UAE Corporate Tax 2026: Complete Guide | Expert services with skrooge.ai

One of the questions we hear most in our years of tax and accounting work is about the UAE’s competitive corporate tax regime.

The UAE corporate tax law is relatively new, first implemented in 2023. Since then, businesses have transitioned from a zero tax environment to a more modern system. This new regime aims to balance competitiveness with global tax standards led by OECD, while still offering incentives for startups, small and medium enterprises, and “qualifying free-zone persons” or entities.

For this 2026 guide, entrepreneurs will understand CT’s scope, rates, registration, filing deadlines and penalties.

With the competitive tax regime in place, UAE companies are expected to gain easier access to global banking, while investors can expect to face fewer red flags. This strengthens the ecosystem as a well-regulated, more entrepreneur focused area.

Understanding Corporate Tax in the UAE

On 1 June 2023, the UAE introduced its first federal corporate tax (CT) regime under the Federal Decree-Law No. 47 of 2022. To put it simply, corporate tax (sometimes referred to as business profits tax) is a federal tax levied on the taxable profits or income of businesses.

The Ministry of Finance sets the policy and statutes, while the Federal Tax Authority administers registration, compliance, audit, tax returns and collection through the EmaraTax online portal. Corporate tax law applies broadly across legal structures, and aligns companies (regardless of size) with global tax and transparency standards.

Tax Rates and Thresholds (2026 Framework)

Corporate tax follows a tiered system depending on whether your company’s residency and income thresholds. Under the UAE Corporate Tax Law, tax treatment is determined in three steps. First, whether a person is a resident or non-resident. Second, which income falls within the tax scope; and third, which rates, reliefs, or thresholds apply.

Table 1: Corporate Tax Base and Income Sourcing (Are you a resident or a non-resident persons?)

Type of Entity	Taxation Details	Description
Resident juridical persons	Taxed on worldwide income	A person is a Resident Person if they are any of the following: 1. Juridical person incorporated or established in the UAE – Includes Mainland and Free Zone (FZ) companies 2. Foreign juridical person If it is effectively managed and controlled in the UAE 3. Any other category specified by a Cabinet decision
Natural persons conducting business	Taxed only on business income connected to the UAE business	If they conduct a Business or Business Activity in the UAE
Non-resident persons	Taxed on: 1. Income attributable to a Permanent Establishment (PE) in the UAE 2. State Sourced Income not attributable to a UAE PE (currently subject to 0% withholding tax, and typically no CT registration if this is the only UAE income). 3. Taxable Income attributable to its UAE nexus (currently, for non-resident juridical persons, nexus includes income from UAE immovable property)	A person is Non-Resident if they are not a Resident Person and they meet any of the following: 1. They have a Permanent Establishment (PE) in the UAE 2. They derive State-Sourced Income 3. They have a UAE nexus as specified by Cabinet decision issued under the Corporate Tax Law

As per Ministry of Finance, corporate tax is tiered in the following threshold system:

Table 2: Corporate Tax Rate in UAE

Category	Tax Rate & Threshold	Who can avail of this?
Taxable persons	0% rate on taxable profits up to AED 375,000 9% rate on taxable profits above AED 375,000	Applies to most taxable persons
Qualifying Free zone Persons	0% on qualifying income and 9% on non-qualifying income	Qualifying Income (0%) includes: 1. Income from B2B transaction with other FZ Persons (subject to exclusions) 2. Transactions with a Non-Free FZ Persons, but only for Qualifying Activities that are not Excluded Activities 3. Income from Qualifying Intellectual Property 4. Other income but within the de minimis test Non-Qualifying Income (9%) includes: 1. Income from Domestic or Foreign Permanent Establishments 2. Certain real estate income 3. Non-qualifying IP income
Eligible small businesses with revenue up to AED 3 million per year (“small business relief”)	0% until the end of 2026 and 9% thereafter	(as of publishing) This incentive will be applicable until the end of 2026
Multinational enterprises (MNEs) with global revenue > €750 million in at least 2 of the previous 4 fiscal years	15% (Domestic Minimum Top-up Tax (DMTT))	Applicable from 2025, large multinational groups are levied an added tax on top of the CT rate of 9%. This ensures their overall minimum effective tax rate reaches 15% under OECD Pillar Two rules, without changing the standard rate for most businesses.

About the Small Business Relief Program

This incentive is designed for eligible resident taxable persons only. The government intends to reduce taxation cost and compliance burdens for smaller operations.

Small Business Relief is claimed by making an election in the Corporate Tax Return for the relevant Tax Period. Hence, this is not automatically applicable to all residents.

Separate eligibility rules and revenue (not taxable income) thresholds apply, in which case, SMEs must show proof to avail for both the current and all previous tax periods (if your revenue ever exceeded AED 3 million in any earlier tax period, you can’t elect SBR). The threshold applies to Tax Periods starting on / after 1 June 2023 and continues only for Tax Periods ending on / before 31 December 2026 (unless extended).

This does not remove the obligation to register or file corporate tax returns. Certain categories cannot elect SBR, including Qualifying Free Zone Persons and members of large multinational groups.

If a business opts for SBR, then losses cannot be carry forwarded. Also QFZPs cannot elect SBR.

Who Must Pay Corporate Tax

Corporate tax applies to all registered persons conducting business activities and incorporated under a license in the UAE.

A commercial license is required for businesses to transact and operate within the UAE, usually given by appropriate governing bodies (DET for mainland and FZ Authorities for certain free zone areas). Upon registration, businesses get a unique Corporate Tax Registration Number (CT TRN). This designates that you are considered as a Taxable person under the CT Law.

Taxable persons include:

1. UAE incorporated companies of all legal forms
2. Natural persons
   Individuals conducting commercial or business activities (e.g. licensed professionals, sole proprietors) maybe subject to CT if their business income qualifies
3. Non-resident juridical persons
   with a permanent establishment (PE) in the UAE are taxable on UAE-sourced income attributed to the PE.
4. Corporate Tax Groups
   Two or more UAE-resident companies to be treated as a single taxable person for corporate tax purposes, subject to approval by the Federal Tax Authority (FTA).

Corporate tax filing is mandatory regardless of whether the entity owes tax. This means that returns must be filed even if:

• You expect to pay 0%
• You qualify for Small Business Relief
• You are a Free Zone Person applying a 0% regime

Registration is to be done with the Federal Tax Authority via EmaraTax.

What about natural persons or individuals?

Natural Persons (individuals i.e. sole proprietors, freelancers) are subject to corporate tax if they earn above annual turnover threshold of AED 1 million. Note that business income vs salary is treated differently.

Calculating Annual Turnover

Annual turnover is calculated as all gross income earned from Businesses/Business Activities conducted in the UAE. Income is counted when it is recognized in financial statements and derived during the relevant tax period.

Revenue must be calculated using accounting standards accepted in the UAE. Default is accrual accounting; cash basis accounting may be used if your turnover doesn’t exceed AED 3 million in annual turnover.

Annual turnover does not include employment income (salary, benefits, allowances); personal investment income including bank interest and dividends from personal shareholdings; and any personal income not connected to the scope of the business operations (i.e. private pension, social security funds).

Annual turnover is measured over the Gregorian calendar year, not the entity’s tax period. For reliefs, revenue may be assessed for the current and prior tax periods, as prescribed by Federal Decree Law No. 47

Sample Calculation for Freelancers:

For freelancers, annual turnover is the total amount billed or earned from freelance services during the year, before expenses, and excluding salary or personal investment income.

For example, a freelance graphic designer operates under a professional freelancers license in the UAE. During the tax year, they invoice clients for design services. Here are some examples of income covered under CT scope:

Sample Income & Expense	Included in Annual Turnover?	Total
Client invoices for freelance work for clients A, B and C	✔️ Included	Total invoices amount to AED 420,000
One-off project outside normal scope(i.e. single advisory project completed once)	✔️ Included	AED 70,000
Reimbursed expenses from clients (i.e. travel reimbursement)	Treatment depends on accounting presentation: If recorded as gross income, it forms part of Revenue If recorded as pure reimbursement (agent/principal analysis), it may not For conservative purposes, include it unless clearly excluded in the financials	AED 25,000
Online course sold once (i.e. Self-created online course sold during the year)	✔️ Included	Gross receipts: AED 85,000
Speaking engagement honorarium	If linked to professional activity → include If purely incidental and not part of business → may exclude	Paid AED 30,000 for a conference talk
Salary from employment	✖️ Not included	AED 180,000
Bank interest on personal savings	✖️ Not included	AED 5,000
Dividends from foreign shares (personal investment)	✖️ Not included	AED 18,000
TOTAL for annual turnover (i.e. also the total for calculation of small business relief program)		AED 630,000

What is exempted under UAE Corporate Tax Regime?

For natural persons conducting business:

As mentioned above, an individual earnings salary and other employment income, whether received from the public or the private sector; and interest and other income earned by an individual from bank deposits or saving schemes are not included in CT scheme.

Specifically, federal corporate tax will not apply to:

• Investment in real estate by individuals in their personal capacity
• A foreign investor’s income earned from dividends, capital gains, interest, royalties and other qualifying investment fund and returns
• Dividends and capital gains earned by a UAE business from its qualifying shareholdings will be exempt from Corporate tax
• Dividends, capital gains and other net income earned by individuals from owning shares or other securities in their personal capacity.
• Qualifying intra-group transactions and reorganizations will not be subject to CT, provided the necessary conditions are met.

Who qualifies as “Certain Exempt Persons?”

Certain exempt persons are entities that are not within the scope of the federal corporate income tax. Here are examples of businesses that are not eligible for corporate tax:

1. Wholly-owned or controlled UAE subsidiaries of government controlled entities
   These companies are usually considered as exempt persons unless they conduct commercial activities.
2. Certain extractive businesses and qualifying public benefit entities
   Extractive businesses (for example, companies involved in natural resource extraction) can get exemptions if conditions are met.
   
   Particularly, businesses engaged in the extraction of natural resources are exempt from CT as these businesses will remain subject to the current Emirate level corporate taxation.
3. Other activities
   Such as pension funds, social security funds, and qualifying investment funds may be exempt based on regulatory conditions.

Registration Guide for Corporate Tax

Businesses registered as sole proprietorships and establishments are required to register for corporate tax only if they are generating above AED 1 million within a calendar year. Once the year closes, then individuals must register within 3 months.

Similarly, for all other taxable persons are required to register within first 3 months post-registration of their entity (i.e. once their licence has been administered).

To register for corporate tax, here are the documents you need and steps using EmaraTax portal.

Documents for Registration

• Business documents required in license registration including Certificate of Incorporation, Memorandum of Association, or Partnership Agreement (if available).
• Commercial Registration Certificate, or any official document issued by the licensing authority
• Valid Trade License, including branch licenses (if applicable).
• Emirates ID and passport of the following:
  • any owner holding more than 25% ownership
  • all shareholders
  • authorized signatories
• Proof of authorization for the signatory, if the person opening the account is not authorized in the business incorporation documents.
• Prior TRNs of shareholders if any (optional).

Steps for Registration

1. Create an account on EmaraTax portal.
   Simply register with your email ID and Phone number. Alternatively, you can login using your existing ID and password or with UAE PASS.
   
   Note that EmaraTax accepts international numbers and applicants can receive their OTP via email instead of via phone.
2. Create your new taxable person profile or select the relevant taxable person from the taxable person list.
   You will see this option after account activation and following log-on to the portal. You can then access Corporate Tax under Account overview.
3. You will see the option to register for Corporate Tax. Please select this option and complete your registration.
   Submit all prepared documents and company details. You must also choose in the platform an authorized signatory to act on behalf of the company for any compliance or taxation purposes. Make sure to submit their Emirates ID or passport details, along with current contact information.
   
   Note that for first time entrepreneurs, it helps to do this part like many businesses in UAE with the help of tax advisors for smoother submission.
   
   The process takes an approximate 40-60 minutes to do, provided you have prepared all the documents and info ahead of time.
4. Click apply, verify all information, and submit the form for acknowledgement.
   After double checking for errors in the application, you can now submit the form. Even the smallest errors can cause delays, so it helps to ask someone else to cross check every detail and document before hitting submit.
   
   The application will show a reference number to track your application status live.
5. Wait for notice from the Federal Tax Authority (FTA) and track your status.
   If the FTA requires clarifications or additional documents, applicants will be made aware through the portal and the contact details given in the application. EmaraTax allows for real-time updates on applications.
   
   Take note that it is usually 20 business days to get approval starting from the date the completed application was received.
6. To complete the process, make sure you receive your CT Tax Registration Number (TRN) after approval.
   FTA will issue a Corporate Tax Registration Number (TRN) upon approval. This serves as confirmation of your registration.
   
   Guard this number with your life, as all future filings and communications will use this as basis for your identification as a business. Note that a VAT TRN and Corporate Tax TRN are different things.

Deadlines & Penalties for Non-compliance

Penalties apply for late or missing registration. Failing to register can incur fixed fine of AED 10,000, among other compliance penalties.

Here are the penalties to expect in 2026, effective on 14 April:

Premise	How much would it cost?
Late Registration Penalty	A fixed AED 10,000 penalty applies if you fail to register by the deadline set Under First-period Penalty Waiver Snapshot, if the tax return (or annual declaration) for the first Tax Period is filed within 7 months from the end of that period, the late-registration penalty can be waived or refunded (even if already paid). Unfortunately, this is NOT a guarantee.
Late Filing of Tax Return	AED 500 per month for the first 12 months then AED 1,000 per subsequent months This is paid monthly and will continue until the tax return is filed.
Late Payment of Tax Due	If tax is payable but not settled by the deadline (9 months after the year-end), penalties may include a 14% per annum penalty charged monthly on unpaid amounts calculated from the day after the payment due date.
Failing to maintain or provide required accounting records and other information	AED 10,000 per violation, and AED 20,000 for repeat offenses within 24 months
Failure to submit requested information in Arabic	AED 5,000 per violation
Failure to inform Authority of amendments to tax record	AED 1,000 per violation; AED 5,000 if repeated within 24 months.
Late Deregistration i.e. When a registrant fails to apply to de-register their business within 3 months from the date they cease to conduct business. For example, if the company has liquidated or permanently closed.	AED 1,000 per month up to a maximum of AED 10,000

Penalties are administrative (monetary). Treat this as separate from any interest or additional charges the FTA may apply for overdue tax.

Corporate tax registration deadlines for residents

Entity	Registration Deadline
Resident persons incorporated in the UAE	within 3 months from the date of incorporation in the UAE
Juridical persons incorporated outside the UAE	within 3 months from the end of the fiscal year in which the juridical person was registered under foreign jurisdiction laws effectively controlled by the UAE
Natural persons	before 31st March in the Gregorian calendar year after the calendar year in which the person exceeded AED 1 million in turnover

Corporate tax registration deadlines for non-residents

Entity	Registration Deadline
Permanent establishment (branches, subsidiaries, etc.)	within 6 months of its operations within UAE
Nexus in the UAE	within 3 months since establishment
Natural person	within 3 months from the end of financial year in which they become taxable in the UAE

Filing for Tax Returns

Upon registration, your business is now required to file a Tax Return (and pay any Corporate Tax due) for each Tax Period within 9 months from the end of that Tax Period for both filing and payment. Filing under UAE Corporate tax law is mandatory even when no tax is payable.

Tax returns must be filed electronically via EmaraTax.

To avoid last minute pressure and compliance risks, it is important to maintain proper books and financial statements (and audited financial statements where required under CT rules or your licensing authority) to support taxable income calculations. It also helps to immediately pay any tax due within date of filing to avoid monthly fines and interest charges.

Compliance on Record-Keeping & Amendments

Businesses are required to retain records and supporting documents for at least 7 years following the end of each tax period.

In addition, businesses must update their registration details within 20 business days when there are changes, such as:

• a change in authorized signatories
• a change in business address, or
• a change in financial year end

Keeping business details official and accurate is core compliance requirement. This prevents administrative issues or potential risky penalties during audits and reviews.

Transfer Pricing Rules

The UAE Corporate Tax Law requires transactions with related parties and connected persons to follow the arm’s length principle, meaning they must be priced as if the parties were independent.

This applies to all the businesses, including situations where:

• a 0% rate applies, or
• a Free Zone entity qualifies as a Qualifying Free Zone Person. This is mandatory especially when giving proof of qualifying income under QFZP status.

Businesses with related-party transactions must be able to demonstrate arm’s length pricing and maintain appropriate documentation.

What qualifies under Transfer Pricing Documentation?

Transfer pricing documentation refers to the documents used to demonstrate that related-party transactions are priced at arm’s length, in line with the UAE Corporate Tax Law.

In practice, documentation typically includes:

• Details of related-party relationships and transactions
• Intercompany or related-party agreements
• An explanation of the pricing methodology used
• Supporting analysis showing that prices reflect market conditions
• Remuneration of connected persons (owners, directors, shareholders) ie salaries must reflect market levels and cannot be set freely

For Free Zone entities, maintaining proper documentation is especially important, as compliance with the arm’s length principle and documentation requirements is a condition for retaining Qualifying Free Zone Person (QFZP) status.

Decoding Qualifying Free Zone Persons (QZFPs)

Free zone entities that qualify as Qualifying Free Zone Persons (QFZPs) may receive 0% on qualifying income only, subject to substance and revenue rules. Non-qualifying income is taxed similar to others at 9%.

Type of Income	Qualifying Income (0%) includes:	Non Qualifying Income (9%) includes:
Type of Transactions	Transactions with other Free Zone Persons (subject to exclusions) Income from Qualifying Activities Qualifying Intellectual Property Other income within de minimis limits	Income from Domestic or Foreign Permanent Establishments Certain real estate income Non-qualifying IP income

QFZP status can be lost if de minimis requirement (Non-qualifying revenue ≤ lower of AED 5 million or 5% of total revenue) or other conditions aren’t met, triggering full taxation.

Note that as per UAE regulations, free zone entitles are not allowed to participate in mainland activities, unless they hold a dual license, appoint a commercial agent or distributor for mainland activities or are registered with a mainland branch where permitted.

How skrooge.ai Helps

We are a UAE-based accounting and corporate tax services firm that blends experienced finance professionals with smart automation to keep you books clean, fulfill your tax obligations, and always be ready for fast decisions. We are built for founders and finance people who want fewer handoffs and complicated judgment calls. With decades of experience and hundreds of clients of different needs and sizes, we prioritize your privacy and data while maximizing effectiveness.

What we help automate:

• Fixing your documents and categorize your data through invoices, receipts
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• Reminding you of deadlines for licenses, leases, passports, along with other tax-related calendar nudges

To avoid harmful tax practices, our financial services will take care of your monthly accounting and bookkeeping needs, together with the needed founders support and advisory from our in-house accountants. All of this, with transparent, value-for-money pricing and all-in monthly fees. You can get started by checking out our pricing model in our home page.

Frequently Asked Questions (FAQs) (updated for 2026)