The UAE introduced a federal corporate tax for financial years starting on or after 1 June 2023. Most businesses now need to register, keep proper accounts and file an annual return, even if they end up paying little or nothing. Here is what a small business owner needs to know.
The rates
- 0% on taxable income up to AED 375,000.
- 9% on taxable income above AED 375,000.
Example: taxable income of AED 500,000 means tax of 9% × (500,000 − 375,000) = AED 11,250.
Small Business Relief
Resident businesses with revenue of AED 3 million or less in the tax period (and each earlier period) can elect Small Business Relief and be treated as having no taxable income. The relief has been extended to tax periods ending on or before 31 December 2029. It isn't automatic: you still register, keep records and elect it on your return. Some businesses, such as members of large multinational groups, can't use it.
From accounting profit to taxable income
- Start with net profit from your financial statements.
- Add back non-deductible items, for example 50% of client entertainment, fines and penalties, and certain donations.
- Deduct exempt income, such as qualifying dividends.
- Consider interest limitation rules and any tax losses brought forward.
- Apply the 0% and 9% bands to the result.
What to keep
Keep financial statements, invoices, contracts and workings for at least seven years. Free-zone businesses may qualify for 0% on certain income but have extra conditions, so take advice.
Plan cash for the tax bill
Corporate tax is due within nine months of the end of the tax period. Put the estimated amount into your cash flow forecast early so it doesn't arrive as a surprise.
Do it in minutes: download the UAE Corporate Tax Estimator (instant download, works in Excel and Google Sheets). Need the related files too? Browse UAE business templates or get 25 business templates for AED 29 in our value packs.
This guide is general information, not legal, tax or financial advice. Rules change, so check the latest official guidance or ask a qualified adviser for your situation.