The UAE corporate tax regime is structured to support business growth while aligning with international tax standards. The tax is calculated starting from a company’s accounting profit (as per IFRS standards). From this figure, non-deductible expenses are added back and exempt income is deducted to arrive at the final taxable income. A tax rate of 0%, 9%, or 15% is then applied, depending on the business category and income level.

Corporate Tax Rates and Thresholds

Taxable Income Corporate Tax Rate Up to AED 375,0000%Above AED 375,0009%Large MNEs (from Jan 2025)15% (Under Global Minimum Tax / DMTT)

• The 0% corporate tax rate supports small businesses and startups, allowing them to grow without immediate tax burdens.
• The 9% tax is only applied to profits exceeding AED 375,000, meaning a business earning AED 500,000 will only be taxed on AED 125,000.
• From January 2025, large multinational enterprises (MNEs) with global revenue over €750 million will be taxed at 15% on their UAE income under the Global Minimum Tax framework.

If you’re unsure how to determine your taxable income or apply these thresholds, working with experienced corporate tax experts or corporate tax firms in the UAE can ensure full compliance and optimized tax outcomes.

What About Free Zone Companies?

Free zone entities can still benefit from 0% UAE corporate tax on qualifying income — but certain conditions must be met:

• The business must have a real economic presence (substance) in the UAE.
• Revenue must come from qualifying activities, such as exports, services to foreign clients, or intra-free-zone trading.
• If a Free Zone Person earns some non-qualifying income, they can still retain the 0% rate if such income does not exceed 5% of total revenue or AED 5 million, whichever is lower.

Example Scenarios:

• A startup with AED 200,000 net profit pays 0% UAE corporate tax as it is below the threshold.
• An SME with AED 500,000 net profit is taxed 0% on the first AED 375,000 and 9% on the remaining AED 125,000, resulting in AED 11,250 corporate tax payable.

Whether you’re a startup, SME, or multinational, navigating UAE corporate tax rules requires clear strategy and compliance. Trusted corporate tax firms and corporate tax experts in the UAE can help you calculate liabilities, maximize exemptions, and stay on the right side of evolving regulations.