The 0% band
The first AED 375,000 of your taxable income is taxed at 0%. Every business gets this band — it is not a special relief you apply for.
The complete guide
Everything a UAE business owner actually needs to know about corporate tax: who pays it, how the 0% and 9% rates work, when and how to register, when returns are due, and what the common mistakes cost. Plain language, real numbers, no filler.
The essentials
Since June 2023, the UAE taxes business profits. Three numbers run the whole system: 0%, 9%, and AED 375,000.
The first AED 375,000 of your taxable income is taxed at 0%. Every business gets this band — it is not a special relief you apply for.
Only the portion of taxable income above AED 375,000 is taxed at 9%. If your taxable income is AED 500,000, just AED 125,000 of it is taxed at 9%.
Your return and your payment are due within 9 months of your financial year end. A year ending 31 December 2025 means filing by 30 September 2026.
We prepare workings, schedules and compliance-ready records. For regulated representation before the FTA we work with registered UAE tax partners.
How the tax is actually computed
The 0% and 9% bands apply to taxable income, not to your revenue and not to your accounting profit. Taxable income is your accounting profit adjusted for the tax rules:
Who is in scope
Three categories of taxpayer. Work out which one you are — everything else follows from that.
UAE-incorporated juridical persons — LLCs and similar — are in scope from their first financial year. New companies must register within 3 months of incorporation.
Natural persons conducting business register once annual business revenue exceeds AED 1 million. The test is on revenue, not profit — see our freelancers guide.
Free zone entities must register and file every year. Qualifying Free Zone Persons can get 0% on qualifying income — but only if every condition is met. Details in our free zone guide.
Exemptions exist for government entities and qualifying public-benefit entities, among others. If you think you might be exempt, confirm your position on EmaraTax or with a registered tax partner rather than assuming.
Worked example
Take a Dubai marketing agency with AED 2.4 million in revenue. Here's how its corporate tax actually works out.
| Line | Amount (AED) |
|---|---|
| Revenue | 2,400,000 |
| Less: allowable expenses (salaries, rent, marketing, software) | (1,200,000) |
| Taxable income | 1,200,000 |
| 0% band: first 375,000 at 0% | 0 |
| 9% band: remaining 825,000 at 9% | 74,250 |
| Corporate tax payable | 74,250 |
Two things worth noticing. First, the effective rate is about 6.2% of taxable income — not 9%, because the 0% band shields the first AED 375,000. Second, with revenue of AED 2.4 million the agency is under the AED 3 million ceiling, so it should check Small Business Relief: if eligible and elected on the return, the tax bill drops to AED 0. That's the value of one checkbox — provided you know it exists.
Deadlines for this agency (financial year ending 31 December 2025): register well before the filing date, then file the return and pay by 30 September 2026 — 9 months after year-end.
Avoid these
The 9% rate applies to taxable income. Applying it to revenue overstates your bill and leads to bad pricing decisions.
Zero tax still means register and file. The AED 10,000 late-registration penalty doesn't care that you owed nothing.
Free zone companies file every year. The 0% for Qualifying Free Zone Persons is conditional — see the QFZP guide.
SBR is not automatic — it's elected on the return. Eligible businesses that miss the election pay tax they didn't need to pay.
Returns are due 9 months after year-end, but the workings need clean books. A September scramble means missed adjustments and errors.
Undocumented owner drawings and personal expenses paid from the business account are the fastest way to a painful tax adjustment.
The one-page summary
Your next three moves
FAQs
Not exactly. It’s 0% on the first AED 375,000 of taxable income and 9% only on the amount above that. For most small businesses the effective rate is well below 9% — and eligible businesses can elect Small Business Relief for 0% through 2026.
Yes. Every registered business files a return each year, including loss years. Documented losses can generally be carried forward to offset future profits — but if you elect Small Business Relief for that period, you forfeit the loss carry-forward for it.
The return and the payment are due within 9 months of the end of your financial year. For a financial year ending 31 December 2025, the deadline is 30 September 2026. The rule is always the 9 months — the date just follows your year-end.
Mainland SMEs generally don’t need a statutory audit just to file a corporate tax return — but your workings must be supportable from proper records kept for 7 years. Qualifying Free Zone Persons do need audited financial statements as one of the QFZP conditions.
On the FTA’s EmaraTax portal, logging in with UAE PASS. New companies should register within 3 months of incorporation. Our step-by-step EmaraTax registration guide walks through the documents and each screen.
The standard position is that the full amount is due with the return, within 9 months of year-end. If cash flow is tight, plan for the liability quarterly from your management accounts rather than discovering it at filing time — and confirm current payment options on EmaraTax.
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