UAE business tax, explained simply
Corporate tax, VAT, e-invoicing and excise: the rules, rates and deadlines a UAE company needs to know, checked against Ministry of Finance and Federal Tax Authority sources.
Key updates for 2026
Corporate tax
Applies to UAE companies, free zone companies, licensed individuals with business turnover above AED 1 million, and foreign businesses with a permanent establishment in the UAE. It started with financial years beginning on or after 1 June 2023.
| Rule | What it means |
|---|---|
| Rates | 0% on taxable income up to AED 375,000. 9% on taxable income above AED 375,000. |
| Registration | Every company must register with the Federal Tax Authority, even if no tax is due. Companies set up on or after 1 March 2024 must register within 3 months of incorporation. |
| Return and payment | Within 9 months of the end of each tax period. For a 31 December year end, the deadline is 30 September of the following year. |
| Small Business Relief | Resident businesses with revenue of AED 3 million or less in the current and every previous tax period can elect to be treated as having no taxable income. A return must still be filed. Available for tax periods ending on or before 31 December 2029. Not available to Qualifying Free Zone Persons or members of large multinational groups. |
| Qualifying Free Zone Person | 0% on qualifying income and 9% on other taxable income, if all conditions are met: adequate substance in the free zone, qualifying income, audited financial statements, transfer pricing compliance and the de minimis test (non-qualifying revenue no more than 5% of total revenue or AED 5 million, whichever is lower). |
| Large multinational groups | Groups with global revenue of EUR 750 million or more are subject to a Domestic Minimum Top-up Tax that brings their UAE effective rate to 15%, for financial years starting on or after 1 January 2025. |
| Transfer pricing | Transactions with related parties must be at market value. Master and local files are required only for larger businesses (AED 200 million revenue, or group revenue of AED 3.15 billion). |
| Main penalties | Late registration AED 10,000 (waiver available, see above). Late return AED 500 per month for the first 12 months, then AED 1,000 per month. Late payment 14% per year, calculated monthly. |
Sources: u.ae, Federal Tax Authority, Ministry of Finance.
Value Added Tax (VAT)
| Rule | What it means |
|---|---|
| Standard rate | 5% on most goods and services. |
| Mandatory registration | When taxable supplies and imports exceed AED 375,000 in the past 12 months, or are expected to in the next 30 days. |
| Voluntary registration | Possible when taxable supplies or expenses exceed AED 187,500. |
| Zero-rated (0%) | Examples: exports outside the GCC, international transport, investment-grade precious metals, the first supply of new residential property, and certain education and healthcare. |
| Exempt | Examples: residential property after its first supply, bare land, local passenger transport and some financial services. |
| Returns | Usually quarterly. Returns and payment are due within 28 days of the end of each period. |
| 2026 amendments | From 1 January 2026: no self-invoicing under the reverse charge (supporting documents must be kept), excess input tax must be reclaimed within 5 years, and input tax can be denied where a supply is linked to tax evasion. |
| Penalties | From 14 April 2026, late payment carries 14% per year, calculated monthly. Other penalties apply for late registration, late filing and incorrect returns or invoices. |
Sources: Ministry of Finance, MoF VAT amendments 2026, u.ae.
E-invoicing is coming
UAE businesses will issue and receive invoices electronically through accredited service providers. The rollout is phased by size.
| Who | Appoint a service provider by | Go-live |
|---|---|---|
| Revenue of AED 50 million or more | 30 October 2026 | 1 January 2027 |
| Revenue below AED 50 million | 31 March 2027 | 1 July 2027 |
| Government entities | 31 March 2027 | 1 October 2027 |
Fines apply for not implementing the system on time (AED 5,000 per month) and for late e-invoices. Plan your accounting system early.
Sources: Ministry of Finance.
Excise tax on specific goods
Excise tax applies to goods considered harmful to health. If you import, produce or stockpile these goods, you must register for excise tax.
Current rates
- Tobacco, e-smoking devices and liquids: 100%
- Energy drinks: 100%
- Sweetened drinks with 8 g or more sugar per 100 ml: AED 1.09 per litre
- Sweetened drinks with 5 g to under 8 g: AED 0.79 per litre
- Under 5 g, or artificial sweeteners only: AED 0
Other rules for UAE businesses
No personal income tax
Salaries and personal investment income of individuals are not taxed. Corporate tax applies to individuals only for business turnover above AED 1 million.
Economic substance
No economic substance notifications or reports are needed for financial years ending after 31 December 2022.
Beneficial owners
Mainland and free zone companies must keep a register of their ultimate beneficial owners and file it with their licensing authority.
Tax residency certificate
Issued by the Federal Tax Authority, valid for one year, and useful for double tax treaty benefits.
Set up right, and stay compliant
We build tax into your setup from day one, and coordinate registrations and filings through our trusted, registered accounting and tax partners.
- Corporate tax registration after your licence is issued
- VAT registration when you reach the threshold
- Bookkeeping and accounting through our partners
- Reminders for renewals and key deadlines
Please note
- Tajnes is a business setup consultancy, not a tax agent
- Tax filings and advice are provided by registered partners under their own terms
- Partner fees are quoted separately
- The exact scope is set in your quotation and agreement
UAE tax questions
Does a new UAE company have to register for corporate tax?
Yes. Every UAE company must register with the Federal Tax Authority, even if its profit is below AED 375,000 or it uses Small Business Relief. New companies must register within 3 months of incorporation.
Will I pay corporate tax if my profit is small?
No tax is due on the first AED 375,000 of taxable income. If your revenue is AED 3 million or less, you may elect Small Business Relief until the end of 2029, but you must still file a return.
Are free zone companies tax free?
Not automatically. A free zone company can pay 0% on qualifying income only if it meets all the Qualifying Free Zone Person conditions. Other income is taxed at 9%.
When do I need to register for VAT?
When your taxable supplies and imports exceed AED 375,000 in 12 months, or are expected to in the next 30 days. You can register voluntarily from AED 187,500.
Do I have to charge VAT on my services?
Once registered, you charge 5% VAT on most supplies in the UAE. Some supplies are zero-rated or exempt. Ask a registered tax advisor about your specific services.
Is there personal income tax in the UAE?
No. Salaries and personal investment income of individuals are not taxed. Business activity by an individual above AED 1 million in turnover falls under corporate tax.
When does e-invoicing apply to my company?
Businesses with revenue of AED 50 million or more go live on 1 January 2027. Smaller businesses must appoint a service provider by 31 March 2027 and go live on 1 July 2027.
Can Tajnes file my tax returns?
We coordinate registrations and filings through our registered accounting and tax partners, under their own terms. Their fees are quoted separately.
Start your company tax-ready
Talk to a senior advisor about your setup, and get an open-book quote.
