Corporate Tax Rate UAE: The 0% and 9% Brackets and the AED 375,000 Threshold

The UAE corporate tax rate is 0% on taxable income up to AED 375,000 and 9% on every dirham above it. It is a federal rate, so the Dubai, Abu Dhabi and Sharjah corporate tax rates are identical, and it is marginal — the 0% band applies in full no matter how large the profit gets. Only the excess above the threshold is charged at 9%.

The corporate tax rate UAE businesses actually face is one of the most searched-for and most misunderstood numbers in the country’s tax system. Ask ten SME owners what the rate is and most will say “9%” — which is true, and also incomplete enough to cause real overpayment. The UAE runs a two-tier standard rate: 0% on taxable income up to AED 375,000 and 9% on the income above that line. That structure is deliberately gentle at the small-business end, and it is the framework every mainland company and most free zone companies now plan around.

But the rate itself is the easy part. The hard part — the part that decides whether your bill is fair, too high or dangerously too low — is what “taxable income” means, and this guide walks through both. If you would rather have the computation prepared than explained, our corporate tax services team handles it end to end.

The headline: 0% and 9%, and why it is marginal

The standard UAE corporate tax rate has two bands. The first AED 375,000 of taxable income is taxed at 0%. Every dirham of taxable income above AED 375,000 is taxed at 9%. That is the whole of the standard rate table, and it applies to financial years starting on or after 1 June 2023. Because corporate tax is federal, the same UAE tax rate applies in every emirate — searching for the Dubai company tax rate, the Sharjah one or the Abu Dhabi one returns the same two bands, because there is no separate emirate-level corporate tax bracket for ordinary businesses.

The single most important thing to understand is that this is a marginal system, not a cliff. A business does not “cross into the 9% bracket” and suddenly pay 9% on everything. The 0% band always covers the first AED 375,000, regardless of how much the company earns in total. Only the slice above the threshold is charged at 9%.

It is worth being concrete, because this is where the misunderstanding costs money. A company with taxable income of exactly AED 375,000 pays nothing. A company with AED 400,000 pays 0% on the first AED 375,000 and 9% on the AED 25,000 above it — AED 2,250, not AED 36,000. A company with AED 1,000,000 pays 9% on AED 625,000, which is AED 56,250. In every case the effective rate — tax as a percentage of total taxable income — sits below 9% and only creeps towards it as profits grow. That gentle curve is intentional relief for smaller businesses, and it is the reason the “just 9%” shorthand overstates what most SMEs owe.

The same two bands apply to individuals. A natural person whose licensed business turnover crosses AED 1 million in a calendar year pays 0% on the first AED 375,000 of taxable profit and 9% on the excess, exactly like a company — the threshold test, registration route and deductions list for that case are in our guide to corporate tax for sole proprietors in the UAE.

AED 375,000

Taxable income threshold below which the standard UAE corporate tax rate is 0% — the 9% rate applies only to the excess above this figure

Before the numbers, it is worth knowing which documents actually carry them. Corporate tax rates are spread across a Decree-Law and a set of Cabinet and Ministerial Decisions, and quoting the wrong one is how outdated figures circulate. Every instrument below was read in primary English text on 4 August 2026.

Instrument	What it settles about the rate	Checked
Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses	The 0% and 9% bands themselves (Article 3), the Small Business Relief election (Article 21), the tax period (Article 57), the effective date (Article 69)	Checked on 4 August 2026
Cabinet Decision No. 116 of 2022 on the annual Taxable Income subject to Corporate Tax	The AED 375,000 figure, and the anti-fragmentation rule attached to it	Checked on 4 August 2026
Ministerial Decision No. 73 of 2023 on Small Business Relief, as amended by Ministerial Decision No. 131 of 2026	The AED 3,000,000 revenue threshold, the 31 December 2029 end date, and who may not elect	Checked on 4 August 2026

Here is the rate table with the article that produces each line, so you can check it rather than take our word for it. Both instruments were read in primary text on 4 August 2026.

Taxable person	Rate	Applies to	Source	Checked
Standard taxable person	0%	The portion of taxable income not exceeding the amount specified by Cabinet Decision	Article 3(1)(a), Federal Decree-Law No. 47 of 2022	Checked on 4 August 2026
Standard taxable person	9%	Taxable income exceeding that amount	Article 3(1)(b), Federal Decree-Law No. 47 of 2022	Checked on 4 August 2026
The amount itself	AED 375,000	Set for the purposes of Article 3(1)(a), in the relevant tax period, irrespective of whether the person conducts multiple businesses or business activities	Article 2(1), Cabinet Decision No. 116 of 2022	Checked on 4 August 2026
Qualifying Free Zone Person	0%	Qualifying Income	Article 3(2)(a), Federal Decree-Law No. 47 of 2022	Checked on 4 August 2026
Qualifying Free Zone Person	9%	Taxable income that is not Qualifying Income under Article 18 and any Cabinet Decision on it	Article 3(2)(b), Federal Decree-Law No. 47 of 2022	Checked on 4 August 2026

Note what Article 3 does not do: it never names a figure. The Decree-Law says 0% up to “the amount specified in a decision issued by the Cabinet”, and Cabinet Decision No. 116 of 2022 supplies AED 375,000. That two-step structure is why the threshold could in principle be changed by Cabinet Decision without amending the Decree-Law, and it is a good reason to check the current Cabinet Decision rather than a rate quoted from memory.

Because the system is marginal, the effective rate climbs towards 9% but never reaches it. The table below applies the two bands arithmetically.

Taxable income (AED)	Taxed at 0%	Taxed at 9%	Corporate tax due (AED)	Effective rate
200,000	200,000	0	0	0.00%
375,000	375,000	0	0	0.00%
400,000	375,000	25,000	2,250	0.56%
500,000	375,000	125,000	11,250	2.25%
750,000	375,000	375,000	33,750	4.50%
1,000,000	375,000	625,000	56,250	5.63%
2,000,000	375,000	1,625,000	146,250	7.31%
5,000,000	375,000	4,625,000	416,250	8.33%
10,000,000	375,000	9,625,000	866,250	8.66%

Those figures are arithmetic applied to the two verified bands, not a published schedule. They assume no relief, no exempt income and no adjustment other than the bands themselves.

Small Business Relief: the election that takes the rate to zero

The rate table is not the whole story for a small UAE company, and the part that is missing from most rate guides is the one that saves the most money. Article 21 of Federal Decree-Law No. 47 of 2022 lets a resident taxable person elect to be treated as not having derived any taxable income for a tax period, where revenue does not exceed a threshold set by the Minister and the person meets the Minister’s other conditions.

That threshold is set by Ministerial Decision No. 73 of 2023, which we read in full on 4 August 2026.

Feature of Small Business Relief	What the decision says	Source	Checked
Revenue threshold	AED 3,000,000 for each tax period, for the relevant tax period and previous tax periods	Article 2(1), Ministerial Decision No. 73 of 2023	Checked on 4 August 2026
Which periods it covers	Tax periods commencing on or after 1 June 2023, continuing only for subsequent periods that end before or on 31 December 2029	Article 2(2), Ministerial Decision No. 73 of 2023 (as amended by Ministerial Decision No. 131 of 2026)	Checked on 4 August 2026
Once you exceed it	You cannot elect the relief if revenue in any relevant or previous tax period has exceeded AED 3,000,000	Article 2(3), Ministerial Decision No. 73 of 2023	Checked on 4 August 2026
How revenue is measured	In accordance with the applicable accounting standards accepted in the State	Article 2(4), Ministerial Decision No. 73 of 2023	Checked on 4 August 2026
Who cannot elect	A constituent company of a Multinational Enterprises Group as defined in Cabinet Decision No. 44 of 2020, and a Qualifying Free Zone Person	Article 3, Ministerial Decision No. 73 of 2023	Checked on 4 August 2026
Effect on the relief must be elected	It is an election, not automatic — Article 21 says the person “may elect”	Article 21(1), Federal Decree-Law No. 47 of 2022	Checked on 4 August 2026

Two features of Article 2 deserve more attention than they usually get. The threshold is measured on revenue, not on taxable income — so a business turning over AED 4,000,000 at a thin margin is outside the relief even though its profit is far below AED 375,000 and its tax would be nil anyway. And Article 2(3) is a one-way door: once revenue has exceeded AED 3,000,000 in any relevant or previous tax period, the election is gone, and it does not come back if revenue later falls.

Electing the relief also switches off parts of the Decree-Law, which is the trade-off people miss. Article 21(2) disapplies exempt income under Chapter Seven, the reliefs in Chapter Eight, the deductions in Chapter Nine and tax loss relief in Chapter Eleven.

What the election costs you	Provision	Checked
Exempt income treatment	Chapter Seven is disapplied for that period	Checked on 4 August 2026
Reliefs	Chapter Eight is disapplied for that period	Checked on 4 August 2026
Deductions	Chapter Nine is disapplied for that period	Checked on 4 August 2026
Tax loss relief	Chapter Eleven is disapplied for that period	Checked on 4 August 2026
Losses arising in the elected period	Cannot be carried forward to any subsequent tax period	Article 4(1), Ministerial Decision No. 73 of 2023, checked on 4 August 2026
Losses from earlier non-elected periods	May still be carried forward to later periods in which no election is made, subject to Article 37 of the Corporate Tax Law	Article 4(2), Ministerial Decision No. 73 of 2023, checked on 4 August 2026
Net interest expenditure in the elected period	Cannot be carried forward to any subsequent tax period	Article 5(1), Ministerial Decision No. 73 of 2023, checked on 4 August 2026
Net interest expenditure from earlier non-elected periods	May be carried forward to later non-elected periods, subject to Article 30 of the Corporate Tax Law	Article 5(2), Ministerial Decision No. 73 of 2023, checked on 4 August 2026

For a loss-making start-up, those last four rows can outweigh the benefit. If you elect the relief in a year when you made a loss, that loss is extinguished for carry-forward purposes. A business expecting to be profitable in two years might rationally decline the relief in a nil-tax year in order to preserve the loss. That is a genuine calculation, not a formality, and it is worth running before ticking the box on the return.

One date to keep in view: on the text of Article 2(2) as amended by Ministerial Decision No. 131 of 2026, the AED 3,000,000 threshold now applies to tax periods ending before or on 31 December 2029 — extended from the original 31 December 2026. The relief still has an end date rather than being permanent, so treat it as an election to make each period rather than a fixture you can assume runs indefinitely.

The AED 375,000 threshold is per taxable person, and the law says so twice

A pattern we see regularly is an owner with three licences assuming three thresholds — AED 1,125,000 of tax-free income across the group. Cabinet Decision No. 116 of 2022 anticipated exactly that, and closed it in the same article that sets the figure.

Provision	What it does	Checked
Article 2(1), Cabinet Decision No. 116 of 2022	Grants the 0% band on taxable income up to AED 375,000 in the relevant tax period, expressly “irrespective of whether the Taxable Person conducts multiple Businesses or Business Activities in that Tax Period”	Checked on 4 August 2026
Article 2(2), Cabinet Decision No. 116 of 2022	Where the FTA establishes that one or more persons artificially separated their business, and income across the whole business above AED 375,000 has been taxed at 0%, this is treated as an arrangement to obtain a corporate tax advantage under Article 50 of the Corporate Tax Law	Checked on 4 August 2026
Article 2(3), Cabinet Decision No. 116 of 2022	Sets out how the FTA determines whether two or more persons have artificially separated their business	Checked on 4 August 2026

Read Article 2(1) carefully. The threshold is one figure per taxable person, and running several activities inside that person does not multiply it. Article 2(2) then reaches the other direction — splitting one business across several persons to claim the band repeatedly is routed into the general anti-abuse rule at Article 50. Structuring decisions should be driven by commercial substance, and any restructuring done principally to duplicate the threshold is precisely the arrangement the provision describes.

Dubai corporate tax rate, Abu Dhabi, Sharjah: one federal table

There is no Dubai corporate tax rate that differs from the UAE corporate tax rate, and searching for one is the fastest way to end up on a page quoting a number that does not exist. Federal Decree-Law No. 47 of 2022 is federal legislation. It applies across all seven emirates for financial years starting on or after 1 June 2023, and the Federal Tax Authority administers it centrally through EmaraTax. So the Dubai corporate tax rate, the Abu Dhabi corporate tax rate and the Sharjah one are the same two bands: 0% to AED 375,000, 9% above.

Work it through for two identical businesses. A Dubai mainland trading LLC with AED 900,000 of taxable income pays 9% on AED 525,000, which is AED 47,250. An Abu Dhabi mainland trading LLC with exactly the same taxable income pays exactly the same AED 47,250. Nothing in the emirate of licence changes the arithmetic — not the band, not the rate, not the nine-month filing window.

What can differ between two companies is status rather than geography. A Dubai free zone company and an Abu Dhabi Global Market company both have the same route to 0% on qualifying income if they meet the Qualifying Free Zone Person conditions, and both fall back to the standard 0%/9% brackets if they do not. That is a test of substance, income type and audited accounts — not of which emirate issued the licence.

The rate is applied to taxable income, not revenue

Here is where most of the real work in corporate tax lives. The 0% and 9% rates are not applied to your turnover, and they are not applied to your bank balance. They are applied to your taxable income — a defined figure that starts from accounting profit and is then adjusted for tax.

Taxable income begins with the accounting profit reported in your financial statements, prepared under IFRS. From that starting point, a series of adjustments produces the taxable figure. Some expenses that reduce accounting profit are not deductible for tax and get added back. Some categories of income may be exempt and come out. Specific reliefs and elections can move the number in either direction. The result of all of that — not the raw accounting profit, and certainly not revenue — is what the rate table applies to.

This distinction is not academic. Two businesses with identical revenue can have very different taxable incomes depending on how their books are kept, what is genuinely deductible, and which exemptions apply. It is also why the rate is, in practice, the least of your concerns. You cannot change the 9% figure, but the quality of the accounting profit it lands on is entirely within your control — and that quality is a function of disciplined accounting and bookkeeping, not of any clever reading of the tax law.

Free zones: the 0% that has to be earned

The free zone position is where the rate story gets genuinely different, and where a lot of confident but wrong assumptions live. A company holding a free zone licence does not automatically pay 0% corporate tax on everything it earns. What the regime offers is a specific benefit for a Qualifying Free Zone Person: 0% on qualifying income, and 9% on non-qualifying income.

The word doing all the work is “qualifying.” To access the 0% rate on qualifying income, a free zone company has to meet a set of conditions — broadly, having adequate substance in the zone, earning income of a type that qualifies, staying within the de minimis limits on non-qualifying income, and maintaining audited financial statements. Where those conditions are met, qualifying income sits at 0% and any non-qualifying income is taxed at the standard 9%.

Where the conditions are not met, the benefit falls away and the company is taxed under the standard 0%/9% brackets like any mainland business. So the practical reality for a free zone SME is that the 0% is a status to be actively maintained and evidenced, not a permanent feature of the licence. That is a very different mental model from “we’re in a free zone, so we don’t pay tax,” and it is the model that keeps free zone businesses out of trouble.

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The free zone 0% is not a shield you own — it is a status you renew with your evidence every year. The businesses that lose it are rarely the ones that fail the rules; they are the ones that never checked whether their income actually qualified in the first place.

The 15% figure — real, but not for most businesses

Somewhere in every corporate tax conversation, the number 15% appears, and it causes needless worry. It is worth being precise about what it is and, more importantly, who it is for.

The 15% comes from the OECD’s Pillar Two Global Minimum Tax framework. The idea behind Pillar Two is that very large multinational enterprise groups should pay an effective tax rate of at least 15% in the jurisdictions where they operate, with a top-up mechanism to bring the rate up to that floor where it would otherwise be lower. It is an international framework, layered on top of a country’s own corporate tax system, and it is aimed squarely at the largest global groups.

The critical point for readers of this guide: Pillar Two applies only to very large multinational groups above the international revenue threshold set under those rules. It is not the rate an ordinary UAE SME pays, and it is not something a standalone Dubai trading company or free zone consultancy needs to plan around. For the overwhelming majority of UAE businesses, the relevant rates remain 0% and 9%, full stop.

If a business genuinely is part of a very large multinational group, then a top-up framework may apply on top of the standard regime, and that is a specialist area to work through carefully with advisors. But for the SME reading this to understand its own bill, 15% is background noise, not a bracket you fall into. Confusing the two leads businesses to either panic unnecessarily or, worse, assume a complexity that distracts them from getting the basic 0%/9% mechanics right.

It also helps to separate corporate tax from the other UAE taxes people fold into the same question. They have different rates, different bases and different laws, and a business that confuses them will budget wrongly.

Tax	Headline rate	Applied to	Governing law	Checked
Corporate tax	0% and 9%	Taxable income above and below AED 375,000	Federal Decree-Law No. 47 of 2022	Checked on 4 August 2026
Value added tax	5% standard rate	The value of any supply or import under Article 2	Article 3, Federal Decree-Law No. 8 of 2017	Checked on 4 August 2026
Personal income tax on salaries	None imposed	Not applicable — the UAE has no federal personal income tax on employment income	No instrument imposes it	Position stated, not a stamped row
Pillar Two top-up	15% minimum effective rate concept	Very large multinational enterprise groups only	OECD framework as implemented domestically — confirm the current UAE instrument before relying on it	Not verified in primary text for this guide

That last row is deliberately unstamped. We did not read the current UAE domestic implementing instrument for the Pillar Two top-up in primary text while preparing this guide, so we are not going to put a date on it or quote a threshold. If your group is large enough for it to matter, the number you need is in the implementing decision, and that is the document to read rather than any summary of it — including this one.

Putting the brackets to work: a simple mental model

It helps to hold the whole rate system as three layers, applied in order.

Layer one — the base. Build taxable income properly. Start from IFRS accounting profit, apply the tax adjustments, arrive at the taxable figure. This is where accuracy is won or lost, and it is the layer that most rewards clean books.

Layer two — the standard brackets. Apply 0% to the first AED 375,000 of taxable income and 9% to the excess. This is the arithmetic almost everyone can do once the base is right.

Layer three — your status. Check whether a special position changes the picture. For most SMEs it does not. For a Qualifying Free Zone Person, qualifying income sits at 0% and non-qualifying income at 9%. For a very large multinational group, the Pillar Two 15% framework may sit on top. Almost no standalone SME touches layer three’s complications at all.

This is also the honest answer to the question people usually mean when they search for the Dubai tax percentage. Taxation in Dubai has no personal income tax and, for most businesses, no emirate-level profit tax on top of the federal regime — so the corporate tax percentage that matters is the federal 0% and 9% applied to a properly computed base, not some separate local figure.

The reason to think in layers is that it puts your effort where it belongs. The rate table — layer two — is fixed and public. Your status — layer three — is usually simple and stable. The base — layer one — is the moving part, the thing you influence every single month through how you record transactions and close your books. A business that spends its energy debating the rate is optimising the one thing it cannot change; a business that spends its energy on the base is optimising the one thing it can.

When your first corporate tax period actually starts

Effective dates trip up more businesses than the rates do. The regime applies to financial years starting on or after 1 June 2023, but “on or after 1 June 2023” resolves differently depending on your own year-end.

A business with a calendar financial year — 1 January to 31 December — first falls within corporate tax for the year beginning 1 January 2024, because that is its first financial year to start on or after 1 June 2023. A business whose financial year begins on 1 June 2023 was in scope from that date. A business with, say, an April-to-March year would be caught from the April period that starts after the effective date. There is no single national “start date” that applies to everyone; it keys off each company’s financial year.

The rule itself is one sentence. Article 69 of Federal Decree-Law No. 47 of 2022 provides that the Decree-Law applies to tax periods commencing on or after 1 June 2023, and Article 57 defines the tax period as the financial year or part of it for which a return is required. Article 57(2) defines the financial year as the Gregorian calendar year, or the twelve-month period for which the taxable person prepares financial statements. All three were read in primary text on 4 August 2026.

Your financial year	First tax period under Article 69	Why
1 January to 31 December	The year beginning 1 January 2024	The year beginning 1 January 2023 commenced before 1 June 2023
1 June to 31 May	The year beginning 1 June 2023	It commences exactly on the effective date
1 July to 30 June	The year beginning 1 July 2023	The first financial year to commence after 1 June 2023
1 April to 31 March	The year beginning 1 April 2024	The year beginning 1 April 2023 commenced before 1 June 2023
1 October to 30 September	The year beginning 1 October 2023	The first financial year to commence after 1 June 2023

Each row is Article 69 applied to a year end; the rule is verified, the mapping is arithmetic.

There is one provision that does not wait for your first tax period. Article 50, the general anti-abuse rule, applies to transactions or arrangements entered into on or after the date the Decree-Law was published in the Official Gazette — earlier than the tax periods it otherwise governs. If you restructured in anticipation of corporate tax, that is the article to have in mind.

This matters because your first taxable period drives everything downstream — when you register, when your first return is due, and which set of figures forms your opening position. Confirming exactly which of your financial years is your first corporate tax period is one of the earliest and most useful things to nail down, and it is a routine part of how we help clients scope their obligations before any numbers get calculated.

What this means for a UAE SME planning its bill

For most SMEs, the honest summary is reassuring. The corporate tax rate structure is designed to be light at the small end. The first AED 375,000 of taxable income is free of tax. Above that, the rate is a flat 9% on the excess, which keeps effective rates well below 9% for anything but the largest profits. There is no progressive ladder of higher and higher brackets to climb, no surtax on top for ordinary businesses, and — for standalone SMEs — no Pillar Two complication to worry about. Once you know where your profits sit in the brackets, the operational question is timing: our corporate tax filing UAE 2026 guide maps every filing deadline by year end and walks the EmaraTax return tab by tab.

The work, therefore, is not in the rate. It is in three quieter disciplines. First, keep IFRS-based books clean enough that your accounting profit is genuinely reliable, because that is the raw material of taxable income. Second, apply the tax adjustments correctly, so the base the rate lands on is defensible. Third, if you operate in a free zone, honestly assess whether your income qualifies for the 0% rather than assuming it does. Do those three things well and the rate table takes care of itself.

That is the through-line of everything above: a simple rate applied to a carefully built base beats a clever rate applied to a sloppy one, every time. We help SMEs across Dubai mainland and the free zones get the base right — reliable monthly accounting and bookkeeping feeding into properly scoped corporate tax support — so that when the 0% and 9% brackets are applied, they are applied to a number the business can stand behind.

Velmont Crest is a specialist UAE accounting firm supporting SMEs with bookkeeping, VAT, corporate tax preparation and advisory across Dubai mainland and the free zones. Read more on our insights hub or get in touch via our contact page.

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Disclaimer: Velmont Crest is a UAE accounting firm providing advisory, preparation and compliance support services. We are not a law firm, we are not the Federal Tax Authority, and we do not act as an FTA-registered tax agent representing clients before the authority. Corporate tax rules, thresholds and qualifying-income conditions carry detail and change over time — verify all figures, rates and effective dates against the Federal Tax Authority, the Ministry of Finance and the relevant Federal Decree-Law before acting, and seek advice specific to your circumstances.

References

• UAE Federal Tax Authority — Corporate Tax
• UAE Ministry of Finance — Corporate Tax in the UAE
• UAE Government Portal — Corporate Tax
• OECD — Global Minimum Tax (Pillar Two)