UAE Corporate Tax in 2026: What Every Business Needs to Know
The full picture on UAE corporate tax in 2026: who pays, who does not, how to keep the free zone 0 percent rate, and what Breeo clients actually file.
UAE corporate tax is 9 percent on profits above AED 375,000. It applies to mainland companies and most free zone companies. The free zone 0 percent rate is still available but only for Qualifying Free Zone Persons that meet strict substance and income rules.
The headline rates
- 0 percent on taxable income up to AED 375,000.
- 9 percent on taxable income above AED 375,000.
- 0 percent for Qualifying Free Zone Persons on qualifying income (strict conditions, see below).
- 15 percent top-up for multinationals with group revenue above EUR 750 million (Pillar Two, from 2025).
Who must register
Every UAE business must register for corporate tax, regardless of profit level. Registration is free, done through the EmaraTax portal. Deadlines depend on your licence issue date and are enforced with a AED 10,000 penalty for late registration.
Free zone 0 percent, the real conditions
You keep the 0 percent rate only if you are a Qualifying Free Zone Person. All of these must be true:
- Adequate substance in the UAE (physical office, qualified employees, real operations).
- Qualifying income only: income from other free zone businesses, from outside the UAE, or from a short list of qualifying activities.
- Non-qualifying income is below 5 percent of total revenue or AED 5 million, whichever is lower (de minimis rule).
- Audited financial statements prepared.
- Transfer pricing rules complied with.
Fail any condition and the full 9 percent rate applies to all your taxable income for 5 years.
Qualifying activities
These keep the 0 percent rate when done from the free zone:
- Manufacturing and processing
- Holding of shares and securities
- Ownership and operation of ships
- Fund management under UAE regulation
- Wealth and investment management under UAE regulation
- Headquarters services to related parties
- Treasury and financing services to related parties
- Financing and leasing of aircraft
- Distribution of goods from a designated zone to customers outside the UAE
- Logistics services
Filing and payment
- Tax year follows your financial year.
- Return filed within 9 months of year-end.
- Payment due at the same time, no instalments.
- Loss carry-forward: unused losses can be carried forward indefinitely, subject to 75 percent cap in any year and continuity-of-ownership rules.
Penalties
- Late registration: AED 10,000.
- Late return: AED 500 per month for the first 12 months, AED 1,000 per month after.
- Late payment: 14 percent per annum, plus percentage-based penalty on the unpaid amount.
- Incorrect return without reasonable grounds: 15 percent of the tax shortfall, rising with repeat offences.
If your free zone company earns most of its income from UAE mainland customers, assume 9 percent and plan accordingly. The 0 percent rate rewards businesses that genuinely serve the free zone, foreign markets or other qualifying activities.
Need help registering and keeping your free zone status? See our tax and compliance services, or set up a company that fits your tax plan with free zone setup or mainland setup.
Frequently asked questions
Does my free zone company still pay 0 percent corporate tax?
Only if you meet the Qualifying Free Zone Person conditions: adequate UAE substance, qualifying income only, de minimis non-qualifying income under 5 percent or AED 5 million, audited accounts and transfer pricing compliance. Fail any one and the full 9 percent rate applies.
Do I need to register for corporate tax even if profits are below AED 375,000?
Yes. Registration is mandatory for every UAE business, regardless of profit. Only the 9 percent tax rate kicks in above AED 375,000.
When is the registration deadline?
It depends on your licence issue month. The Federal Tax Authority has published a schedule. Missing it triggers a AED 10,000 penalty, so register as soon as the deadline band opens for your licence.
Can I offset losses against future profits?
Yes. Losses carry forward indefinitely, subject to a 75 percent cap of taxable income in any year, and continuity-of-ownership rules.
Is small business relief available?
Yes. Small Business Relief applies if revenue is below AED 3 million per tax period until end of 2026. Companies that elect it are treated as having no taxable income, so pay zero tax.