How the UAE corporate tax 9 percent threshold works

What is the UAE corporate tax 9 percent threshold?

The UAE corporate tax 9 percent threshold is the AED 375,000 taxable income level set by Federal Decree-Law 47 of 2022. Income up to AED 375,000 is taxed at 0 percent. Income above AED 375,000 is taxed at 9 percent. The threshold applies per business, per tax period, and helps protect small companies and startups.

This single figure shapes how most UAE businesses plan their tax position. It sets the line between paying nothing and paying the standard rate. If you want the bigger picture, see our hub on UAE Corporate Tax and the sibling guide on UAE Corporate Tax Rates.

The threshold sits inside the federal corporate tax regime that took effect for financial years starting on or after June 1, 2023. For background on the regime itself, read What Is UAE Corporate Tax.

How the 9 percent threshold works in law

The threshold is defined in Article 3 of Federal Decree-Law 47 of 2022. The law applies a two-tier rate structure to taxable income earned by a taxable person.

The two-tier rate structure

• 0 percent on taxable income up to and including AED 375,000.
• 9 percent on taxable income above AED 375,000.

Taxable income is your accounting profit after the adjustments required by the corporate tax law. It is not the same as revenue or turnover. A business with AED 5,000,000 in revenue may report far less taxable income after deducting allowable expenses.

One threshold per taxable person

The AED 375,000 threshold applies once per taxable person, per tax period. A tax period is normally 12 months and follows your financial year. You cannot stack the threshold by splitting a single business into multiple legal entities to create artificial slices of profit. The Federal Tax Authority (FTA) can challenge structures set up mainly to multiply the relief.

For the full legal context, see our explainer on the UAE Corporate Tax Law.

Worked examples: applying the 9 percent threshold

The math is straightforward once you know your taxable income. The table below shows three common scenarios for a UAE mainland company with a calendar tax year.

The tax is calculated on the slice above AED 375,000, not on the full taxable income. A business earning AED 500,000 in taxable income pays AED 11,250, not AED 45,000.

Why the slice matters

Some owners assume that crossing the threshold taxes the whole amount at 9 percent. It does not. The first AED 375,000 always stays at 0 percent for a standard taxable person. This design keeps the UAE rate one of the lowest headline corporate tax rates in the region while protecting smaller firms.

Who the 9 percent threshold applies to

The threshold applies to most taxable persons under the corporate tax law. That includes mainland companies, branches of foreign companies, and many free zone businesses that do not qualify for the 0 percent Qualifying Free Zone Person (QFZP) regime.

Mainland companies

UAE mainland LLCs, PJSCs, and PSCs are taxable persons. They apply the AED 375,000 threshold to their taxable income each year and pay 9 percent on the excess.

Free zone companies

Free zone companies are also taxable persons. A free zone business that meets the QFZP conditions can apply 0 percent to its qualifying income, but any non-qualifying income is taxed at 9 percent with no threshold benefit on that slice. Read more in Who Pays Corporate Tax in UAE.

Natural persons doing business

Individuals running a licensed business in the UAE become taxable persons once their turnover from business activities exceeds AED 1,000,000 in a calendar year. The same AED 375,000 threshold then applies to their taxable income.

Large multinationals

Large multinational groups with global consolidated revenue of EUR 750 million or more fall under a separate rule. From January 2025, they are subject to a Domestic Minimum Top-up Tax (DMTT) at 15 percent under Pillar 2. The 9 percent threshold still exists for the local entity calculation, but the top-up rule can lift the effective rate. See UAE Corporate Tax 15 Percent Pillar 2 for the detail.

Small business relief and the threshold

Small Business Relief is a separate mechanism that can override the threshold calculation for qualifying small firms. If your revenue is AED 3,000,000 or less in the current and all previous tax periods, you can elect to be treated as having no taxable income for that period. The relief is available for tax periods ending on or before December 31, 2026.

This is an election, not automatic. You still file a corporate tax return. If you do not elect, the standard rates and the AED 375,000 threshold apply in the normal way.

Choosing between the threshold and the relief

Filing under the 9 percent threshold

Every taxable person must register for corporate tax with the FTA and get a Tax Registration Number (TRN). You file one corporate tax return per tax period, even if your tax due is AED 0 because you stayed under the threshold.

Deadlines

• Corporate tax return: within 9 months of the end of your financial year.
• Payment: same 9 month window.
• VAT returns (if registered): within 28 days of the end of each VAT period.

A company with a December 31 year end must file and pay by September 30 of the following year. For the first applicable year of corporate tax, see UAE Corporate Tax Effective Date.

Records to keep

Keep audited or management accounts, supporting invoices, contracts, and bank records for at least 7 years. The threshold calculation rests on accurate taxable income, which rests on accurate books. From 2026 and 2027, e-invoicing under the Peppol 5-corner DCTCE (Decentralized Continuous Transaction Control and Exchange) model will tighten how invoice data is exchanged in the UAE, so clean records become even more important.

Common planning points around the threshold

Owners often ask how to manage profits around the AED 375,000 line. The answer is to follow the law and book real expenses, not to manufacture deductions.

• Track taxable income monthly, not just at year end.
• Confirm which expenses are deductible under the corporate tax law.
• Review related party transactions, since transfer pricing rules apply from the first dirham of profit.
• Check whether free zone qualifying income rules apply to part of your revenue.
• Decide on Small Business Relief each year if you are eligible.

For official guidance, see the UAE Ministry of Finance and the UAE Federal Tax Authority. Both publish updates on rates, thresholds, and clarifications.

How the threshold connects to e-invoicing

Corporate tax and e-invoicing run on the same underlying data: your invoices. The UAE e-invoicing rollout starts with a pilot in Q2 2026 and mandatory go-live on January 1, 2027 for businesses with annual revenue of AED 50,000,000 or more. Smaller businesses follow on July 1, 2027. Government entities go live on October 1, 2027.

If your e-invoicing setup is clean, your taxable income figure for the 9 percent threshold calculation is easier to defend. Inaccurate invoice data can lead to penalties of AED 2,500 to AED 50,000 per violation under Cabinet Decision 106 of 2025.

Get UAE corporate tax and e-invoicing ready

EInvoice Direct is UAE e-invoicing software by Massive FZCO. It includes an accredited service provider (ASP) at no extra charge, so you can issue PINT AE invoices, keep clean tax records, and support your corporate tax filings without juggling extra contracts. To plan your rollout and budget, get UAE e-invoicing pricing and see how EInvoice Direct fits your business.