UAE Corporate Tax Calculator 2026 — Estimate Your CT Liability Instantly

How UAE Corporate Tax Works: The Complete 2026 Guide

The Dual-Rate System: 0% and 9%

UAE corporate tax operates on a dual-rate structure. All taxable income up to AED 375,000 is charged at 0% — meaning small and medium-sized businesses effectively pay no tax on their first AED 375,000 of profit. Taxable income above AED 375,000 is taxed at 9%, the standard rate.

The 9% rate applies only to the excess above AED 375,000 — not to the entire profit. This progressive design ensures businesses with modest profits face a very low effective tax rate. For example, on AED 1,000,000 profit, only AED 625,000 is taxed at 9%, resulting in AED 56,250 tax — an effective rate of just 5.63%.

Large multinational enterprise groups with global consolidated revenue exceeding EUR 750 million are subject to the OECD Pillar Two rules and a 15% minimum effective tax rate. This affects only the largest global corporations operating in the UAE.

Small Business Relief (SBR): Who Qualifies?

Small Business Relief allows eligible UAE businesses to elect for zero taxable income for a tax period, effectively paying no corporate tax. To qualify, a business must meet all of the following conditions:

• Revenue threshold: Total revenue for the tax period must not exceed AED 3,000,000.
• UAE resident: The business must be a UAE resident taxable person.
• Not an MNE group member: Cannot be a constituent entity of a Multinational Enterprise group (consolidated global revenue > EUR 750M).
• Election must be made: SBR must be explicitly elected on the corporate tax return — it is not automatic.
• Filing still required: Businesses claiming SBR must still register for CT and file an annual return with the FTA.

SBR cannot be used in conjunction with tax loss carry-forwards. If a business elects SBR, any losses arising from that period cannot be carried forward to future tax periods.

Qualifying Free Zone Persons (QFZP): The 0% Route

Free zone companies that meet the Qualifying Free Zone Person criteria enjoy a 0% corporate tax rate on their qualifying income. This is one of the most significant tax planning considerations for UAE businesses. To qualify, a free zone entity must:

• Maintain adequate substance in their free zone (real operations, employees, assets).
• Earn qualifying income — primarily income from transactions with other free zone persons, qualifying intellectual property, and certain qualifying activities.
• Not have a permanent establishment on the UAE mainland that generates taxable income.
• Comply with the de minimis rule — non-qualifying income must not exceed 5% of total revenue or AED 5 million (whichever is lower).
• Prepare and submit audited financial statements regardless of revenue level.

Non-qualifying income earned by a QFZP is still taxable at 9%. Free zone companies conducting significant business with mainland UAE entities may find QFZP status difficult to maintain without careful structuring.

Key Deductions That Reduce Your Taxable Income

Several categories of expenditure and reliefs can lawfully reduce your UAE corporate tax liability. The most significant include:

• Business expenses: All costs wholly and exclusively incurred for business purposes are deductible — salaries, rent, utilities, marketing, professional fees.
• Depreciation and amortisation: Capital assets may be depreciated per your accounting policy; certain assets qualify for enhanced tax depreciation.
• Interest expenses: Net interest expenses are deductible up to 30% of EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation). Excess interest can be carried forward.
• Qualifying donations: Donations to FTA-approved public benefit entities and charities are deductible within Cabinet-specified limits.
• Tax losses: Losses from one period can be carried forward and offset against up to 75% of taxable income in future periods — indefinitely.
• Participation exemption: Dividends and capital gains from qualifying shareholdings (≥5% for ≥12 months) in UAE or foreign companies are exempt from CT.
• Group relief: UAE corporate groups can transfer tax losses between related companies meeting 75%+ common ownership criteria.

Non-deductible expenses include entertainment above 50%, personal expenses, fines and penalties, and distributions to shareholders. Accurate deduction classification is critical — Essence Accounting's CT specialists ensure every eligible deduction is captured.