UAE corporate tax for founders: the 9%, the 0% and the traps

The headline structure

Corporate tax applies at 0% on taxable profit up to AED 375,000 and 9% above it. That is the entire rate card for most businesses. No tax on dividends between UAE companies, no withholding tax, and salaries, including what you pay yourself, remain untaxed personal income.

Small business relief goes further: businesses with revenue under AED 3 million can elect to be treated as having no taxable income through the current relief window. For a genuinely small operation, the effective rate stays zero, but only if you register and elect properly.

Free zone companies and the 0% rate

A qualifying free zone person pays 0% on qualifying income: broadly, trade with other free zone entities, foreign customers, and a defined list of qualifying activities. Mainland UAE revenue generally does not qualify, and once non-qualifying revenue passes the de minimis line, 5% of total revenue or AED 5 million, whichever is lower, the entire profit falls into the 9% regime.

Qualifying status also demands adequate substance in the zone and audited financial statements. The 0% is real and thousands of companies enjoy it; it is a maintained position, not a default.

Deadlines that carry penalties

• Registration: mandatory for every company, even dormant ones. Late registration: AED 10,000
• Filing: within nine months of financial year end
• Payment: with the filing
• Records: seven years of books supporting the return

VAT sits alongside, not instead

VAT at 5% is a separate regime: mandatory registration at AED 375,000 of taxable supplies in a rolling year, voluntary from AED 187,500. Exports of services are commonly zero-rated, which matters for free zone businesses billing abroad, zero-rated is not exempt, and the distinction decides whether you reclaim input VAT.

What we set up for every formation

• Corporate tax registration at incorporation, not at the deadline
• A bookkeeping baseline from month one
• Qualifying free zone person assessment where relevant
• VAT registration timed to your turnover trajectory
• Calendar ownership: you hear about deadlines from us before the authority does