What is the Corporate Tax rate in the UAE?
WHAT IS THE CORPORATE TAX RATE IN THE UAE?
What is the Corporate Tax rate in the UAE? Learn the current rates, thresholds, and how UAE businesses can stay compliant. TAXESMAN explains simply.
What Is the Corporate Tax Rate in the UAE?
What is the Corporate Tax rate in the UAE?
This is one of the first questions business owners, freelancers, and entrepreneurs ask when preparing for Corporate Tax compliance.
Understanding the Corporate Tax rate in the UAE is critical because it directly affects your profits, financial planning, and reporting obligations with the Federal Tax Authority. Many businesses assume the rate is flat or applies to all income, which is not the case.
In this guide, you will learn exactly what the Corporate Tax rate in the UAE is, how it works, who it applies to, and clear examples showing what it means for your business.
If you want clarity tailored to your company, TAXESMAN is here to help.
What Is the Corporate Tax Rate in the UAE Today?
Official Corporate Tax Rates
The Corporate Tax rate in the UAE is structured as follows:
- 0% Corporate Tax on taxable profits up to AED 375,000
- 9% Corporate Tax on taxable profits exceeding AED 375,000
This tiered structure is designed to support startups and small businesses while aligning the UAE with international tax standards.
If you are unsure how your taxable profit is calculated, TAXESMAN can review this with you.
Why Does the UAE Have a 0% and 9% Corporate Tax Rate?
When people ask what the Corporate Tax rate in the UAE is, they often want to understand the reasoning behind it.
The UAE introduced:
- A 0% rate to protect SMEs, freelancers, and early-stage businesses
- A 9% rate to meet global tax transparency and compliance standards
This approach keeps the UAE competitive while introducing a predictable and internationally accepted tax framework.
If you are planning growth, TAXESMAN can help you forecast how Corporate Tax will affect your business.
How Is the Corporate Tax Rate Applied in Practice?
Corporate Tax Is Applied to Profit, Not Revenue
One of the most common misunderstandings is that Corporate Tax applies to turnover. It does not.
Corporate Tax in the UAE is calculated on taxable profit, which is based on:
- Accounting profit
- Adjustments allowed under Corporate Tax rules
- Proper and accurate financial records
This is why strong bookkeeping is essential.
If your records are not clean, TAXESMAN can help you fix them before filing.
Examples: What Is the Corporate Tax Rate in the UAE for Real Businesses?
Dubai Example: SME Consulting Firm
A consulting firm in Dubai earns AED 500,000 in taxable profit.
- First AED 375,000 taxed at 0%
- Remaining AED 125,000 taxed at 9%
Only the amount above the threshold is subject to Corporate Tax.
Abu Dhabi Example: Growing Startup
A startup in Abu Dhabi records AED 300,000 in taxable profit.
• Entire amount falls under the 0% Corporate Tax rate
No Corporate Tax is payable, although registration and filing obligations may still apply.
Free Zone Example: Service Company
A free zone company earns AED 800,000 in taxable profit.
- First AED 375,000 taxed at 0%
- Remaining profit may be taxed at 9%, depending on whether the income qualifies as qualifying free zone income
Free zone rules can be complex. TAXESMAN can assess your position properly.
Is the Corporate Tax Rate the Same for Free Zone Companies?
The Corporate Tax rate is the same in law, but free zone companies may benefit from a 0% rate on qualifying income, subject to strict conditions.
This does not mean all free zone income is tax-free.
If you operate in a free zone, TAXESMAN can review whether you qualify and what reporting is required.
Does the Corporate Tax Rate Apply to Freelancers and Individuals?
Yes, in many cases.
If a freelancer or sole proprietor is carrying out a business activity in the UAE, Corporate Tax may apply to their profits.
This often surprises consultants and independent professionals.
If you are a freelancer, TAXESMAN can clarify your exact position.
How Does Corporate Tax Compare to VAT?
This is another common area of confusion.
- VAT is charged on sales and paid by customers
- Corporate Tax is charged on profits and paid by the business
Many UAE businesses are subject to both.
If you want a clear tax overview for your business, TAXESMAN can prepare it for you.
What Is the Corporate Tax Rate in the UAE?
To recap, what is the Corporate Tax rate in the UAE?
- 0% on taxable profits up to AED 375,000
- 9% on taxable profits above AED 375,000
- Applies to mainland businesses, free zone companies (subject to conditions), and many freelancers
Understanding the rate is important. Managing it correctly is essential.
Do not leave this to chance. Let TAXESMAN handle your Corporate Tax assessment, calculations, and filings so you can focus on running your business.
FAQs: What Is the Corporate Tax Rate in the UAE?
What is the Corporate Tax rate in the UAE?
0% up to AED 375,000 of taxable profit and 9% above that amount.
Is Corporate Tax charged on revenue or profit?
Corporate Tax in the UAE is charged on taxable profit, not revenue.
Do free zone companies pay Corporate Tax?
Some free zone companies may qualify for a 0% rate on qualifying income, subject to conditions.
Does Corporate Tax apply to freelancers?
Yes, if they are conducting a taxable business activity.
Who can help me manage Corporate Tax compliance?
TAXESMAN provides Corporate Tax registration, accounting, and filing support.