United Arab Emirates company taxes

Corporate tax: the 0% band and the 9% above it

Federal corporate tax applies to taxable income at 0% up to AED 375,000 and 9% on the excess. That AED 375,000 zero band is genuine relief for early-stage businesses — a company with AED 500,000 of taxable income pays 9% only on AED 125,000, an effective rate well under 9%. Crucially, registration with the FTA is mandatory for every company even if it expects to pay nothing, and late registration carries an AED 10,000 penalty. There is no separate municipal or trade tax for ordinary companies on top of this.

The Qualifying Free Zone Person 0% rate — conditional, not automatic

A free-zone company is not 0% by default. To be a Qualifying Free Zone Person it must (1) maintain adequate substance in the free zone, (2) derive 'qualifying income' from qualifying activities (e.g. trading with other free-zone or foreign persons, manufacturing, holding shares, fund/wealth management), (3) keep audited financial statements, (4) not elect into the standard 9% regime, and (5) keep non-qualifying revenue within the de-minimis limit — the lower of AED 5 million or 5% of total revenue. Breach the de-minimis or substance test and the entire taxable income is taxed at 9% for that period and the next four. Income that does not qualify (for example most mainland-UAE B2C sales) is taxed at 9% even for a QFZP.

VAT for a foreign-owned company

VAT is 5%. A company must register once taxable supplies and imports exceed AED 375,000 in 12 months, and may register voluntarily from AED 187,500. The trap for non-residents: a business with no fixed establishment in the UAE that makes taxable supplies there generally has no registration threshold and must register from the first such supply. Exports of goods and many services to non-UAE customers are typically zero-rated, so a company selling only abroad may register yet reclaim input VAT without charging output VAT. Returns are filed on EmaraTax, usually quarterly.

Dividends, withholding and how a non-resident owner is taxed

This is where the UAE shines for foreign owners. There is no withholding tax — 0% on dividends, interest and royalties paid to non-residents — so when your UAE company distributes profit to you abroad, nothing is deducted at the UAE end. There is also no UAE personal tax on those dividends. The company itself pays corporate tax (0% or 9%) on its profits before distribution; after that, extraction is clean. Your home country may still tax the dividend or the company under controlled-foreign-company rules, and running the company's real management from your home country can create tax residence or a permanent establishment there, so coordinate with a local adviser.

Small Business Relief and incentives

A resident company with revenue not exceeding AED 3 million can elect Small Business Relief and be treated as having no taxable income — effectively 0% tax — but only for tax periods ending on or before 31 December 2026, and the relief is unavailable to Qualifying Free Zone Persons and members of large multinational groups. It must be elected on the return; it is not automatic, and once you ever exceed AED 3 million you lose it permanently. Beyond this, the UAE's main 'incentive' is the free-zone 0% regime itself plus an extensive double-tax-treaty network (130+ treaties) that can reduce foreign withholding on income flowing into the UAE company.

Filing calendar

Corporate-tax registration is required within FTA deadlines after formation. The corporate-tax return is filed, and any tax paid, within 9 months of the end of the financial year — so a company with a 31 December year-end files by 30 September of the following year. There is no provisional/advance corporate-tax payment for most companies. VAT returns, if registered, are typically quarterly. Records must be kept for at least seven years. Penalties are real: AED 500/month for late filing in the first year (rising thereafter), plus interest on unpaid tax.