1. Tax Rates and Key Thresholds
The UAE’s corporate tax follows a tiered structure designed to be competitive while supporting small and medium-sized enterprises. A 0% tax rate applies to taxable income up to AED 375,000, ensuring that small businesses have the room to grow without an immediate tax burden. Any taxable income exceeding this threshold is subject to a standard 9% rate. Additionally, for large multinational enterprises with global revenues exceeding €750 million, a 15% Domestic Minimum Top-Up Tax has been implemented as of January 1, 2025, to align with global minimum tax standards.
2. Mandatory Registration Requirements
A common misconception is that registration is only necessary for businesses that expect to pay tax. However, all juridical persons, including mainland and Free Zone companies, are required to register with the Federal Tax Authority and obtain a Tax Registration Number regardless of their profit levels. For natural persons like freelancers and sole proprietors, the registration requirement kicks in if their annual turnover from business activities exceeds AED 1 million. Failing to register within the specified deadlines, which for many new companies is within three months of incorporation, can lead to significant administrative penalties.
3. The Free Zone Qualifying Status
Free Zone entities can still enjoy a 0% tax rate on qualifying income, but this benefit is no longer granted automatically. To maintain “Qualifying Free Zone Person” status, an entity must demonstrate adequate economic substance within the UAE by having a physical office and employees. They must also derive their income from specific qualifying activities, prepare audited financial statements, and comply with transfer pricing regulations. If these conditions are not met, the business may find its entire income subject to the standard 9% tax rate.
4. 2025 Incentives and Relief Measures
To encourage continued economic growth and innovation, the government has introduced several relief programs. Small Business Relief allows businesses with revenue below AED 3 million to elect to be treated as having no taxable income until the end of 2026. Furthermore, a new refundable tax credit for high-value employment became effective in 2025, aimed at companies hiring top-tier professionals in sectors like technology and finance. Other benefits include participation exemptions, where dividends and capital gains from local and foreign investments are often exempt from tax if specific ownership criteria are satisfied.
5. Compliance and Filing Deadlines
Staying compliant requires diligent record-keeping and a clear understanding of the calendar. Corporate tax returns and payments are generally due within nine months from the end of a business’s financial year. For businesses following a standard calendar year ending on December 31, the first major filing deadline is September 30, 2025. Businesses must also maintain their financial records for at least seven years, as the Federal Tax Authority may perform audits to verify compliance and ensure that all applicable taxes have been calculated correctly.