UAE Corporate Tax 9 Percent Explained: Who Pays Who Is Exempt
UAE corporate tax is 9 percent on taxable profits over AED 375,000. Free zones still offer 0 percent on qualifying income in 2026. Know who pays and who stays exempt.
Who must register for corporate tax in 2026
Every mainland and free zone company, branch, and partnership that carries on a business in the UAE must register with the Federal Tax Authority if it meets the threshold. Individuals who run a business through a sole establishment or civil company also register. The deadline is within three months of meeting the conditions or of starting the activity.
Who pays the 9 percent rate
Taxable persons pay 9 percent on taxable profits above AED 375,000. The first AED 375,000 of taxable income is taxed at zero percent. This applies to mainland companies, non-qualifying free zone persons, and foreign companies with a permanent establishment in the UAE. Banks, insurance firms, and oil and gas contractors also follow the standard rate.
Who stays exempt from corporate tax
Government entities, certain public benefit entities, and qualifying public pension or social security funds are exempt. Natural persons earning income from wages, real estate investment, or personal property are outside the scope. Foreign companies with no permanent establishment in the UAE are not taxed on UAE-sourced income unless it is connected to a UAE business.
Free zone rules in 2026
Qualifying Free Zone Persons continue to enjoy zero percent tax on qualifying income from transactions with other free zone persons or from qualifying activities such as manufacturing, logistics, and certain trading. Non-qualifying income, including income from mainland customers, is taxed at 9 percent. All free zone entities must still register and file even if their final tax bill is zero.
Practical filing steps and deadlines
Companies must prepare audited financial statements if revenue exceeds AED 50 million. The corporate tax return is due within nine months after the financial year ends. Payment of any tax due must accompany the return. Late registration or filing attracts penalties starting at AED 10,000. Keep records for seven years.
Common mistakes expats make
Many assume free zone status automatically means zero tax on all income. Others forget to register personal sole establishments or branches. Track every revenue stream and separate qualifying from non-qualifying activities in your books from day one.
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Frequently asked questions
Do free zone companies still get 0 percent tax in 2026?▾
Yes, on qualifying income from qualifying activities or other free zone persons. Non-qualifying income is taxed at 9 percent.
What is the threshold before 9 percent tax applies?▾
The first AED 375,000 of taxable profits is taxed at 0 percent. Profits above that amount are taxed at 9 percent.
When must I register for corporate tax?▾
Within three months of starting a business or meeting the conditions. File returns within nine months after your financial year ends.
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