In 2026, UAE companies pay 0% corporate tax on taxable income up to AED 375,000 and 9% above that, and every company must register with the Federal Tax Authority even if no tax is due. Small businesses with revenue of AED 3 million or less can still use Small Business Relief, which has now been extended to the end of 2029.
Key facts
- Rates: 0% up to AED 375,000 of taxable income, 9% above.
- New companies must register within 3 months of incorporation.
- Returns and payment are due within 9 months of the end of each tax period.
- Small Business Relief is available for tax periods ending on or before 31 December 2029.
Who has to register for corporate tax?
All UAE companies, including free zone companies, must register. Individuals running a licensed business must register once their business turnover goes above AED 1 million in a calendar year. Registration is done online through EmaraTax.
Companies set up on or after 1 March 2024 must register within 3 months of their incorporation date. Missing the deadline can lead to an AED 10,000 penalty.
Is there a way to avoid the late registration penalty?
Yes. The Federal Tax Authority waives the AED 10,000 late registration penalty if you register and file your first tax return, or annual declaration, within 7 months of the end of your first tax period. Penalties already paid are returned as a credit on EmaraTax. In 2026 the FTA confirmed the initiative is still available, with no published end date.
What is Small Business Relief?
Small Business Relief lets a resident business with revenue of AED 3 million or less elect to be treated as having no taxable income for that tax period. The revenue must stay at or below AED 3 million in the current period and in every previous period.
- It was extended by Ministerial Decision 131 of 2026 to tax periods ending on or before 31 December 2029.
- You must still register and file a tax return to use it.
- It is not available to Qualifying Free Zone Persons or to members of large multinational groups.
- Transactions with related parties must still be at market value.
Do free zone companies pay corporate tax?
A free zone company can pay 0% on its qualifying income if it is a Qualifying Free Zone Person. To qualify, it must meet every condition, including:
- adequate substance in the free zone,
- earning qualifying income from qualifying activities,
- preparing audited financial statements,
- following transfer pricing rules, and
- passing the de minimis test: non-qualifying revenue no more than 5% of total revenue or AED 5 million, whichever is lower.
Other taxable income is taxed at 9%. If a free zone company fails a condition, it can lose the 0% rate.
What are the main deadlines and penalties?
| Item | Rule |
|---|---|
| Registration (new companies) | Within 3 months of incorporation |
| Return and payment | Within 9 months of the end of the tax period |
| 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 |
What should a small business do now?
- Check that your company is registered for corporate tax.
- Keep proper books from day one, with invoices and bank records.
- Decide each year whether to elect Small Business Relief.
- Diary your filing deadline: 9 months after your financial year end.
- If you are in a free zone, check every Qualifying Free Zone Person condition with a registered tax advisor.
See our full UAE tax guide for VAT, e-invoicing and excise tax.
Frequently asked questions
Do I pay corporate tax if my profit is below AED 375,000?
No tax is due on the first AED 375,000 of taxable income, but you must still register and file a return.
Until when is Small Business Relief available?
For tax periods ending on or before 31 December 2029, following Ministerial Decision 131 of 2026.
Can a free zone company use Small Business Relief?
A Qualifying Free Zone Person cannot. A free zone company that is not a Qualifying Free Zone Person may be able to, if it meets the revenue condition.
When is my first corporate tax return due?
Within 9 months of the end of your first tax period. For a 31 December year end, that is 30 September of the following year.
Starting a company? We build tax registration into your setup. Book a free consultation or see your costs in the cost calculator.
General information as of October 2026, based on Ministry of Finance and Federal Tax Authority sources. Not legal or tax advice. Rules can change, so confirm your position with a registered tax agent.
