UAE Corporate Tax for Small Businesses: 2026 Guide

The UAE introduced federal corporate tax in 2023, and by 2026 it is part of normal life for most businesses. The headline rate is low by global standards, and many small companies owe little or nothing, but everyone still has obligations to register, keep records and file. Missing them is where the cost is.

This guide covers the basics for owners of small companies, freelancers with a trade licence and free zone businesses. It is general information as of 2026, not tax advice, and rules are set by the Federal Tax Authority at tax.gov.ae. If your situation is complex, speak to a registered tax agent.

The basics: rates and thresholds

• 0% on taxable income up to AED 375,000.
• 9% on taxable income above AED 375,000.
• Larger multinational groups may also face a separate top-up tax, which does not affect small local businesses.

The tax applies to taxable income (profit adjusted under the tax rules), not revenue. For a company with AED 600,000 of taxable income, the 9% applies only to the amount above AED 375,000, so the tax is 9% of AED 225,000, which is AED 20,250. Try your own numbers with our corporate tax estimator.

Who must pay

Corporate tax applies to UAE companies and other juridical persons, foreign companies with a permanent establishment or place of effective management in the UAE, and individuals running a business or trade licence whose turnover exceeds AED 1 million in a calendar year. Salaries, personal investment income and rental income from personal real estate are not taxed under this regime for individuals.

Small Business Relief

Small Business Relief lets eligible businesses be treated as having no taxable income, which means no corporate tax. To qualify:

• Your revenue must be AED 3 million or less in the tax period and in earlier tax periods.
• You must be a UAE resident person and not part of a large multinational group.
• You must not be a Qualifying Free Zone Person.
• The relief is available only for tax periods ending on or before 31 December 2026.

This is a time-limited relief. A business with a calendar-year tax period gets one last use of the relief for the year ending 31 December 2026, and then standard rules apply to 2027 onwards unless the government extends it. Plan ahead, because a growing business crossing AED 3 million loses the relief for that period.

You still need to register and file a return to claim it. The relief is not automatic, and it must be elected in the return. Also note that the AED 3 million test uses revenue, not profit.

Free zone companies

A free zone company can qualify as a Qualifying Free Zone Person, which means a 0% rate on its qualifying income and 9% on anything else. Typical qualifying income includes transactions with other free zone companies (with some exceptions) and income from qualifying activities such as certain trading, manufacturing, logistics and holding activities. Income from mainland customers is usually non-qualifying, and so is income from excluded activities such as most real estate transactions.

To keep the 0% status, a free zone company generally must:

• Maintain adequate substance in the free zone, such as staff, premises and decision-making.
• Keep non-qualifying revenue below a de minimis limit (the lower of 5% of revenue or AED 5 million).
• Prepare audited financial statements.
• Comply with transfer pricing documentation rules.

If you fail a requirement, you lose the 0% status for that year and the following four years, and your income may be taxed at the standard rates. This catches many small free zone businesses that take mainland work, so check your revenue mix. Qualifying Free Zone Persons cannot use Small Business Relief at the same time.

Registration with the Federal Tax Authority

Almost every taxable person has to register, even if their tax will be zero, and registration is done on the FTA's EmaraTax portal. A few points:

• New companies are generally expected to register within three months of incorporation or licence issue.
• Individuals with turnover above AED 1 million must register, following a deadline set by the FTA after the calendar year ends.
• Free zone companies must register too, even if they expect to pay 0%.
• Registration gives you a Tax Registration Number, which is separate from your VAT number.

Details of deadlines have been staggered by licence date and have changed through ministerial decisions, so confirm your own deadline on the FTA website.

Filing deadline

Your corporate tax return and any tax due must be filed and paid within nine months after the end of your tax period. A company with a financial year ending 31 December 2026 should therefore file and pay by 30 September 2027. If your year ends on 31 March, your deadline falls on 31 December. Plan your accounts well before this, because the return needs full financial statements.

Penalties

The FTA uses fixed administrative penalties. Key ones as of 2026:

• Late registration: AED 10,000. The FTA has offered limited waivers in some cases, so check whether any apply to you.
• Late filing: AED 500 per month for the first 12 months, rising to AED 1,000 per month after that.
• Late payment: a percentage penalty on the unpaid tax, so pay on time even if you file later.
• Record-keeping failures: fines for not maintaining or providing records.

Penalties change, so check the FTA site before relying on any figure.

Record keeping

You must keep accounting records and supporting documents for seven years after the end of the tax period. This includes invoices, contracts, bank statements, payroll, board minutes and your financial statements. Records should be accurate enough to show how you worked out revenue, expenses and taxable income.

Good habits include using accounting software, separating personal and business accounts and storing digital copies of every invoice. Our banking, money and tax guide covers business banking basics, and our setting up a business guide explains licensing.

How corporate tax works alongside VAT

Corporate tax and VAT are two separate taxes with separate registrations.

	Corporate tax	VAT
Rate	0% to 375,000, then 9%	5%
Applied to	Taxable profit	Most goods and services sold
Who pays	The business	The customer, collected by the business
Return	Annual	Usually quarterly
Registration	EmaraTax	EmaraTax

If you are VAT-registered, you charge 5% on sales and recover VAT paid on purchases. VAT is not counted as revenue or an expense for corporate tax purposes. Mandatory VAT registration applies once taxable supplies exceed AED 375,000 in 12 months, and voluntary registration starts at AED 187,500. Use our VAT calculator to work out invoices.

Frequently asked questions

What is the corporate tax rate in the UAE?

The rate is 0% on taxable income up to AED 375,000 and 9% on the amount above that. Qualifying free zone income can be taxed at 0%, and large multinational groups may face a separate top-up tax.

Do small businesses have to register for corporate tax?

Yes. Most businesses must register, even if the tax payable is zero. Small Business Relief does not remove the need to register or to file a return.

What is Small Business Relief?

It treats eligible businesses with revenue of AED 3 million or less as having no taxable income. It is available for tax periods ending on or before 31 December 2026 and must be claimed in the return.

When do I file my corporate tax return?

Within nine months of the end of your tax period. For a year ending 31 December 2026, that is 30 September 2027.

Do free zone companies pay corporate tax?

A Qualifying Free Zone Person pays 0% on qualifying income and 9% on other income. Companies that do not meet the conditions, or that earn a lot of non-qualifying revenue, can lose the 0% rate.