0% tax supports small businesses and startups by allowing them to grow without immediate tax burdens.
9% tax applies only to profits exceeding AED 375,000; meaning businesses are taxed only on the amount above that threshold.
Large multinational enterprises with global revenue exceeding €750 million pay 15% corporate tax on their UAE income starting January 2025.
What About Free Zone Companies?
Free zone businesses can still enjoy 0% corporate tax on qualifying income, but the conditions are stricter:
They must maintain adequate substance (real presence and activity in the UAE)
Income must be qualifying, typically exports, services to overseas clients, or trading within the same free zone
A Free Zone Person can still qualify for the 0% tax rate even if they earn some non-qualifying income as long as this non-qualifying revenue does not exceed 5% of total revenue or AED 5 million, whichever is lower.
A small startup with AED 200,000 net profit pays 0% corporate tax since its income is below the AED 375,000 threshold.
An SME with AED 500,000 net profit is taxed at 0% on the first AED 375,000, and the remaining AED 125,000 is taxed at 9%, resulting in AED 11,250 tax due.
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