UAE Corporate Tax Rate: 0%, 9%, and the Free Zone Rules Explained

The UAE taxes company profits at two main rates. Income up to AED 375,000 pays 0%. Income above that pays 9%. Ask a corporate tax consultant how each rate applies to your entity.

A separate 0% rate applies to qualifying free zone companies, but only on some income. A third rate, 15%, applies only to very large multinational groups. Most business owners only ever deal with the first two.

This guide covers each rate, who it applies to, and where people get confused.

The Standard Corporate Tax Rate: 0% and 9%

Every company in scope uses the same two bands for each tax period:

• 0% on taxable income up to AED 375,000
• 9% on taxable income above AED 375,000

The AED 375,000 band isn’t an allowance you take off once and forget. It applies per tax period. It sits inside the same tax return as the rest of your taxable income. Take a company with AED 900,000 of taxable income. It pays 0% on the first AED 375,000. It pays 9% on the other AED 525,000, not on the full amount.

This structure applies to mainland companies and most branches. It also applies to free zone companies that don’t qualify for the free zone rate below. The Corporate Tax Law sets it out. That’s Federal Decree-Law No. 47 of 2022. The Ministry of Finance and the Federal Tax Authority run it together.

The Free Zone Rate: 0% on Qualifying Income Only

A Qualifying Free Zone Person, or QFZP, pays 0% on qualifying income. The AED 375,000 ceiling doesn’t limit that income. But the rate isn’t automatic. The company needs real substance in the free zone. Its income must meet the qualifying income rules.

There’s also a cap on other revenue. It’s the lower of 5% of total revenue or AED 5 million. Cross it and the company loses QFZP status. The loss covers that tax period and the next four. Our guide to corporate tax for free zone companies sets out each condition.

The 15% Rate: Only for Very Large Multinational Groups

A third rate exists, but it touches almost no small or mid-sized UAE business. It’s the Domestic Minimum Top-up Tax, or DMTT, set at 15%. It applies to financial years starting on or after 1 January 2025. It covers multinational groups with global revenue of EUR 750 million or more. The group must hit that figure in at least two of the four years before. The DMTT tops up the group’s UAE tax to an effective 15%.

If your business isn’t part of a group that size, this rate doesn’t apply to you. It still helps to know it exists. Then you won’t confuse it with the 9% rate in tax news.

How the 375,000 Threshold Actually Works

People often mix up the AED 375,000 band and Small Business Relief. They’re two different rules.

The AED 375,000 figure is simply where the 0% band ends and the 9% band starts. Every taxable person gets this band by default.

Small Business Relief has a different trigger. It looks at revenue, not taxable income. A resident business can elect it if revenue is AED 3 million or less. That limit applies in the current period and every earlier one.

The business is then treated as having no taxable income for that period. The relief covers tax periods ending on or before 31 December 2029. Ministerial Decision No. 131 of 2026 set that date. A QFZP can’t elect it. Our guide to UAE corporate tax small business relief covers who qualifies and how to elect.

Who Does This Rate Apply To?

The rates apply to every taxable person. That covers UAE companies and foreign companies with a UAE permanent establishment. It also covers individuals with business turnover over AED 1 million per calendar year. The rate doesn’t tell you if you must register yet. Some entities have their own scope rules.

Freelancers and sole establishments are a common example. If you’re not sure your business needs to register, start with UAE corporate tax registration eligibility. Check that before you worry about which rate applies. Once you confirm your entity type, the rate feeds into your filing duties.

Frequently Asked Questions

Is the 9% rate charged only above AED 375,000, or on the whole amount once you cross it?

Only the amount above AED 375,000 pays 9%. The first AED 375,000 stays at 0%, whatever your total income. It works like an income tax bracket in other countries.

Do free zone companies pay 0% on all their income?

No. A QFZP gets 0% on qualifying income. Its other revenue must stay under the lower of 5% of total revenue or AED 5 million. Cross that cap and the company loses QFZP status for that period and the next four. The standard 0% and 9% bands then apply.

Does the 375,000 threshold apply per company or per group?

It applies per taxable person. A UAE Tax Group counts as one taxable person. So the group gets the threshold once, not once per member company.

Will these rates change?

Federal law and Cabinet Decisions set the rates and thresholds, and they can change. Check the current figures on the Federal Tax Authority or Ministry of Finance website before you file. This article reflects the rules as of October 2026.

This article explains the general corporate tax rate structure in the UAE. It isn’t a substitute for advice on your own tax position. Rules on qualifying income, substance and reliefs need case-by-case judgment. Speak with our team for corporate tax help in UAE before you file or elect any relief.