UAE corporate tax rates at a glance
| Situation | Rate | Notes |
|---|---|---|
| Taxable profit up to AED 375,000 | 0% | Applies to mainland and free zone companies |
| Mainland profit above AED 375,000 | 9% | Standard corporate tax rate |
| Free zone — qualifying income (as a QFZP) | 0% | Only if you meet all Qualifying Free Zone Person conditions |
| Free zone — non-qualifying income | 9% | e.g. most income from mainland UAE customers |
| Very large multinationals (Pillar Two) | 15% | Groups with global revenue of about EUR 750m+ (AED ~3bn) |
How a free zone company keeps 0%
To be a Qualifying Free Zone Person and keep 0% on qualifying income, a company must generally:
- Keep adequate substance in the free zone — real office, staff and core income-generating activity there
- Earn qualifying income (e.g. dealings with other free zone businesses and certain qualifying activities)
- Stay within the de-minimis limit on non-qualifying income
- Keep audited financial statements
- Comply with transfer-pricing rules and documentation
- Not elect to be taxed at the standard rate
Miss any condition and the company is taxed at 9% on the relevant income for that period.
Common mistakes that cost the 0%
- Selling mostly to mainland UAE customers and assuming it's still 0% (usually it's 9%)
- Being a "shelf" company with no real substance in the zone
- Skipping corporate tax registration or the annual return because "we pay 0%"
- No audited accounts or transfer-pricing documentation
Corporate tax & free zones — FAQs
Do free zone companies pay tax in the UAE?
A free zone company can keep a 0% corporate tax rate on its qualifying income if it is a Qualifying Free Zone Person — meaning it has real substance in the zone and meets all the conditions. Income that does not qualify (for example, most trade with mainland UAE customers) is taxed at 9%. Every company must still register for corporate tax, even if it pays 0%.
What is a Qualifying Free Zone Person (QFZP)?
A QFZP is a free zone company that keeps adequate substance in the UAE (office, staff, core activities in the zone), earns qualifying income, does not elect to be taxed normally, meets the de-minimis limit on non-qualifying income, keeps audited financial statements, and follows transfer-pricing rules. Meet all of these and qualifying income is taxed at 0%.
What is qualifying income?
Broadly, income from transactions with other free zone businesses, and certain qualifying activities, is qualifying income. Income from mainland UAE customers and from "excluded activities" generally is not, and is taxed at 9%. Confirm your specific activities with a tax advisor.
Is there any personal income tax in the UAE?
No. The UAE has no personal income tax on salaries. Corporate tax applies to business profits, not to individual employment income.
Do I have to register for corporate tax if I pay 0%?
Yes. Registration with the Federal Tax Authority and annual filing are required even for a 0% Qualifying Free Zone Person or a company below the AED 375,000 threshold. Missing registration or filing can bring penalties.
Is there relief for small businesses?
Small Business Relief lets eligible resident businesses with revenue at or below AED 3 million be treated as having no taxable income for a tax period, within the scheme's time limits. Check current eligibility with the FTA or an advisor.
Related
This page is general information, not tax advice. Corporate tax rules change and depend on your activities — confirm current rules with the UAE Federal Tax Authority (tax.gov.ae) or a qualified tax advisor.
Last updated: September 2026 · Maintained by the My Business Setup editorial team