UAE Corporate Tax Explained: Who Actually Pays 9%?

June 21, 2026 · 1 min read · VAT & Tax

Since June 2023, the UAE has had a federal corporate tax for the first time. It's still one of the most competitive rates globally, but the free zone exemptions confuse a lot of business owners. Here's how it actually breaks down.

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The basic structure

Under Federal Decree-Law No. 47 of 2022:

0% on taxable income up to AED 375,000
9% on taxable income above that threshold

This applies to most UAE-incorporated businesses and branches of foreign companies, on their net accounting profit after specific tax adjustments.

Free Zone companies can still pay 0%

A Qualifying Free Zone Person can continue to pay 0% corporate tax on their "qualifying income" — broadly, income from transactions with other free zone entities or specific qualifying activities. Income from mainland UAE business generally doesn't qualify and gets taxed at the standard rates. Eligibility rules are specific and worth confirming with the Federal Tax Authority or a tax advisor for your exact business activity.

Frequently asked questions

Do all UAE businesses pay corporate tax?

Most do, but there are exemptions for government entities, extractive businesses (which have their own emirate-level tax regime), and qualifying Free Zone Persons on qualifying income.

Is corporate tax the same as VAT?

No — VAT is a 5% consumption tax on goods and services. Corporate tax is a separate 9% tax on business profits above AED 375,000.