Corporate tax rates in the UAE: how the 0%, 9%, and 15% tiers work

What is the corporate tax rate in the UAE?

The corporate tax rate UAE businesses pay is 0% on taxable income up to AED 375,000 and 9% on taxable income above that threshold. A separate 15% Domestic Minimum Top-up Tax (DMTT) applies to large multinational groups with global revenue of EUR 750 million or more, effective from January 2025.

The Federal Corporate Tax was introduced under Federal Decree-Law 47 of 2022 and applies to financial years starting on or after June 1, 2023. It covers most UAE businesses, including mainland companies, branches of foreign companies, and free zone entities. For background, see our overview of UAE Corporate Tax and what is UAE corporate tax.

This article walks through each tax band, three worked examples, free zone treatment, and common myths about the rates.

The three UAE corporate tax rates at a glance

The UAE uses a two-tier statutory system for most companies, with an additional top-up tax for large multinationals. The Ministry of Finance set the thresholds to keep small businesses outside the tax net while aligning with global minimum tax rules under OECD Pillar Two.

Why two main rates instead of one

The two-tier model protects startups and small companies. By taxing the first AED 375,000 at 0%, the UAE keeps early-stage businesses outside the cash impact of corporate tax. The 9% rate above that threshold is still one of the lowest headline corporate tax rates among major economies.

How the AED 375,000 threshold works

The threshold is a flat slab, not a personal allowance that phases out. Every taxable person gets the 0% band on their first AED 375,000 of taxable income each tax period. There is no progressive scale beyond that point. Once you cross the threshold, only the excess is taxed at 9%.

The 0 percent corporate tax UAE band

The 0 percent corporate tax UAE band applies to the first AED 375,000 of taxable income for any taxable person, whether a mainland company, a branch, or a partnership treated as a taxable person. The rate is set by Article 3 of Federal Decree-Law 47 of 2022.

Taxable income is calculated after allowable deductions, including business expenses, depreciation, and approved exemptions. The starting point is the accounting net profit prepared under IFRS or IFRS for SMEs, then adjusted for tax purposes.

Small business relief and the 0% band

A separate mechanism, called Small Business Relief, lets resident persons with revenue up to AED 3 million elect to be treated as having no taxable income through 2026. This is different from the 0% rate band. Read our guide to small business relief UAE for the election rules and deadlines.

The UAE corporate tax 9 percent band

The UAE corporate tax 9 percent rate applies to taxable income above AED 375,000 for most businesses. It is a flat marginal rate, not a graduated scale.

The 9% rate covers both trading profits and capital gains, with specific reliefs for participation exemption, qualifying group transfers, and business restructuring. Foreign tax credits are available to avoid double taxation on income already taxed abroad.

Who pays the 9% rate

• Mainland UAE companies on profits above AED 375,000
• Branches of foreign companies operating in the UAE
• Foreign companies with a permanent establishment in the UAE
• Free zone entities on non-qualifying income
• Natural persons running a business with annual turnover above AED 1 million

The 15 percent DMTT UAE rule

The 15 percent DMTT UAE rule is the Domestic Minimum Top-up Tax. It applies to constituent entities of multinational enterprise (MNE) groups with consolidated global revenue of EUR 750 million or more in at least two of the four preceding financial years.

DMTT brings the UAE in line with the OECD's Pillar Two Global Anti-Base Erosion (GloBE) rules. If a qualifying MNE's effective tax rate in the UAE falls below 15%, a top-up tax raises it to that floor. The rule took effect for financial years starting on or after January 1, 2025.

What DMTT does not change

The DMTT does not replace the 9% federal corporate tax. It is an additional layer that only bites if the effective rate paid by a qualifying group inside the UAE is below 15%. Small and mid-sized UAE companies, including most family businesses, are not in scope.

QFZP: the free zone 0% on qualifying income

A Qualifying Free Zone Person (QFZP) can apply 0% on qualifying income and 9% on non-qualifying income. To keep QFZP status, the entity must maintain adequate substance in the UAE, comply with transfer pricing rules, derive qualifying income from approved activities, and meet the de minimis rule on non-qualifying revenue.

If any condition fails, the QFZP loses the 0% rate on qualifying income for the current tax period and the next four tax periods. See the full criteria in our guide to QFZP rules.

Worked examples at three income levels

The examples below assume a mainland UAE company with no QFZP election, no Small Business Relief election, and no foreign source income subject to withholding. Figures are in AED.

Example 1: Taxable income of AED 300,000

The full AED 300,000 sits inside the 0% band. The company files a corporate tax return but owes nothing.

Example 2: Taxable income of AED 1,000,000

The effective tax rate is 5.625% of total taxable income. The 0% slab keeps the average rate well below the 9% headline.

Example 3: Taxable income of AED 10,000,000

The effective rate climbs to 8.66%, close to the 9% headline. The 0% slab matters less as income grows.

Common misconceptions about the UAE corporate tax rate

Myth 1: Free zone companies pay no corporate tax

Only Qualifying Free Zone Persons get 0% on qualifying income. Non-qualifying income is taxed at 9%. Free zone entities that fail any QFZP condition are taxed at the standard mainland rates.

Myth 2: The 9% rate applies to revenueThe 9% rate applies to taxable income, not revenue. Taxable income is accounting net profit adjusted for tax rules. A company with AED 5 million revenue and AED 4.9 million costs has only AED 100,000 taxable income, which sits inside the 0% band.

Myth 3: Every business pays the DMTT

Only constituent entities of multinational groups with EUR 750M+ global revenue are in scope of the 15% DMTT. UAE-only family businesses and most SMEs are unaffected.

Myth 4: Corporate tax replaces VAT

Corporate tax is separate from value added tax (VAT). VAT applies at 5% on most goods and services. Corporate tax applies to business profits. Most companies must comply with both, plus the upcoming e-invoicing mandate under the UAE's Peppol 5-corner Decentralized Continuous Transaction Control and Exchange (DCTCE) model.

Filing deadlines for each rate

Whether you pay 0%, 9%, or are subject to DMTT, the corporate tax return is filed within 9 months of the financial year end. There is one annual return per tax period. Late filing and underpayment trigger administrative penalties from the Federal Tax Authority.

For official guidance, refer to the UAE Federal Tax Authority and the UAE Ministry of Finance.

How rates interact with e-invoicing

From 2026 and 2027, UAE businesses must issue structured electronic invoices in PINT AE format through accredited service providers (ASPs). The e-invoicing rollout supports corporate tax and VAT reporting by giving the FTA real-time transaction data. Larger taxpayers must appoint an ASP by October 30, 2026 and go live by January 1, 2027. Accurate invoice data feeds directly into taxable income calculations, so getting your rate band right depends on clean source records. See our hub on UAE Corporate Tax for the full picture.

If you are preparing for both corporate tax and e-invoicing at once, you can get UAE e-invoicing pricing from EInvoice Direct, which includes an accredited ASP at no extra charge.