investment income, such as dividends, interest and investment gains on their own account, where no licence is needed and the activity is not a commercial business.
• Real Estate Investment income from selling, leasing or renting UAE property where no licence is needed.

In an FTA example, AED 450,000 of salary and bonuses plus AED 900,000 of cupcake sales gives turnover of AED 900,000, so no Corporate Tax is due.

Above the threshold, the rates apply to Taxable Income from all the person's Businesses combined: 0% up to AED 375,000 and 9% above. The Tax Period is the calendar year, and a resident individual must register by 31 March of the following year. The AED 1 million test is separate from the AED 3 million Revenue limit for Small Business Relief; see registration deadlines.

Which income is exempt from corporate tax?

Exempt Income is left out of Taxable Income. The main types are dividends and other profit distributions from UAE resident companies, income from a qualifying Participating Interest, profits of foreign permanent establishments where the business elects to exempt them, and certain international shipping and aircraft income of non-residents.

• UAE dividends: exempt with no further conditions.
• Participation exemption: dividends from a foreign company, and gains on selling shares in a UAE or foreign company, where the holding is at least 5% (or cost at least AED 4 million), held or intended to be held for at least 12 months, and meets further conditions, including on how the company is taxed.
• Qualifying Income is different: a Qualifying Free Zone Person's Qualifying Income is taxed at 0%, not exempt.

For the adjustments, see from accounting profit to taxable income.

What is the difference between VAT and corporate tax?

Corporate Tax is a direct tax on a business's annual profit, at 9% on Taxable Income above AED 375,000. VAT is a 5% tax on consumption: registered businesses charge it on their sales, reclaim the VAT on their business purchases and pay the difference to the FTA, and the end consumer ultimately bears it.

• Who registers: almost every Taxable Person registers for Corporate Tax. For a UAE-resident business, VAT registration is mandatory once taxable supplies and imports exceed AED 375,000 over the previous 12 months, and optional above AED 187,500.
• Same number, different test: AED 375,000 is both the VAT registration threshold, measured on supplies, and the top of the Corporate Tax 0% band, measured on Taxable Income.
• Returns: Corporate Tax has one return per Tax Period, normally the financial year, filed and paid within nine months of its end. VAT returns normally cover three months and are filed and paid by the 28th day after the period ends.

Getting help

For help confirming whether Corporate Tax applies to you, registering or preparing your return, see our Corporate Tax services or contact us.