Corporate Tax Rates & Thresholds in the UAE: A Complete Guide

Introduction:

The introduction of Corporate Tax in the UAE is a transformative step for the country’s business landscape. Officially effective from June 1, 2023, this new regime applies to companies, freelancers, and entrepreneurs alike. At the heart of this law are tax rates and income thresholds—critical factors that determine how much you pay, and whether you need to register.

This blog breaks down the tax brackets, relief options, and special rates to help you stay compliant and optimize your financial planning.

What Are the Corporate Tax Rates in the UAE?

The UAE applies a tiered tax rate structure:

Taxable Income	Tax Rate
Up to AED 375,000	0%
Above AED 375,000	9%
Multinational groups (OECD Pillar Two rule)	15% (Top-up tax)

Note: The 15% rate applies only to large multinational enterprises (MNEs) with consolidated global revenue exceeding €750 million, in line with OECD Pillar Two – Global Minimum Tax.

What is the AED 375,000 Threshold?

The AED 375,000 threshold is designed to support small businesses and startups. If your net taxable income is:

AED 375,000 or less → you pay 0% corporate tax
More than AED 375,000 → the portion exceeding it is taxed at 9%

For example:

Taxable Income: AED 500,000
0% on the first AED 375,000 = AED 0
9% on remaining AED 125,000 = AED 11,250

Total Tax Payable = AED 11,250

Who is Subject to These Rates?

These rates apply to:

All UAE resident legal entities
Branches of foreign companies operating in the UAE
Natural persons (freelancers, sole proprietors) earning over AED 1 million/year
Free Zone entities, unless they qualify as Qualifying Free Zone Persons (QFZP)

Small Business Relief: Additional Protection:

From June 2023 until December 2026, Small Business Relief is available for UAE-resident businesses with annual revenue under AED 3 million.

If eligible:

You can elect to be treated as having no taxable income
No corporate tax is due, even if you earn profit above AED 375,000

But: If your revenue exceeds AED 3 million in any tax period, you lose eligibility permanently for this relief.

Free Zone Businesses: Different Rules Apply

Free Zone entities may enjoy a 0% corporate tax rate on qualifying income, but only if they meet all QFZP conditions:

Maintain adequate substance in the Free Zone
Earn qualifying income (e.g., from trading with foreign clients or other Free Zone entities)
Do not elect to be taxed at 9%
Maintain separate accounting records

If these conditions are not met, standard 9% corporate tax applies.

What if You’re a Multinational?

If you’re a part of a Multinational Enterprise Group (MNE Group):

With global consolidated revenue ≥ €750 million in any of the last four fiscal years,
And operating in the UAE,

Then from January 1, 2025, you may be subject to a 15% global minimum tax (DMTT) under OECD’s Pillar Two rules, even if you previously qualified for Free Zone benefits.

Summary of UAE Corporate Tax Rates

Category	Rate	Applies To
Small Businesses (≤ AED 375,000 profit)	0%	All taxable persons
Businesses (> AED 375,000 profit)	9%	Companies, freelancers, Free Zone entities (non-QFZPs)
MNE Groups (revenue ≥ €750M)	15% (DMTT)	Large global multinationals operating in the UAE

Important Notes on Filing and Deadlines:

Even if your income is below the taxable threshold:

You still need to register with the FTA
You must file a tax return annually
Corporate tax returns are due within 9 months of the end of your financial year

Final Takeaway:

Understanding the rates and thresholds is crucial for tax planning. Even businesses that pay 0% tax must comply with registration and reporting obligations. Whether you’re a startup, freelancer, or multinational, the UAE’s corporate tax regime affects how you report, plan, and grow.

Need Help with Tax Registration or Calculations?

Our experts at Think Biz Management Consultancies can help you:

Understand your eligibility
File accurate tax returns
Reduce compliance risk

Contact number: ‪+971 50 983 0334‬

Email ID: info@alphabets.ae