What is the UAE Corporate Tax rate for 2026?

The standard rate is 9% on taxable profits exceeding AED 375,000. Profits up to AED 375,000 are taxed at 0%.

Are Free Zone companies exempt from Corporate Tax?

Qualifying Free Zone Persons (QFZP) can benefit from 0% tax on 'Qualifying Income'. However, non-qualifying income is taxed at 9%. They must still register and file returns.

What is Small Business Relief in UAE?

Businesses with revenue below AED 3 million in a tax period can elect for Small Business Relief, treating their taxable income as zero for that period (valid until Dec 2026).

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Everything You Need to Know About UAE Corporate Tax (2026)

The UAE Federal Tax Authority (FTA) introduced a federal corporate tax on business profits starting June 1, 2023. Understanding your liability is crucial to avoid penalties.

1. The Tax Rates Explained

Taxable Income	Tax Rate
AED 0 – AED 375,000	0%
Above AED 375,000	9%
Large Multinationals (Revenue > €750M)	15% (Pillar 2 Rules)

2. What is Small Business Relief?

To support startups and SMEs, the Ministry of Finance introduced Small Business Relief.

The Rule: If your revenue (not profit) is below AED 3 Million in a tax period, you can elect to be treated as having 0 taxable income. This relief is valid until the end of 2026.

3. Are Free Zone Companies Exempt?

Free Zone companies are not automatically exempt. To benefit from the 0% rate, a Free Zone Person must:

Maintain "Substance" in the UAE (office, employees).
Derive "Qualifying Income" (transactions with other Free Zone entities or specific activities).
Comply with Transfer Pricing rules.

If a Free Zone company earns non-qualifying income (e.g., trading directly with mainland consumers), they may be subject to the standard 9% rate.

4. Deductible Expenses

Tax is calculated on Net Profit (Accounting Profit), not Revenue. However, some expenses have limits:

Client Entertainment: Only 50% is deductible.
Interest Expenditure: Capped at 30% of EBITDA.
Fines & Penalties: Not deductible.
Owner Salaries: Must be reasonable and justifiable.

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