The United Arab Emirates (UAE) has built a global reputation as one of the most attractive destinations for businesses, entrepreneurs, and investors. With its strategic geographic location, world‑class infrastructure, political stability, and investor‑friendly regulations, the UAE continues to be a preferred hub for regional and international operations.
A major development in recent years has been the introduction of UAE Corporate Tax, effective from 1 June 2023. While this marked a shift from the UAE’s long‑standing zero‑tax business environment, it was introduced in a carefully structured manner to ensure continued competitiveness and economic growth. As businesses move into 2026, understanding Corporate Tax rules, compliance obligations, and planning opportunities is no longer optional—it is essential.
This comprehensive guide explains UAE Corporate Tax in detail, including who it applies to, tax rates, Free Zone benefits, compliance requirements, and how professional advisors like HayyaTax support businesses across the UAE.
What Is UAE Corporate Tax?
UAE Corporate Tax is a federal direct tax levied on the net profits of businesses and commercial activities conducted in the UAE. It applies to both mainland and Free Zone entities, as well as certain foreign businesses with a taxable presence in the country.
The Corporate Tax regime has been designed in line with international best practices, particularly the OECD’s Base Erosion and Profit Shifting (BEPS) framework, ensuring transparency while preserving the UAE’s appeal as a low‑tax jurisdiction.
UAE Corporate Tax Rates
The UAE has adopted a tiered tax system:
- 0% Corporate Tax on taxable profits up to AED 375,000
- 9% Corporate Tax on taxable profits exceeding AED 375,000
- 0% Corporate Tax for Qualifying Free Zone Persons, subject to conditions
This structure ensures that startups, SMEs, and early‑stage businesses are protected, while larger and more profitable companies contribute at a globally competitive rate.
Who Is Subject to Corporate Tax in the UAE?
Corporate Tax applies broadly to entities and individuals engaged in business activities in the UAE.
Entities Subject to Corporate Tax
- Mainland companies licensed in the UAE
- Free Zone companies (unless qualifying for exemption)
- Foreign companies with a Permanent Establishment (PE) in the UAE
- Individuals conducting business activities under a commercial or professional license
Entities Exempt from Corporate Tax
Certain entities are exempt, including:
- Government entities and government‑controlled entities
- Public benefit entities approved by the authorities
- Extractive and non‑extractive natural resource businesses (subject to Emirate‑level taxation)
- Individuals earning salary income (employment income remains tax‑free)
Understanding whether your business falls under taxable or exempt status is critical and often requires professional evaluation.
Free Zone Corporate Tax: Key Advantages & Conditions
Free Zones continue to play a vital role in the UAE’s investment ecosystem. Businesses operating in Free Zones can still benefit from 0% Corporate Tax if they qualify as a Qualifying Free Zone Person (QFZP).
Conditions to Qualify for 0% Corporate Tax
To maintain 0% tax status, Free Zone entities must:
- Maintain adequate economic substance in the UAE
- Earn qualifying income as defined by law
- Comply with Transfer Pricing regulations
- Not conduct excluded activities
- File an annual Corporate Tax return
Failure to meet these conditions may result in the entity being taxed at the standard 9% rate.
Transfer Pricing & Related Party Transactions
UAE Corporate Tax law places strong emphasis on Transfer Pricing, especially for businesses with related‑party or cross‑border transactions.
Businesses must ensure that transactions are conducted at arm’s length and maintain proper documentation, including:
- Local File
- Master File (where applicable)
- Transfer Pricing disclosures
Professional guidance is strongly recommended to avoid penalties and disputes.
Common Corporate Tax Challenges for Businesses
Many UAE businesses face challenges such as:
- Determining taxable income accurately
- Understanding Free Zone eligibility
- Managing cross‑border transactions
- Handling FTA audits and penalties
- Aligning accounting practices with tax requirements
These challenges highlight the importance of working with experienced tax professionals.
How HayyaTax Supports UAE Businesses
HayyaTax is a UAE‑based professional tax consultancy specializing in Corporate Tax, VAT, and Federal Tax Authority compliance. We help businesses adapt to the evolving tax environment with confidence and clarity.
HayyaTax Corporate Tax Services
- UAE Corporate Tax registration
- Corporate Tax impact assessment and planning
- Free Zone eligibility and restructuring advisory
- Corporate Tax return preparation and filing
- Transfer Pricing documentation and advisory
- FTA audit support and penalty assistance
- Ongoing tax compliance and advisory services
At HayyaTax, our approach is practical, transparent, and tailored to each client’s business model. We focus not only on compliance, but also on tax efficiency and long‑term sustainability.
Why the UAE Remains a Global Business Hub
Despite the introduction of Corporate Tax, the UAE continues to offer unmatched advantages:
- One of the lowest corporate tax rates globally
- No personal income tax
- Strong double taxation avoidance treaty network
- Stable regulatory and legal framework
- Access to global markets
With proper planning and expert support, businesses can continue to grow and prosper in the UAE.
Conclusion
UAE Corporate Tax represents a strategic evolution rather than a barrier to business. Companies that understand the law, maintain compliance, and implement effective tax planning strategies will remain competitive and profitable.
If you are unsure about your Corporate Tax obligations or Free Zone status, HayyaTax is ready to assist you at every step.
Contact HayyaTax today for professional UAE Corporate Tax advisory and seamless compliance support.