UAE corporate tax applies to most businesses for financial years starting on or after 1 June 2023. Many small businesses pay nothing, but they still have to register, keep records and file a return. Missing those steps is where the penalties come from.

Who pays and how much

• 0% on taxable income up to AED 375,000.
• 9% on taxable income above AED 375,000.
• Qualifying free zone persons pay 0% on qualifying income and 9% on the rest, if they meet every condition.

Small Business Relief

A resident business with revenue of AED 3 million or less in a tax period can elect Small Business Relief and be treated as having no taxable income. It still registers and files a return; the election is made in that return. It is not available to qualifying free zone persons or members of large multinational groups. Check that the relief applies to your tax period before relying on it.

Your checklist

1. Register with the Federal Tax Authority on EmaraTax, even if you expect to pay no tax. Late registration carries a penalty of AED 10,000.
2. Know your tax period. It normally follows your financial year.
3. File the return and pay within nine months of the end of each tax period. For a December year-end, that is 30 September of the following year.
4. Keep records for seven years, including financial statements prepared under IFRS.
5. Audit your accounts if revenue exceeds AED 50 million or you are a qualifying free zone person.
6. Price related-party deals at market value and keep the support.

Where small businesses go wrong

• Not registering because no tax is due.
• Mixing personal and business spending.
• Assuming free zone status means 0% on all income.

Try our free UAE corporate tax calculator, and contact our UAE team for registration and returns.

Frequently asked questions