UAE corporate tax explained: the 9% rate, the AED 375,000 threshold and Small Business Relief
How UAE corporate tax works: 0% on taxable income up to AED 375,000 and 9% above, Small Business Relief for revenue up to AED 3 million until 2029, and worked examples.
- Written by
- Arnold Gold, Product Manager
- Published
- 13 October 2026
- Figures checked
- 12 October 2026
How UAE corporate tax works
The UAE introduced a federal corporate tax under Federal Decree-Law No. 47 of 2022, for tax periods starting on or after 1 June 2023. The rate structure, set by Cabinet Decision No. 116 of 2022, has two bands: 0% on taxable income up to AED 375,000, and 9% on taxable income above it.
The AED 375,000 band works like an income tax allowance: every business taxed at the standard rates gets it, so tax only starts on the part of taxable income above it.
Tax at different levels of taxable income
| Taxable income | Taxed at 0% | Taxed at 9% | Corporate tax | Effective rate |
|---|---|---|---|---|
| AED 300,000 | AED 300,000 | AED 0 | AED 0 | 0.00% |
| AED 375,000 | AED 375,000 | AED 0 | AED 0 | 0.00% |
| AED 500,000 | AED 375,000 | AED 125,000 | AED 11,250 | 2.25% |
| AED 1,000,000 | AED 375,000 | AED 625,000 | AED 56,250 | 5.63% |
| AED 2,000,000 | AED 375,000 | AED 1,625,000 | AED 146,250 | 7.31% |
| AED 5,000,000 | AED 375,000 | AED 4,625,000 | AED 416,250 | 8.33% |
The effective rate approaches 9% as profits grow, but never reaches it.
Small Business Relief
Taxable persons with annual revenue not exceeding AED 3,000,000 can elect Small Business Relief, subject to the conditions in the legislation. Ministerial Decision No. 131 extended it to tax periods ending on or before 31 December 2029 (Ministry of Finance). The calculator models an eligible business that elects it as paying no corporate tax for that period.
Example: revenue of AED 2,500,000 and taxable income of AED 600,000. Without the relief, tax is AED 20,250. With it elected, AED 0. The test is on revenue, not profit — a business with AED 3,100,000 of revenue doesn't qualify however small its profit.
Not every business can use the relief — the legislation sets conditions — so check eligibility before relying on a zero bill.
Worked example
A company with AED 10,000,000 of revenue and AED 1,000,000 of taxable income — too large for Small Business Relief. The first AED 375,000 is taxed at 0%; the remaining AED 625,000 at 9% = AED 56,250. Try your own figures in the corporate tax calculator.
Common mistakes
- Taxing revenue. Corporate tax is on taxable income, after expenses and adjustments.
- Testing Small Business Relief on profit. The AED 3,000,000 test is on revenue.
- Applying 9% to everything. The first AED 375,000 is at 0%.
Frequently asked questions
Frequently asked questions
What is the corporate tax rate in the UAE?
0% on taxable income up to AED 375,000 and 9% on the part above it.
Who qualifies for Small Business Relief?
Taxable persons with annual revenue of AED 3,000,000 or less, subject to the legislation's conditions, for tax periods ending on or before 31 December 2029.
How much tax on AED 1 million of profit?
AED 56,250 on AED 1,000,000 of taxable income at the standard rates — 5.63% effective.
Is corporate tax charged on revenue?
No — on taxable income. Revenue matters only for the Small Business Relief test.
When did UAE corporate tax start?
For tax periods starting on or after 1 June 2023, under Federal Decree-Law No. 47 of 2022.
Sources
Related guides
Not financial advice