Deadline alert: If your financial year ended on 31 December 2025, your Corporate Tax return and any tax due must be filed and paid by 30 September 2026. Penalties start the following day.
Do Free Zone companies need to register for UAE Corporate Tax?
Yes. Every taxable person must register with the Federal Tax Authority (FTA) through the EmaraTax portal and obtain a Corporate Tax Registration Number. This includes businesses that pay 0% tax, earn less than AED 375,000, or hold Qualifying Free Zone Person (QFZP) status.
Registration and tax payable are two different things. A Free Zone company can owe no tax at all and still need a registration number, an annual return and proper accounting records. The rest of this guide covers the rates, who qualifies for 0%, registration steps, deadlines and penalties.
What is UAE Corporate Tax?
UAE Corporate Tax is a tax on business profits, introduced by Federal Decree-Law No. 47 of 2022 and administered by the Federal Tax Authority. It applies to:
- UAE-incorporated companies, including both Mainland and Free Zone entities
- Certain non-resident businesses, for example those with a permanent establishment in the UAE
- Individuals running a business, once their business turnover passes AED 1,000,000
Is Corporate Tax the same as VAT?
No. Corporate Tax is charged on a business’s taxable profit. VAT is charged on taxable supplies of goods and services. They have separate registration rules, separate returns and separate deadlines, so a business may need one, both or neither. If you are unsure which applies to you, our VAT services and Corporate Tax services pages explain what each involves.
UAE Corporate Tax rates
The standard framework is simple:
- 0% on taxable income up to AED 375,000
- 9% on taxable income above AED 375,000
Do not read this as “Mainland companies pay 9%”. The 9% rate applies only to the portion of taxable income above the AED 375,000 threshold.
Does a 0% rate mean I do not need to register?
No. The AED 375,000 threshold decides which rate applies to your income. It does not decide whether you have to register. A company with taxable income below the threshold still registers, keeps records and files a return.
UAE Corporate Tax for Free Zone companies
Do Free Zone companies pay Corporate Tax?
Not automatically zero. Setting up in a Free Zone does not exempt a company from the Corporate Tax regime. A Free Zone company can receive a 0% rate on certain income only if it qualifies as a Qualifying Free Zone Person (QFZP). Otherwise it is taxed under the standard rules.
What is a Qualifying Free Zone Person?
To be a QFZP, a Free Zone company must meet all of the following conditions:
- Maintain adequate substance in a Free Zone (real people, premises and decision-making that match its activity)
- Earn Qualifying Income
- Not have elected to be taxed under the standard regime
- Follow the arm’s length principle for related-party transactions
- Keep transfer pricing documentation
- Maintain audited financial statements
- Keep non-qualifying revenue within the de minimis limit, which is the lower of 5% of total revenue or AED 5 million
What is Qualifying Income?
Qualifying Income broadly includes:
- Income from transactions with other Free Zone Persons, except income from Excluded Activities
- Income from Qualifying Activities carried out with non-Free Zone persons
- Other income, provided the company stays within the de minimis limit
Which activities can qualify for the 0% rate?
Ministerial Decision No. 229 of 2025 sets the current list of Qualifying Activities and Excluded Activities. It replaced the earlier Ministerial Decision No. 265 of 2023 and applies retroactively from 1 June 2023. It identifies fourteen categories of Qualifying Activities, including manufacturing and processing of goods, and attaches specific conditions to some of them. For example, distribution and logistics activities are subject to a 51% revenue threshold, and holding securities requires a minimum 12-month holding period. Trading in qualifying commodities was also widened to cover industrial chemicals, associated by-products and environmental commodities such as carbon credits.
Some activities are excluded from the 0% regime. These include banking and insurance, finance and leasing (with limited exceptions), and owning or exploiting immovable property, other than certain commercial property in a Free Zone.
Important: holding a licence for an activity does not mean the income from it qualifies. Each income stream needs to be tested against the rules.
What happens if a Free Zone company does not qualify, or loses its status?
A Free Zone company that fails any of the QFZP conditions is treated as a standard taxable person at 9% for the current year and the following four tax periods. It can retest its status in the sixth year. A single breach, such as exceeding the de minimis limit, can therefore have a five-year cost.
Two further points are worth knowing:
- A QFZP does not receive the AED 375,000 zero-rate band. It pays 0% on Qualifying Income and 9% on non-qualifying income.
- For a small Free Zone company with modest income, staying outside the QFZP regime can sometimes be simpler. This is a decision to take with an adviser before the tax period begins.
What about Meydan, IFZA, DMCC and other Free Zones?
Choosing a particular Free Zone, whether Meydan, IFZA, DMCC or any other, does not by itself make your income 0%-taxed. Your position depends on your activity, your sources of income and whether you meet the QFZP conditions. When comparing options for a Free Zone company setup, consider the tax position alongside licence cost and visa needs.
UAE Corporate Tax for Mainland companies
Mainland companies follow the standard framework: 0% on taxable income up to AED 375,000 and 9% above it. They must register, keep records, file an annual return and pay on time. There is no QFZP test, but the general rules on records, deductions and related-party transactions still apply. If you are still choosing a structure, see our guide to Mainland company formation in Dubai.
Mainland vs Free Zone: how the rules compare
| Mainland company | Free Zone company | |
| Corporate Tax registration | Required | Required, even at 0% |
| Standard treatment | 0% up to AED 375,000, 9% above | Same, unless QFZP conditions are met |
| QFZP treatment | Not available | 0% on Qualifying Income only |
| Small Business Relief | Available if eligible | Not available to a QFZP |
| Audited financial statements | Required above AED 50 million revenue | Mandatory for QFZPs |
| Main risk | Missing filing and payment deadlines | Losing QFZP status through non-qualifying income |
Small Business Relief
Small Business Relief (SBR) lets an eligible small resident business elect to be treated as having no taxable income for a tax period. The key points:
- Revenue limit: revenue must be AED 3 million or less in the relevant period and in each previous tax period.
- Who cannot use it: Qualifying Free Zone Persons and members of large multinational groups (consolidated revenue above AED 3.15 billion).
- Duration: the relief was extended by Ministerial Decision No. 131 of 2026 and now covers tax periods ending on or before 31 December 2029.
- It is not automatic: you elect it in your Corporate Tax return, and you still have to register and file.
- Losing it is permanent: if revenue exceeds AED 3 million in any period, the relief is no longer available, even if revenue falls again later.
- The trade-off: electing SBR means giving up any tax losses and disallowed interest from that period, so check the numbers first.
Corporate Tax registration in the UAE
Who must register?
All taxable persons must register: Mainland companies, Free Zone companies and other in-scope entities. This applies whether or not any tax will be payable. Individuals with business turnover above AED 1,000,000 must register by 31 March of the following year.
How to register through EmaraTax
- Log in or create an EmaraTax account on the FTA portal.
- Select Corporate Tax registration.
- Enter your company details: legal entity information, trade licence, business activity, address, ownership details and authorised signatory.
- Upload the supporting documents, such as the trade licence, Memorandum of Association and identity documents for owners and signatories.
- Submit the application and receive your Corporate Tax Registration Number.
Registration deadlines
| Type of business | Registration deadline |
| Resident company incorporated on or after 1 March 2024 (including Free Zone companies) | Within three months of incorporation, establishment or recognition |
| Resident company incorporated before 1 March 2024 | Set by licence issue month, ranging from 31 May to 31 December 2024. These deadlines have all passed |
| Individual running a business | 31 March of the following year, once turnover exceeds AED 1 million |
| Non-resident with a permanent establishment | Nine months if the permanent establishment existed before 1 March 2024; six months if it began on or after that date |
For newly formed companies, the three months run from the incorporation or recognition date, not from the date you start trading or the date your licence is issued. A company incorporated on 15 January 2026 therefore had until 15 April 2026 to register. If your company has not registered yet, do it now: the penalty is already running, and the sooner you file, the more options you may have.
Corporate Tax return filing deadline
Returns and any tax due must be filed and paid through EmaraTax within nine months of the end of the tax period. For a calendar-year company, that means:
- Financial year ended 31 December 2025: due 30 September 2026
- Financial year ended 31 December 2026: due 30 September 2027
Every registered taxable person files a return, including companies taxed at 0% and those electing Small Business Relief. A nil tax result does not remove the filing duty.
UAE Corporate Tax penalties
| Non-compliance | Penalty |
| Late registration | AED 10,000 (Cabinet Decision No. 75 of 2023) |
| Late return | AED 500 per month or part of a month for the first 12 months, then AED 1,000 per month |
| Late payment | 14% per annum on the unpaid tax, applied monthly |
| Failure to keep required records | From AED 10,000 per violation |
Two details catch people out. First, the late-filing penalty counts “a month or part of a month”, so filing four days late costs the same as filing four weeks late. Second, it is a fixed amount, so it applies even if your return shows no tax payable. The schedule sets no cap on the filing penalty.
Can the AED 10,000 late-registration penalty be waived?
Sometimes, but you should not count on it. The waiver is a time-limited FTA initiative with specific conditions:
- It took effect on 14 April 2025 and applies to penalties incurred from 1 June 2023.
- The company must file its first return within seven months of the end of its first tax period, instead of the usual nine.
- It applies only to the company’s first tax period.
- If the penalty was already paid, the amount is credited to the company’s EmaraTax account.
Because the seven-month window runs from each company’s own first tax period, many businesses have already missed it. For a company with a 31 December 2025 year-end, the cut-off was 31 July 2026. Check your own position on the FTA website or with an adviser before assuming you qualify.
Corporate Tax compliance checklist for Free Zone businesses
- Keep proper accounting records and retain them for seven years. Our accounting and bookkeeping team can help set this up.
- Track qualifying and non-qualifying income separately, and monitor the de minimis limit during the year, not after it ends.
- Maintain real substance in the Free Zone that fits your activity.
- Prepare audited financial statements if you are a QFZP.
- File the return and pay by the deadline.
- Watch for rule changes. The qualifying activities list was revised in 2025 and Small Business Relief was extended in 2026.
Other compliance steps after company formation
Corporate Tax is one part of running a compliant UAE company. Once your licence is issued, also plan for:
- Corporate bank account opening
- Accounting and bookkeeping
- VAT registration, where applicable
- Corporate Tax registration and annual returns
- Licence renewals
- PRO and government services
Common UAE Corporate Tax mistakes to avoid
- Assuming a Free Zone means 0% tax on everything
- Treating the AED 375,000 threshold as a reason not to register
- Missing the registration deadline
- Letting non-qualifying income creep past the de minimis limit
- Not filing because “no tax is due”
- Electing Small Business Relief without checking the loss trade-off
- Treating compliance as a one-off task instead of a yearly cycle
Frequently asked questions about UAE Corporate Tax
Do Free Zone companies pay Corporate Tax in the UAE?
It depends. A Free Zone company that meets all the QFZP conditions pays 0% on Qualifying Income, and its other income is taxed under the standard rules. Every Free Zone company still has to register.
What is the UAE Corporate Tax rate?
0% on taxable income up to AED 375,000 and 9% on the portion above that. Qualifying Free Zone Persons have a separate regime for qualifying income.
Is Corporate Tax registration mandatory in the UAE?
Yes, for all taxable persons, including those with no tax payable.
What is the Corporate Tax registration deadline?
For companies incorporated on or after 1 March 2024, three months from incorporation. The deadlines for older companies, which depended on licence month, have passed.
What is the penalty for late Corporate Tax registration?
AED 10,000. It may be waived if the conditions of the FTA’s waiver initiative are met.
Do companies earning less than AED 375,000 need to register?
Yes. The threshold affects the rate of tax, not the obligation to register or file.
When is the UAE Corporate Tax return due?
Nine months after the end of the tax period. For a 31 December 2025 year-end, that is 30 September 2026.
What happens if a company misses a Corporate Tax deadline?
Late filing costs AED 500 per month (rising to AED 1,000 per month from month 13), and late payment accrues at 14% a year on unpaid tax.
Does setting up in a Dubai Free Zone or Meydan mean 0% Corporate Tax?
No. A Free Zone company must meet the QFZP conditions and earn qualifying income to receive the 0% rate.
Conclusion: compliance starts with the right structure
The sequence is straightforward: choose your structure, register, understand your rate, keep records, file on time and stay compliant. Tax treatment can differ significantly between Mainland and Free Zone, and between QFZP and non-QFZP status. It is much easier to plan for this before company formation than to fix it afterwards.
If you would like help with Corporate Tax registration, accounting, filing or choosing the right jurisdiction, the team at Virtue Corporate Services can guide you. Explore our Corporate Tax services or our business setup services, or contact us for a free consultation.
Disclaimer: This article provides general information and is not tax or legal advice. Rules, rates and deadlines can change. Please confirm current requirements with the Federal Tax Authority (tax.gov.ae) or a qualified tax adviser. Sources: Federal Decree-Law No. 47 of 2022; Cabinet Decision No. 75 of 2023; FTA Decision No. 3 of 2024; Ministerial Decisions No. 229 and No. 84 of 2025; Ministerial Decision No. 131 of 2026; FTA Free Zone Persons guidance.
