UAE Corporate Tax Rate Explained: 0% and 9%
The UAE corporate tax rate is 0% on taxable income up to AED 375,000 and 9% on everything above it. Here is exactly how the two bands work, with a worked example — and why a 9% headline almost never means a 9% bill.
Corporate tax in the UAE has one of the simplest rate structures in the world: two numbers, 0% and 9%. But the way those two rates interact catches people out, and the difference between "9% of my profit" and what you actually owe can be large. This guide breaks down the rate, works through a real example, and covers the two exceptions — free zones and very large groups. For the full picture of registration, deadlines and reliefs, see our complete UAE corporate tax guide.
What is the corporate tax rate in the UAE?
The UAE corporate tax rate is 0% on taxable income up to AED 375,000 and 9% on taxable income above AED 375,000. It was set by Federal Decree-Law No. 47 of 2022 and applies to financial years starting on or after 1 June 2023. There is no separate rate in between and no surcharge below it — for the vast majority of UAE businesses, those two figures are the whole story.
The key word is taxable income — your accounting profit after the adjustments the tax law allows, not your revenue. Revenue thresholds decide whether you register (and whether reliefs apply); the rate is applied to profit.
The AED 375,000 band is not an allowance
This is the single most misread part of the rate. The AED 375,000 is a band taxed at 0%, not an allowance that is clawed back once you cross it. You do not pay 9% on your whole profit the moment you pass AED 375,000 — you pay 9% only on the slice above the line.
A company with AED 500,000 of taxable income pays:
- 0% on the first AED 375,000 = AED 0
- 9% on the remaining AED 125,000 = AED 11,250
Total tax: AED 11,250, not AED 45,000. That is an effective rate of about 2.25%, not 9%.
A worked example, at different profit levels
Because the first AED 375,000 is always free, the effective rate rises slowly toward 9% but never reaches it:
| Taxable income | 9% applies to | Corporate tax | Effective rate |
|---|---|---|---|
| AED 375,000 | AED 0 | AED 0 | 0% |
| AED 500,000 | AED 125,000 | AED 11,250 | ~2.3% |
| AED 1,000,000 | AED 625,000 | AED 56,250 | ~5.6% |
| AED 5,000,000 | AED 4,625,000 | AED 416,250 | ~8.3% |
Even at AED 5 million of profit the effective rate is still under the 9% headline. This is why the UAE regime stays highly competitive for small and mid-sized businesses.
Do free zone companies get the same rates?
Not quite — this is the first exception. A Qualifying Free Zone Person (QFZP) pays 0% on qualifying income and 9% on income that is not qualifying. Crucially, a QFZP does not get the AED 375,000 band on that non-qualifying income: it is taxed at 9% from the first dirham. So the "0% up to AED 375,000" rule is for ordinary taxable persons, not for a QFZP's non-qualifying income. The conditions that earn and keep 0% are covered in our guide to the free zone 0% QFZP rate.
Is there a higher rate for large companies?
Yes — the second exception. Multinational enterprise (MNE) groups with consolidated global revenue of EUR 750 million or more fall under a Domestic Minimum Top-up Tax (DMTT) that brings their effective rate up to a 15% floor, in line with the OECD global minimum tax. Per the Ministry of Finance, it applies for financial years starting on or after 1 January 2025. If you are not part of a group that size, it does not affect you — your world is 0% and 9%.
Rates versus Small Business Relief
One more distinction worth keeping straight, because it is the most common confusion. The 0%/9% rate is tested on profit. Small Business Relief is tested on revenue — up to AED 3,000,000 — and, when elected, treats your taxable income as nil for the period rather than applying the rate at all. The rate structure is permanent; Small Business Relief is transitional and ends for periods after 31 December 2026. If your revenue is under AED 3 million, compare both before you file — the full analysis is in our guide to Small Business Relief.
How QuickTax helps
Knowing the rate is the easy part; getting to the right taxable income — the profit figure the rate is applied to — is where clean bookkeeping and the correct adjustments matter. QuickTax keeps your books to IFRS, computes your taxable income correctly, and files your return on time so the low rate is the only surprise.
See how our accounting and tax service works →
This material is for reference and is not tax advice. Always verify current requirements on the official resources of the FTA and the UAE Ministry of Finance.
What this means for you
The headline is two numbers, but the bill depends on how they interact. Keep three things straight:
0% up to AED 375,000, 9% above
The rate is a band, not an allowance: only taxable income above AED 375,000 is taxed, and only at 9%. A company with AED 500,000 of profit pays AED 11,250 — not AED 45,000.
Your effective rate is always under 9%
Because the first AED 375,000 is free, the effective rate starts near zero and climbs slowly toward 9% as profits grow. Small and mid-sized businesses pay a fraction of the headline rate.
Free zones and big groups are the exceptions
A Qualifying Free Zone Person pays 9% on non-qualifying income with no AED 375,000 band, and multinational groups above EUR 750M face a 15% minimum. Everyone else lives in the 0%/9% world.
Frequently asked questions
If my company's profit is exactly AED 375,000, do I pay any corporate tax?
No. The first AED 375,000 of taxable income is taxed at 0%, so a profit of exactly AED 375,000 produces a corporate tax bill of zero. You only pay 9%, and only on the amount above AED 375,000 — a taxable income of AED 375,001 is taxed on the single dirham above the line.
What is the effective corporate tax rate in the UAE?
It is always below 9%, because the first AED 375,000 of taxable income is taxed at 0%. A business with AED 500,000 of taxable income pays AED 11,250 — an effective rate of about 2.3%. At AED 1,000,000 the bill is AED 56,250, roughly 5.6%. The effective rate rises toward 9% as profit grows but never reaches it.
Do freelancers and individuals get the 0% corporate tax band?
Yes. A natural person carrying on a business is taxed on the same basis as a company — 0% on the first AED 375,000 of taxable income and 9% above — once their business turnover passes AED 1,000,000 in a Gregorian calendar year and they become a taxable person.
Is there a higher corporate tax rate for large companies?
For most companies, no — 9% is the top rate. But multinational groups with consolidated global revenue of EUR 750 million or more fall under a Domestic Minimum Top-up Tax that raises their effective rate to a 15% floor, in line with the OECD global minimum tax, for financial years starting on or after 1 January 2025.