1. Overview and Statutory Framework
Effective for financial years commencing on or after 1 June 2023, the UAE established a federal corporate tax framework governed by Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.
The regime is administered by the Federal Tax Authority (FTA) under policy direction from the Ministry of Finance (MoF). It applies across all commercial, industrial, and professional activities in the United Arab Emirates, with targeted exemptions designed to support small enterprises and qualifying free zone operations.
2. Statutory Tax Rates and Thresholds
| Taxable Profit Bracket | Statutory Tax Rate | Legal Reference |
|---|---|---|
| Portion of Net Taxable Profit up to AED 375,000 | 0% (Exempt Bracket) | Article 3(1)(a), Decree-Law 47/2022 |
| Portion of Net Taxable Profit exceeding AED 375,000 | 9% (Standard Rate) | Article 3(1)(b), Decree-Law 47/2022 |
| Qualifying Income of Qualifying Free Zone Persons (QFZP) | 0% | Article 3(2) & Cabinet Decision 55/2023 |
3. Small Business Relief (SBR) Extended to 31 December 2029
To protect micro-enterprises, startups, and emerging businesses from administrative and financial burdens, the Ministry of Finance enacted Small Business Relief (SBR):
- Original Enactment: Enacted by Ministerial Decision No. 73 of 2023 on Small Business Relief.
- Official Extension: Formally extended to tax periods ending on or before 31 December 2029 by Ministerial Decision No. 131 of 2026.
- Revenue Cap: Gross commercial revenue must not exceed AED 3,000,000 in the relevant tax period and all prior tax periods.
- Relief Effect: If elected, the business is treated as having zero taxable income for that period, resulting in AED 0.00 corporate tax payable and simplified record-keeping requirements (no complex transfer pricing documentation).
- Election Requirement: SBR is not automatic. The business must elect to claim Small Business Relief on its annual Corporate Tax return via EmaraTax for each eligible financial period.
4. Mandatory Registration & Filing Timelines
All legal entities (including Mainland LLCs, Free Zone companies, sole establishments, and qualifying individuals) must register on the EmaraTax portal and obtain a Corporate Tax TRN. Failure to register within the FTA staggered timeline results in a mandatory administrative penalty of AED 10,000 (Cabinet Decision No. 75 of 2023).
Maintain accurate accounting books in accordance with International Financial Reporting Standards (IFRS) or IFRS for SMEs. Businesses electing SBR may use simplified cash-basis accounting if revenue is below statutory thresholds.
The annual Corporate Tax return, along with any tax liability payable, must be submitted within nine (9) months following the close of the entity's financial year (e.g., for a tax year ending 31 December, filing and payment are due by 30 September of the following year).
Related Tools & Calculators
Calculate your estimated corporate tax liability or test SBR eligibility: