UAE corporate tax is charged at 0% on the first AED 375,000 of taxable income and 9% on the amount above it, so a business with AED 1 million of taxable income pays AED 56,250 — an effective rate of 5.6%, not 9%. Resident businesses with revenue of AED 3 million or less can instead elect Small Business Relief and treat taxable income as nil for tax periods ending on or before 31 December 2029. This guide shows the exact tax payable at each profit level, the relief that can zero the bill, and the registration and filing deadlines that apply in 2026.
The two corporate tax brackets, as the law states them
UAE corporate tax is governed by Federal Decree-Law No. 47 of 2022 and the rate split is set by Cabinet Resolution No. 116 of 2022, effective for financial years starting on or after 1 June 2023:
- 0% on the part of taxable income that does not exceed AED 375,000.
- 9% on the part of taxable income that exceeds AED 375,000.
Two points owners frequently get wrong. First, the 9% applies only to the excess — crossing AED 375,001 does not reprice the whole profit. Second, the brackets apply to taxable income (accounting profit after permitted deductions and adjustments), not to revenue.
Corporate tax payable by profit bracket
The table below applies the two brackets directly. Small Business Relief is noted separately because it is tested on revenue, not profit.
| Taxable income (profit) | Corporate tax payable | Effective rate | Note |
|---|---|---|---|
| AED 200,000 | AED 0 | 0.00% | Inside the 0% band |
| AED 375,000 | AED 0 | 0.00% | Top of the 0% band |
| AED 500,000 | AED 11,250 | 2.25% | 9% on the AED 125,000 excess only |
| AED 1,000,000 | AED 56,250 | 5.63% | Relief may reduce this to AED 0 |
| AED 3,000,000 | AED 236,250 | 7.88% | Relief depends on revenue, not profit |
| AED 10,000,000 | AED 866,250 | 8.66% | Effective rate approaches 9% |
The spread between marginal and effective rate is widest just above the threshold: a business that grows profit from AED 375,000 to AED 500,000 pays AED 11,250 on the extra AED 125,000, while its total effective rate stays at 2.25%.
Small Business Relief: revenue up to AED 3 million, extended to 2029
A UAE-resident business whose revenue does not exceed AED 3 million per tax period can elect Small Business Relief and treat its taxable income as nil for those periods. The AED 3 million threshold was set by Ministerial Decision No. 73 of 2023, and the relief window was extended by Ministerial Decision No. 131 of 2026, announced by the Ministry of Finance on 7 August 2026, so eligible businesses can elect it for tax periods ending on or before 31 December 2029 — not 2026, as older guidance still states. Revenue is measured across all businesses and business activities of the person, and a person who artificially separates activities to stay under the threshold can be denied the relief. For the full eligibility conditions and how to elect, see our guide to qualifying for Small Business Relief.
Natural persons: the AED 1 million turnover trigger
An individual conducting a business or business activity in the UAE falls inside corporate tax only where total turnover from those activities exceeds AED 1,000,000 in a calendar year, under Cabinet Decision No. 49 of 2023. Turnover from wages, personal investment income and real estate investment income does not count toward the threshold. Once the AED 1 million line is crossed, the same 0%/9% brackets apply to the business's taxable income.
Free zone companies: the 0% does not depend on profit
A Qualifying Free Zone Person pays 0% on qualifying income and 9% on taxable income that does not meet the qualifying-income definition — the split follows the income type and the QFZP conditions (adequate substance, audited financial statements, de minimis limits on non-qualifying revenue), not a profit bracket. Free zone companies file a return even when the whole result is taxed at 0%. Our free zone corporate tax calculation guide walks through the worked example.
Which treatment applies to you: a four-step decision aid
- Is your total revenue AED 3 million or less for the tax period, and are you a UAE resident person? → Elect Small Business Relief; taxable income is nil for periods ending on or before 31 December 2029.
- Are you a natural person whose business turnover did not exceed AED 1 million in the calendar year? → Outside corporate tax scope for that year.
- Is any part of your income qualifying income as a Qualifying Free Zone Person? → 0% on qualifying income, 9% on the rest.
- Otherwise → apply 0% to the first AED 375,000 of taxable income and 9% to the excess.
Registration and filing deadlines in 2026
Registration is due within three months of licence issue, issuance or renewal under FTA Decision No. 3 of 2024, and missing it triggers an AED 10,000 administrative penalty — our registration deadlines by licence month article maps the exact cut-offs. The return and any payment are due within nine months of the end of the tax period, and mainland companies above the audit thresholds should build the audit lead time into that window (see when UAE companies need an audit).
Frequently asked questions
What is the corporate tax rate on AED 500,000 profit? AED 11,250 — 0% on the first AED 375,000 and 9% on the AED 125,000 excess.
Do I pay 9% on all my profit once I cross AED 375,000? No. Only the amount above AED 375,000 is taxed at 9%; the first band stays at 0% (Cabinet Resolution No. 116 of 2022).
Does Small Business Relief look at profit or revenue? Revenue. The AED 3 million test is on total revenue for the tax period, regardless of profit or loss (Ministerial Decision No. 73 of 2023, extended to 31 December 2029 by Ministerial Decision No. 131 of 2026).
When is my corporate tax return and payment due? Within nine months of the end of your tax period, filed through EmaraTax.
Reviewed by Gautam Sanoj, Senior Tax Advisor, Finanshels — last reviewed 2 October 2026. This article reflects UAE corporate tax rules in force for 2026 tax periods; confirm your position with a registered tax agency before electing relief.
