Corporate Tax: 0% up to AED 375,000 of taxable income; 9% on the portion above AED 375,000. VAT standard rate: 5%. VAT mandatory registration threshold: AED 375,000; voluntary threshold: AED 187,500.
Small Business Relief AED 3 million revenue threshold extended for tax periods ending on or before 31 December 2029.
1. Executive Summary
The United Arab Emirates (UAE) operates a federal tax framework that includes Corporate Tax (CT) and Value Added Tax (VAT). These are separate taxes with different bases, thresholds and compliance obligations. Corporate Tax generally applies to taxable income, while VAT is a consumption tax collected on taxable supplies and accounted for through VAT returns.
For most businesses, the practical starting point is to understand three numbers: the Corporate Tax threshold of AED 375,000 of taxable income, the VAT mandatory registration threshold of AED 375,000 of taxable supplies and imports for UAE-resident businesses, and the VAT voluntary threshold of AED 187,500. The standard UAE VAT rate is 5%.
Important Non-Resident VAT Notice
VAT registration thresholds are not a universal rule for foreign/non-resident businesses. A non-resident making taxable supplies in the UAE may have a mandatory VAT registration obligation even below AED 375,000 where no other UAE person is responsible for accounting for the VAT.
2. UAE Corporate Tax & VAT: Key Numbers
Summary of essential tax rates, thresholds, and submission deadlines across UAE federal tax laws:
| Tax / Topic | Key figure | What it means |
|---|---|---|
| Corporate Tax | 0% up to AED 375,000 | Headline CT rate on taxable income up to the threshold. |
| Corporate Tax | 9% above AED 375,000 | Applies to the portion of taxable income exceeding AED 375,000. |
| Small Business Relief | AED 3 million revenue threshold | Eligible businesses can claim relief subject to statutory conditions; extension currently covers tax periods ending on or before 31 Dec 2029. |
| VAT | 5% | Standard VAT rate on standard-rated supplies. |
| VAT registration | AED 375,000 | Mandatory threshold for UAE-resident businesses based on taxable supplies/imports. |
| VAT registration | AED 187,500 | Voluntary registration threshold for eligible UAE-resident businesses. |
| Corporate Tax filing | Within 9 months | Return and payment generally due within 9 months from the end of the tax period. |
| VAT filing | Within 28 days | VAT return and payment generally due within 28 days from the end of the tax period. |
3. What Is Corporate Tax in the UAE?
UAE Corporate Tax is a federal tax imposed on the taxable income of a Taxable Person. The regime applies for financial years starting on or after 1 June 2023. The starting point for determining taxable income is generally the accounting net profit or loss reported in financial statements, followed by tax adjustments required under the Corporate Tax Law.
The headline rate is 0% on the portion of taxable income up to AED 375,000 and 9% on the portion above AED 375,000. This is a tax-on-taxable-income structure, not a 9% tax on total turnover.
Figure 1 — UAE Corporate Tax headline rates. Source: UAE Ministry of Finance / Federal Tax Authority.
4. How to Calculate UAE Corporate Tax: Example
Suppose a company has AED 1,000,000 of taxable income for its tax period. The first AED 375,000 is taxed at 0%. The remaining AED 625,000 is taxed at 9%.
Illustrative Calculation
(AED 1,000,000 − AED 375,000) × 9% = AED 56,250 Corporate Tax Payable
Calculated before considering any applicable tax reliefs, credits, or other statutory adjustments.
The exact taxable income should be determined from the company's financial statements after applying the Corporate Tax Law and relevant implementing decisions. Therefore, accounting profit and taxable income may not always be identical.
Figure 2 — Illustrative Corporate Tax payable at different taxable-income levels. This chart is an example, not market data.
5. Small Business Relief: Important for Eligible SMEs
Small Business Relief is a Corporate Tax relief designed for eligible resident businesses meeting prescribed revenue and other statutory conditions. As of the current rules, the AED 3 million revenue threshold continues to apply for eligible tax periods ending on or before 31 December 2029.
Do not confuse the AED 3 million Small Business Relief revenue threshold with the AED 375,000 Corporate Tax rate threshold. They serve completely different purposes under UAE Corporate Tax law.
6. Corporate Tax for UAE Free Zone Businesses
Free Zone businesses fall within the UAE Corporate Tax framework. A Qualifying Free Zone Person (QFZP) may benefit from a 0% Corporate Tax rate on Qualifying Income, while income that does not qualify is subject to the standard 9% rate.
Free Zone Myth Busting
"Free Zone = no Corporate Tax" is an oversimplification. Free Zone entities must register for Corporate Tax, maintain audited financial statements, and meet strict substance & transaction conditions to access 0% rate benefits on Qualifying Income.
7. Corporate Tax Registration, Filing & Records
Taxable Persons are required to register for Corporate Tax and obtain a Corporate Tax Registration Number through the FTA's EmaraTax platform. The service is free, taking approximately 25 minutes for application submission and up to 20 business days for FTA processing.
Figure 3 — Key filing/payment deadlines. Units are different: Corporate Tax is generally within 9 months; VAT is generally within 28 days.
8. What Is VAT in the UAE?
VAT is a indirect consumption tax introduced across the UAE on 1 January 2018. The standard VAT rate is 5%. VAT is charged on standard-rated taxable supplies, while certain supplies can be zero-rated or exempt under UAE VAT law.
Output VAT is charged on sales to customers, while input VAT is paid on eligible business expenses. Recoverable input VAT reduces the net VAT payable to the FTA.
9. UAE VAT Registration Thresholds
A UAE-resident business must register for VAT when taxable supplies and imports exceed AED 375,000 over the previous 12 months, or are expected to exceed that amount in the next 30 days. Voluntary registration is available above AED 187,500.
The AED 375,000 threshold does not apply to non-resident businesses. Mandatory VAT registration applies to foreign entities making taxable supplies in the UAE if no resident customer accounts for VAT under the reverse charge.
Figure 4 — UAE VAT registration thresholds for eligible UAE-resident businesses.
10. VAT Calculation Example
If a business sells a standard-rated service for AED 10,000 before VAT, VAT at 5% is AED 500. The customer's total invoice value becomes AED 10,500.
VAT example: AED 10,000 taxable value × 5% = AED 500 VAT. Total invoice = AED 10,500.
Figure 5 — Illustrative composition of an AED 10,500 VAT-inclusive invoice.
11. How to Register for VAT in the UAE
12. Documents Commonly Required for VAT Registration
- Certificate of Incorporation, Memorandum of Association (MOA), or Partnership Agreement.
- Commercial Registration Certificate or official licensing authority document.
- Valid Trade Licence and branch licences, where applicable.
- Customs code and customs registration information, if importing/exporting.
- Passport & Emirates ID copies of authorized signatories and managers.
- Financial statements, bank statements, or turnover projection reports.
13. Corporate Tax vs VAT: What Is the Difference?
| Point | Corporate Tax | VAT |
|---|---|---|
| Tax base | Taxable income (net profit) | Taxable supplies / consumption |
| Headline rate | 0% up to AED 375K; 9% above | 5% standard rate |
| Key threshold | AED 375K taxable-income rate threshold | AED 375K mandatory / AED 187.5K voluntary for UAE residents |
| Registration | Taxable Persons register with FTA | Eligible businesses register when required or voluntarily |
| Return timing | Generally within 9 months after Tax Period | Generally within 28 days after VAT Tax Period |
| Can both apply? | Yes | Yes |
14. Common UAE Tax Compliance Mistakes
Treating Corporate Tax as 9% of total turnover rather than net taxable income.
Assuming a Free Zone licence automatically grants 0% tax without qualifying income.
Failing to track 9-month CT deadlines or 28-day VAT submission windows.
Checking turnover only annually instead of on a 12-month rolling basis.
Assuming the AED 375k VAT threshold protects foreign businesses.
Charging VAT incorrectly or confusing zero-rated and exempt transactions.
Failing to match accounting ledgers with EmaraTax return submissions.
Failing to maintain valid tax invoices and financial books for 5+ years.
15. UAE Tax Considerations for NRIs and International Entrepreneurs
An NRI or foreign entrepreneur operating through a UAE business should separate three distinct questions: personal tax residency, whether a permanent establishment or business presence exists in the UAE, and which UAE federal tax rules apply to that entity.
UAE Corporate Tax and VAT are federal regimes applying across all seven emirates (Dubai, Abu Dhabi, Sharjah, Ajman, RAK, Fujairah, UAQ). Cross-border arrangements may also involve Double Taxation Avoidance Agreements (DTAA), transfer pricing rules, and foreign tax credit rules in your home jurisdiction.
16. UAE Corporate Tax & VAT Compliance Checklist
17. Final Takeaway
For UAE businesses, Corporate Tax and VAT should be treated as two separate but connected compliance systems. Corporate Tax focuses on taxable income (0% up to AED 375,000; 9% above). VAT is a consumption tax (5% standard rate) with AED 375,000 mandatory and AED 187,500 voluntary registration thresholds.
The most important practical step is building a reliable process for accounting, invoicing, documentation, reconciliations and timely filing before deadlines approach.
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18. Official Reference Sources
- Ministry of Finance — Small Business Relief Extension Announcement (7 August 2026)
- UAE Ministry of Finance — Corporate Tax in the UAE
- UAE Ministry of Finance — Value Added Tax (VAT)
- Federal Tax Authority — Corporate Tax Registration Portal
- Federal Tax Authority — VAT Registration
- Federal Tax Authority — Filing VAT Returns and Making Payments
- Federal Tax Authority — Corporate Tax FAQs
Disclaimer
This document is intended for general educational and website-content purposes and does not constitute tax, legal or accounting advice. UAE tax rules and administrative guidance can change. The applicable treatment depends on the entity, activity, transactions, Tax Period and other facts. Businesses should verify current requirements with the UAE Federal Tax Authority and Ministry of Finance or obtain professional advice before acting.
Frequently Asked Questions
What is the UAE Corporate Tax rate for businesses?
UAE Corporate Tax is levied at 0% on taxable income up to AED 375,000 and 9% on the portion of taxable income exceeding AED 375,000.
What is the Small Business Relief (SBR) threshold in the UAE?
Eligible resident businesses with revenue up to AED 3,000,000 in a relevant tax period can elect for Small Business Relief, treating their taxable income as zero for Corporate Tax purposes. The UAE Ministry of Finance has extended this relief for tax periods ending on or before 31 December 2029.
Are Free Zone companies exempt from UAE Corporate Tax?
Not automatically. Free Zone businesses fall within the UAE Corporate Tax regime. A Qualifying Free Zone Person (QFZP) can benefit from a 0% rate on Qualifying Income, but non-qualifying income is subject to the standard 9% rate.
What is the difference between Corporate Tax and VAT filing deadlines?
Corporate Tax returns and payments are generally due within 9 months from the end of the tax period (financial year). VAT returns and payments are due within 28 days from the end of each VAT tax period (quarterly or monthly).
Do foreign or non-resident businesses need to register for VAT in the UAE?
Yes, if a non-resident business makes taxable supplies in the UAE and no other UAE-resident person is responsible for accounting for the VAT, mandatory VAT registration applies regardless of the AED 375,000 threshold.
Can a business be subject to both Corporate Tax and VAT in the UAE?
Yes. Corporate Tax and VAT are separate federal tax regimes. A business in the UAE can have both Corporate Tax and VAT registration and compliance obligations simultaneously.