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UAE Corporate Tax (9%): Basics for Indian Business Owners

The UAE brought in federal corporate tax for financial years starting on or after 1 June 2023, under Federal Decree-Law No. 47 of 2022. The UAE is still very tax-efficient, but it is no longer “zero tax” for businesses, and non-compliance penalties are strict. Here are the essentials.

Rates

Taxable income Rate
Up to AED 375,000 0%
Above AED 375,000 9%
Qualifying income of a Qualifying Free Zone Person 0%
Large multinational groups (global revenue of EUR 750 million or more) Subject to the UAE’s minimum top-up tax rules

Who must pay?

  • UAE companies, both mainland and free zone.
  • Foreign companies with a Permanent Establishment in the UAE, or managed and controlled from the UAE.
  • Individuals (natural persons) running a business in the UAE, if their business turnover is more than AED 1 million in a calendar year. Salary, personal investment income and personal real estate income are not subject to corporate tax.

There is still no personal income tax on salaries in the UAE.

Small Business Relief

Resident businesses with revenue of AED 3 million or less, in the current period and every previous period, can elect to be treated as having no taxable income.

  • It was originally available for tax periods ending on or before 31 December 2026.
  • The UAE Ministry of Finance has extended it to tax periods ending on or before 31 December 2029 (announced August 2026). The AED 3 million threshold is unchanged.
  • Qualifying Free Zone Persons and members of large multinational groups cannot use it.
  • You must still register and file a (simplified) return. Electing the relief is not the same as being exempt from compliance.

Free zones: 0% is conditional

Holding a free zone licence does not automatically mean 0% tax. A company must be a Qualifying Free Zone Person (QFZP). The broad conditions are:

  1. Adequate substance in the free zone: assets, qualified employees and operating expenses that match the income earned.
  2. Earning qualifying income, broadly from qualifying activities and transactions with other free zone persons or abroad.
  3. De minimis rule: non-qualifying revenue must not exceed the lower of 5% of total revenue or AED 5 million.
  4. Following transfer pricing rules and keeping documentation.
  5. Preparing audited financial statements.
  6. Not choosing to be taxed under the standard regime.

If you breach a condition, the company loses QFZP status for that period and the following four periods. That means 9% on all taxable income for five years.

Registration and filing

  • Registration: every taxable person must register with the Federal Tax Authority (FTA) on the EmaraTax portal. New companies generally have three months from incorporation to register. Late registration: AED 10,000 penalty.
  • Individuals with business turnover above AED 1 million must register by 31 March of the following year.
  • Return and payment: due within nine months of the end of the tax period. For a company with a 31 December year-end, that is 30 September of the next year.
  • Record keeping: generally seven years.

What this means for Indian owners

  • UAE corporate tax is the company’s tax. If you are an Indian resident receiving dividends, India taxes those dividends at your slab rate. The UAE corporate tax paid by the company is generally not available as a credit against your personal Indian tax.
  • If your UAE company is managed from India, Indian tax (POEM) may also apply. See our article on Indian founders with UAE companies.
  • NRIs in the UAE who own their business there generally pay only the UAE corporate tax on business profits. The dividend or salary they take is not taxed in India, provided they are non-resident.

Frequently asked questions

My UAE company earns AED 300,000 profit. Do I pay anything?
The first AED 375,000 of taxable income is taxed at 0%, so there is no tax to pay. You must still register and file your return.

Is my salary from my UAE company taxed?
Not in the UAE: there is no personal income tax on salaries. If you are an Indian resident, it is taxable in India.

Can I use Small Business Relief and the free zone 0% together?
No. Qualifying Free Zone Persons cannot elect Small Business Relief.

What if I missed the registration deadline?
An AED 10,000 penalty applies. The FTA has run waiver schemes for timely first-return filing in some periods. Check current FTA announcements.

Running a business outside India? Garvita Jain & Co. coordinates the Indian side of cross-border businesses: ODI, POEM, dividends and your Indian ITR. We work with UAE tax agents for local filings. Contact us here, or at contact@garvitajainandco.com or +91 98678 16597.

This article is general information based on the law as of October 2026 and is not professional advice. UAE filings should be made through a registered UAE tax agent where required.

Sources

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