What is Corporate Tax?
By Kitaab on June 18, 2025
Corporate tax in the UAE is a federal tax on business profits, effective from June 2023 and applies uniformly across all Emirates. Businesses earning profits of AED 375,000 and above are taxed at a 9% rate, while profits below this threshold are taxed at 0%. The tax aligns the UAE with global standards while preserving its business-friendly environment.
The introduction of this tax marks a significant shift in the UAE’s business landscape, especially as the country was long known for its zero-tax environment.
Corporate tax is calculated annually and applies only if a business’s taxable income exceeds AED 375,000, beyond which a 9% tax is levied. Businesses earning below this threshold are taxed at 0%.
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Learn moreWhy Was Corporate Tax Introduced?
The UAE implemented corporate tax to:
Align with global tax standards such as the OECD’s Base Erosion and Profit Shifting (BEPS) framework.
Diversify government revenue away from oil and ensure long-term economic sustainability.
Enhance transparency and improve the UAE’s position in global financial markets.
Despite the introduction of corporate tax, the UAE continues to offer a competitive business environment with one of the lowest tax rates globally.
Who Does Corporate Tax Apply To?
Corporate tax applies to:
All UAE-incorporated businesses, including mainland and free zone companies (with some exceptions).
Foreign legal entities if they earn income from the UAE or have a permanent establishment here.
Natural persons (individuals) conducting business or commercial activity in the UAE above a certain threshold.
However, the following are not subject to corporate tax:
Salaried individuals and employees
Real estate investments made in a personal capacity (not as a licensed business)
Dividends and capital gains earned by individuals from personal investments
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