UAE Corporate Tax — the basics
UAE introduced a 9% Corporate Tax (CT) on business profits effective for financial years starting on or after June 1, 2023. This means most UAE companies filed their first CT return in 2024 for FY2023, with late filing penalties of AED 10,000.
Does CT apply to free zone companies?
Free zone companies can maintain a 0% CT rate on their qualifying income if they meet the Qualifying Free Zone Person (QFZP) conditions:
- They earn qualifying income (income from free zone or international activities)
- They maintain adequate substance in the UAE free zone
- They comply with transfer pricing requirements
- They do not conduct significant business with UAE mainland parties
Qualifying income includes: income from transactions with other free zone persons, international transactions, and income specifically approved by the Ministry of Finance.
Small Business Relief
Companies with total UAE-source revenue under AED 3 million per financial year may elect for Small Business Relief — essentially paying 0% CT for that year. This applies to both mainland and free zone companies with revenues below the threshold.
CT rates summary
| Entity type | Income | CT rate |
|---|---|---|
| Any entity | Up to AED 375,000 | 0% |
| Any entity | Above AED 375,000 | 9% |
| Free zone QFZP | Qualifying income | 0% |
| Free zone QFZP | Non-qualifying income | 9% |
| Small business relief | Revenue under AED 3M | 0% |
Filing deadlines
UAE CT returns must be filed within 9 months of the end of the financial year. For companies with a December 31 year-end: deadline is September 30 of the following year. Late filing penalty: AED 10,000. Late payment penalty: 14% per annum.
ZoneWise provides UAE Corporate Tax advisory as part of the Professional and Business+ plans. Contact shubh24oct@gmail.com for a CT eligibility assessment for your free zone company.