Quick Answer
For most UAE businesses, Corporate Tax is 0% on the first AED 375,000 of taxable income and 9% on taxable income above AED 375,000. The tax is charged on taxable income, not revenue. A business with AED 500,000 of taxable income would generally pay AED 11,250, calculated as 9% of AED 125,000. The total cost may also include accounting, tax computation, return filing, transfer pricing, and advisory expenses. BCL Globiz helps UAE businesses assess these amounts, prepare accurate computations, and meet Federal Tax Authority requirements.
For registration, computation, filing, and ongoing support, visit BCL Globiz Corporate Tax Services.
What Does the Cost of Corporate Tax in the UAE Mean?
The phrase cost of Corporate Tax can refer to two separate amounts. The first is the Corporate Tax liability payable to the FTA. The second is the cost of complying with the law, which can include bookkeeping, financial statements, tax adjustments, return preparation, transfer pricing documentation, and professional advice.
A company should budget for both. A low or zero tax liability does not automatically remove registration, record keeping, or filing responsibilities. For example, a business that earns less than the taxable income threshold may still need to register and submit a return.
What Are the UAE Corporate Tax Rates?
Under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, the standard rates for a taxable person are generally:
- 0% on taxable income up to AED 375,000
- 9% on taxable income above AED 375,000
How the Standard Calculation Works?
| Taxable income | Amount taxed at 9% | Indicative tax due |
| AED 300,000 | AED 0 | AED 0 |
| AED 500,000 | AED 125,000 | AED 11,250 |
| AED 1,000,000 | AED 625,000 | AED 56,250 |
| AED 2,000,000 | AED 1,625,000 | AED 146,250 |
These examples assume the standard rate applies and ignore reliefs, exempt income, tax losses, foreign tax credits, and special Free Zone rules. The final figure must be based on the taxpayer’s actual accounting records and the adjustments required by Corporate Tax law.
Is Corporate Tax Charged on Revenue or Profit?
UAE Corporate Tax is not normally calculated by multiplying the 9% rate by sales revenue. The calculation begins with accounting income shown in the financial statements. Adjustments are then made under the Corporate Tax Law to arrive at taxable income.
This distinction matters. A company may have AED 5 million in revenue but only AED 600,000 in taxable income after eligible business expenses and required tax adjustments. Its standard Corporate Tax liability would generally be 9% of AED 225,000, or AED 20,250.
Which Costs Can Change the Final Tax Bill?
Deductible Business Expenses
Legitimate expenses incurred wholly and exclusively for the business are generally deductible, subject to specific limits and conditions. Examples may include employee costs, rent, utilities, software, professional fees, and other costs connected with earning taxable income. Accurate classification and supporting documents are essential.
Non-Deductible and Partly Deductible Expenses
Some costs must be added back when taxable income is calculated. Fines and penalties imposed by government bodies, certain donations, owner distributions, and expenses that are not incurred for business purposes may be non-deductible. Business entertainment expenditure for customers, shareholders, suppliers, or business partners is generally only 50% deductible.
Tax Losses and Foreign Tax Credits
Available tax losses may reduce taxable income when the legal conditions are met. A foreign tax credit may also reduce UAE Corporate Tax on relevant foreign-source income, although the credit is subject to limitations. These rules can materially affect the final payment and should be supported by clear calculations and evidence.
How Much Do Free Zone Companies Pay?
A Free Zone licence does not automatically guarantee a 0% Corporate Tax bill. A Qualifying Free Zone Person can benefit from a 0% rate on Qualifying Income if all conditions are met. Taxable income that is not Qualifying Income is generally taxed at 9%. For a Qualifying Free Zone Person, the AED 375,000 threshold does not apply to non-qualifying taxable income.
The entity must satisfy detailed requirements covering adequate substance, qualifying activities, excluded activities, transfer pricing, audited financial statements where required, and the de minimis test. A failure to meet the conditions can change the tax outcome, so Free Zone businesses should not estimate their cost solely from their licence type.
Can Small Businesses Pay No Corporate Tax?
Eligible resident persons may elect for Small Business Relief if their revenue is no more than AED 3 million in the relevant tax period and every previous tax period covered by the relief rules. The current relief applies to tax periods ending on or before 31 December 2026. An eligible person is treated as having no taxable income for that period.
The election is not automatic and is made for each tax period. Qualifying Free Zone Persons and members of multinational enterprise groups above the applicable threshold cannot use this relief. Eligible businesses must still comply with relevant registration, filing, and record keeping obligations.
What Compliance Costs Should a UAE Business Budget For?
Professional service costs depend on transaction volume, record quality, legal structure, number of entities, Free Zone status, related-party transactions, international operations, and whether the accounts are already tax-ready. A simple company with clean bookkeeping will usually require less work than a group with cross-border arrangements or extensive transfer pricing obligations.
- Corporate Tax registration and EmaraTax profile review
- Bookkeeping cleanup and year-end closing
- Financial statement preparation or audit support
- Taxable income computation and adjustment schedules
- Corporate Tax return preparation and submission
- Transfer pricing analysis and documentation
- Tax grouping, restructuring, relief, or Free Zone advice
- FTA correspondence, clarification, amendment, or audit support
Businesses should request a scope-based quotation instead of comparing only a headline filing price. The cheapest option may exclude the accounting corrections, technical review, or supporting schedules needed for an accurate return.
What Are the Main FTA Deadlines?
Taxable persons must register within the timeframes prescribed by the FTA. Corporate Tax returns and the related payment are generally due within nine months from the end of the relevant tax period. For example, a business with a financial year ending 31 December 2025 generally has a filing and payment deadline of 30 September 2026.
The filing deadline and payment deadline are normally the same. Waiting until the deadline to reconcile accounts can increase professional costs and the risk of errors. A practical approach is to complete monthly bookkeeping, review tax-sensitive items during the year, and begin the annual tax computation soon after the financial year closes.
How Can a Business Reduce Its Corporate Tax Cost Legally?
Legal tax planning is based on accurate records and correct use of the reliefs, exemptions, deductions, elections, and group provisions available under UAE law. It does not mean hiding income or creating unsupported expenses.
- Maintain complete invoices, contracts, payroll records, and expense evidence
- Separate private, exempt, and business expenditure correctly
- Review related-party transactions under the arm’s length principle
- Assess available tax losses and foreign tax credits before filing
- Check eligibility for Small Business Relief for each tax period
- Test Free Zone conditions and qualifying income carefully
- Review group structures and elections before statutory deadlines
How BCL Globiz Helps Calculate the True Cost?
BCL Globiz provides integrated Corporate Tax and accounting support for UAE mainland companies, Free Zone entities, startups, SMEs, groups, and international businesses. Its specialists can review the financial records, identify tax adjustments, assess reliefs, calculate the expected liability, prepare the return, and support timely submission through EmaraTax.
This joined-up approach helps a business understand its full cost before the deadline. It also creates a clearer audit trail for the figures reported to the FTA. Businesses with complex structures, related-party dealings, or mixed Free Zone income should obtain advice early because these areas can change both the tax liability and the compliance work required.
Explore BCL Globiz Corporate Tax advisory services or request an assessment of your UAE Corporate Tax position.
Frequently Asked Questions
How much Corporate Tax does a UAE company pay?
Most taxable businesses pay 0% on taxable income up to AED 375,000 and 9% on taxable income above that amount. Special rules apply to Qualifying Free Zone Persons and certain other taxpayers.
Does a company pay Corporate Tax if it makes less than AED 375,000?
If its taxable income is no more than AED 375,000, the standard tax liability may be zero. Registration, filing, and record keeping obligations can still apply.
Is the AED 375,000 threshold based on sales?
No. The standard rate threshold is based on taxable income, not turnover. Revenue is relevant for other rules, including Small Business Relief and the registration of natural persons conducting business.
Do Free Zone companies always pay 0%?
No. The 0% rate is available only to a Qualifying Free Zone Person on Qualifying Income when all legal conditions are satisfied. Non-qualifying taxable income is generally subject to 9%.
When must Corporate Tax be paid?
Corporate Tax returns and payments are generally due within nine months after the end of the tax period, subject to any specific FTA decision or applicable exception.
Are Corporate Tax consultancy fees deductible?
Professional fees incurred wholly and exclusively for the business are generally deductible, subject to the Corporate Tax Law, proper documentation, and any relevant limitation.
Conclusion
For most UAE companies, the direct Corporate Tax cost is 9% of taxable income above AED 375,000. The true amount depends on accounting profit, tax adjustments, deductible expenses, reliefs, losses, credits, and the company’s Free Zone or group position. Compliance costs also vary with the quality of the records and complexity of the business. A timely calculation by BCL Globiz can give management a reliable estimate, reduce filing risk, and help the business meet FTA requirements with confidence.
Reach out to us at info@bcl.ae
