The United Arab Emirates (UAE) introduced a Federal Corporate Tax (CT) regime to diversify government revenue and align with international tax standards while remaining business-friendly.
The standard corporate tax rate is 9% on taxable profits exceeding AED 375,000, while profits up to this threshold are taxed at 0%, supporting startups and small businesses. Furthermore, small companies having gross revenue/turnover of AED 3 million may also benefit from small business relief with 0% tax, irrespective of profits earned during the period up to 31st Dec 2026.
Certain entities, such as government bodies, qualifying public benefit entities, and some investment funds, are exempt. In addition, Qualifying Free Zone Persons may benefit from a 0% tax rate on qualifying income, provided they meet specific substance and compliance requirements.
UAE has also adopted Pillar Two of OECD BEPS Action plan as of 1st Jan 2025, which would result into 15% corporate tax for entities forming part of large multinational groups with combined revenues exceeding Euro 750 mn.
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