Who Is Required to Pay Corporate Tax in the UAE? Companies, Free Zones, Foreign Entities, Individuals and Exemptions (2027 Guide)
Taxable Persons Explained: Mainland and Free Zone Companies, Foreign Companies, Freelancers and the AED 1 Million Rule, Partnerships, Exempt Persons, Registration Deadlines and Penalties
Quick Summary: UAE Corporate Tax is paid by taxable persons: UAE companies, including free zone companies, foreign companies managed from the UAE or with a UAE branch or property income, and individuals whose business turnover exceeds AED 1 million in a calendar year. Employees and personal investors are generally outside the tax, and some exempt persons must still register. This guide uses charts, tables and registration deadlines to show who pays, who does not and what happens if you miss registration.
📋 Table of Contents
- Introduction: Taxable Persons, Not Just Companies
- Quick Answer: Who Pays and Who Does Not
- The Legal Basis and the Taxable Person Test
- UAE Companies: Mainland and Free Zone
- Foreign Companies: Management, Branches and Nexus
- Individuals and Freelancers: The AED 1 Million Rule
- Partnerships and Family Foundations
- Exempt Persons and How They Register
- Rates, Thresholds and Reliefs
- Who Must Register and When
- Who Is Not Required to Pay
- Sector Snapshots: Retail, Restaurants, Finance, Funds and Groups
- Penalties and Ongoing Compliance
- Common Mistakes to Avoid
- 6 Steps to Check Whether You Must Pay
- How One Desk Solution Can Help
- Frequently Asked Questions
- Related Resources
🚀 Introduction: Taxable Persons, Not Just Companies
UAE Corporate Tax is not limited to large companies. It applies to "taxable persons", a group that includes UAE-incorporated companies in the mainland and free zones, foreign companies managed from the UAE or operating through a UAE branch, and individuals who run a business with turnover above AED 1 million in a calendar year. The standard rate is 9% on taxable income above AED 375,000, with 0% on the first AED 375,000.
Just as important is who is not required to pay. Salaries, personal investment income and personal rental income fall outside the tax, non-residents with only UAE-sourced income and no UAE presence do not need to register, and some exempt persons are outside the tax altogether. Being in the 0% band or being exempt does not always remove the duty to register, which is where many businesses go wrong.
This guide sorts each group with charts and tables, using the FTA's published guidance and professional summaries of the Federal Decree-Law No. 47 of 2022, which the FTA says took effect on 1 June 2023. Our tax services and business setup teams help new and existing businesses work out their status before the deadlines bite.
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✅ Quick Answer: Who Pays and Who Does Not
| Who you are | Subject to Corporate Tax? | Key point |
|---|---|---|
| UAE company, mainland or free zone | Yes | Resident taxable person; 0% up to AED 375,000, 9% above |
| Qualifying Free Zone Person | Yes, with 0% on qualifying income | Non-qualifying income is taxed at 9% |
| Foreign company managed and controlled in the UAE | Yes | Treated as resident |
| Foreign company with a UAE branch or nexus | Yes, on UAE-attributable income | Branch means a permanent establishment; nexus includes UAE property income |
| Foreign company with only UAE-sourced income | No registration needed | No branch or nexus, per the FTA guide |
| Individual or freelancer with business turnover above AED 1M | Yes, on business income | Measured per calendar year |
| Employee, personal investor or private landlord | No | Salary, personal investments and personal real estate are outside the scope |
| Unincorporated partnership | Generally transparent | Partners are taxed on their shares, unless the partnership elects otherwise |
| Exempt person | Exempt, if conditions are met | Some must apply, and some must register |
| Large multinational group | Yes, plus top-up tax | 15% minimum for groups with EUR 750 million or more of consolidated revenue |
⚖️ The Legal Basis and the Taxable Person Test
The charge to tax comes from Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. The law taxes a "taxable person", which is either a resident person or a non-resident person with a link to the UAE. The chart shows where common situations land.
Are You a Taxable Person? Status by Situation
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Based on FTA guidance on non-resident persons and natural persons, FTA Decision No. 3 of 2024 as summarised by DLA Piper, and Ministry of Finance announcements. Your own facts decide the answer.
Law changes since 2023: Federal Decree-Law No. 28 of 2025 amended the law. A summary we reviewed describes changes to the settlement order of tax credits and a new article on claiming unused credits, not a change in who is taxable. The Tax Procedures Law was also amended from 1 January 2026. Read the current text or ask an adviser if your position depends on a recent change.
🏢 UAE Companies: Mainland and Free Zone
A company incorporated or established in the UAE is a resident taxable person. That includes mainland companies, free zone companies and other UAE entities with their own legal personality. Banks, insurers and other regulated businesses are not among the exempt categories, so they are generally taxable too.
- Free zone companies are taxable persons: a Qualifying Free Zone Person pays 0% only on qualifying income, and 9% on other income. Failing the conditions can mean the 9% rate applies to all income, as our guide on how a retail business can optimize its tax structure explains for consumer sales.
- No profit is no excuse: being inside the 0% band for the first AED 375,000 does not by itself remove the duty to register and file. The FTA has said the same about eligibility for Small Business Relief.
- Licensed financial institutions: Corporate Tax sits alongside Central Bank duties, covered in our guides to Central Bank reporting obligations and how to comply with Central Bank requirements.
🌍 Foreign Companies: Management, Branches and Nexus
A foreign company can be a UAE taxpayer in three ways. The test is about the company's connection to the UAE, not where it is incorporated.
| Connection to the UAE | Corporate Tax result |
|---|---|
| Effectively managed and controlled in the UAE | Grouped with resident juridical persons in DLA Piper's summary of FTA Decision No. 3 of 2024 |
| Permanent establishment: any fixed place of business or other form of presence in the UAE | Non-resident taxable person; must register and obtain a Tax Registration Number |
| Nexus: for example, income from immovable property in the UAE | Non-resident taxable person; must register |
| State-sourced income only, with no permanent establishment or nexus | Not required to register, per the FTA guide |
A foreign group running a UAE branch should also check related-party pricing between the branch and head office, which we cover in our guide to multinational company transfer pricing.
👤 Individuals and Freelancers: The AED 1 Million Rule
Individuals are taxable only for business activity in the UAE, and only when their total turnover exceeds AED 1 million within a Gregorian calendar year. The Ministry of Finance clarified that wages and personal investment income fall outside the scope under Cabinet Decision No. 49 of 2023, and that rental income from personal property is not taxable.
How the AED 1 Million Threshold Applies to Individuals
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Illustrative amounts. Based on FTA and Ministry of Finance statements reported by the FTA and Khaleej Times. The threshold is measured on turnover from business activity, per calendar year.
- Counts: income earned outside an employment contract, such as freelance, consulting, influencer or artist fees, if turnover from the activity exceeds AED 1 million.
- Does not count: salary and bonuses, income from personal shares and bonds, and personal rental income.
- Mixed income: a person with a salary and a business is taxed only on the business, and only if business turnover passes the threshold.
- Non-resident individuals: subject to tax where a UAE permanent establishment has turnover above AED 1 million in a calendar year, as the FTA guide states.
- Registration: residents register before 31 March of the following Gregorian year, and non-residents within three months of becoming a UAE taxpayer, per DLA Piper's summary of FTA Decision No. 3 of 2024.
Worked example: a consultant just above the threshold
An illustrative consultant has licensed turnover of AED 1,200,000 and deductible business expenses of AED 700,000, giving taxable income of AED 500,000. Assuming the standard bands apply, the tax is 9% of AED 125,000 (the amount above AED 375,000), or AED 11,250. At turnover of AED 900,000 the same person is below the threshold and is not subject to the tax. These are rounded, illustrative figures, not advice.
🤝 Partnerships and Family Foundations
Partnerships without separate legal personality are treated differently from companies. Under FTA Decision No. 5 of 2025, summarised by Deloitte, unincorporated partnerships are generally fiscally transparent, effective 1 July 2025.
| Vehicle | Who pays Corporate Tax | What it means |
|---|---|---|
| Unincorporated partnership (default) | The partners, on their shares | The partnership files an annual declaration; one partner is the authorised representative for registration |
| Partnership that elects to be a taxable person | The partnership itself | The FTA must approve the application; it is then treated as a resident juridical person |
| Foreign partnership meeting the conditions | The partners | A partner files the annual declaration with their own return |
| Family foundation | Depends on the application and conditions | Can apply to be treated as an unincorporated partnership, with an annual confirmation of continued compliance |
🛡️ Exempt Persons and How They Register
Some persons are exempt, but exemption depends on category and conditions, and the FTA does not treat all of them the same way for registration.
Exempt Persons: How the Exemption Arises and Whether They Register
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Based on the FTA's exempt person page. The page does not set out the detailed conditions for each category, so check the legislation and FTA guidance.
- Registration dates: the FTA page shows registration required from 1 October 2023 for government-controlled entities and qualifying public benefit entities, and from 1 June 2024 for the categories that apply to the FTA for approval.
- Taxable activities: exempt government entities and extractive businesses must register if they also carry on a taxable business.
- Investment funds: a fund must apply and be approved to be a qualifying investment fund. Our guide on investment fund accounting in the UAE covers the records such vehicles keep.
📊 Rates, Thresholds and Reliefs
UAE Corporate Tax Rates at a Glance
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Standard bands per the Corporate Tax Law. Top-up tax per EY's summary of Cabinet Decision No. 142 of 2024. Small Business Relief extension per Gulf News (2026).
| Item | Rule |
|---|---|
| Standard rate | 0% on the first AED 375,000 of taxable income, 9% above it |
| Return deadline | Nine months after the end of the tax period |
| Small Business Relief | Revenue of AED 3 million or less; elected in the return; extended to tax periods ending on or before 31 December 2029 under Ministerial Decision No. 131 of 2026 |
| Qualifying Free Zone Person | 0% on qualifying income only, with conditions and a de minimis limit on other revenue |
| Domestic Minimum Top-up Tax | 15% minimum effective rate for groups with consolidated revenue of EUR 750 million or more in two of the last four years, for fiscal years starting on or after 1 January 2025 |
Large groups should also review related-party pricing and connected-person payments, as explained in our guide to multinational company transfer pricing.
📝 Who Must Register and When
Registration is separate from payment. A taxable person must register and obtain a Tax Registration Number, and the deadline depends on who you are. The deadlines below are for new taxpayers, from DLA Piper's summary of FTA Decision No. 3 of 2024.
Registration Clocks for Newly Taxable Persons
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Months allowed to register, per DLA Piper's summary of FTA Decision No. 3 of 2024. Earlier cohorts had fixed 2024 deadlines that have passed. Confirm the current decision for your case.
| Taxpayer | Registration deadline |
|---|---|
| UAE entity established on or after 1 March 2024 | Within three months of incorporation or establishment |
| Foreign entity managed and controlled in the UAE | Within three months after the end of its financial year |
| Non-resident with a permanent establishment created on or after 1 March 2024 | Within six months of its creation |
| Non-resident with a nexus established on or after 1 March 2024 | Within three months of the nexus |
| Resident individual above AED 1M turnover | Before 31 March of the following calendar year |
| Non-resident individual | Within three months of becoming a UAE taxpayer |
| Unincorporated partnership | Within three months of the end of its first tax period, where that period ends on or after 1 July 2025, per Deloitte |
🚫 Who Is Not Required to Pay
- Employees: salaries and bonuses are outside Corporate Tax.
- Personal investors and private landlords: income from personal shares, bonds and rental property is outside the scope, as the Ministry of Finance clarified.
- Individuals below the threshold: business turnover of AED 1 million or less in the calendar year.
- Non-residents with only UAE-sourced income: no branch and no nexus means no registration under the FTA guide.
- Exempt persons: those who meet the conditions of their category.
- Transparent partnerships: the partnership itself does not pay, though its partners may.
Not required to pay is not the same as not required to register: exempt persons in some categories, free zone persons earning 0% and small businesses using relief generally still have registration or filing duties. Check your category before you assume you can ignore the FTA.
🧭 Sector Snapshots: Retail, Restaurants, Finance, Funds and Groups
| Sector | Corporate Tax angle | Related guide |
|---|---|---|
| Retail | Free zone 0% does not usually cover sales to individuals; Small Business Relief for revenue up to AED 3 million | Retail tax structure |
| Restaurant chains | A Corporate Tax group can differ from a VAT group for the same structure, so plan each separately | Restaurant chain VAT |
| Banks, insurers and finance companies | Not among the exempt categories; Central Bank reporting runs alongside tax | Central Bank reporting |
| Investment funds | Exempt only if approved as a qualifying investment fund | Fund accounting |
| Multinational groups | Possible 15% top-up tax; related-party pricing must be arm's length | Transfer pricing |
⏰ Penalties and Ongoing Compliance
| Duty | Rule |
|---|---|
| Register on time | A one-off AED 10,000 penalty applies for late registration under Cabinet Decision No. 75 of 2023, as summarised by QAS Pro Global. A waiver applies to those who filed their first return within seven months of the end of their first tax period, and some windows have closed |
| File the return | Due nine months after the period end. Late filing is AED 500 a month for the first 12 months, then AED 1,000 a month, per the same source |
| Keep records | Keep accounting records and supporting documents, commonly stated as seven years for Corporate Tax |
| Tax procedures from 1 January 2026 | Amendments introduced a five-year window to request refunds or credits and allow FTA binding directions, per Gulf News |
Our accounting & bookkeeping services team keeps the books that support the return, and our audit & assurance services team can review them before you file.
⚠️ Common Mistakes to Avoid
- Assuming a free zone company is outside Corporate Tax because it is in a free zone.
- Not registering because profit is below AED 375,000.
- Treating the AED 1 million rule as a profit test, when it is a turnover test for business activity.
- Counting salary or personal rental income towards the AED 1 million threshold.
- Assuming a foreign company with a UAE branch is outside the tax because it is incorporated abroad.
- Assuming exempt status removes all registration duties.
- Missing the registration deadline and then missing the shorter waiver window.
- Assuming a VAT group and a Corporate Tax group are the same.
🪜 6 Steps to Check Whether You Must Pay
Identify what you are
Decide whether you are a UAE company, a foreign company, an individual running a business, a partnership or a possible exempt person.
Check your connection to the UAE
For foreign entities, test for UAE management and control, a permanent establishment or a UAE property-income nexus.
Test individuals against the AED 1 million rule
Add up turnover from business activity for the calendar year and exclude salary and personal investment income.
Check exemptions and reliefs
Confirm any exempt category, Qualifying Free Zone Person status or Small Business Relief, and note what each requires.
Register within your deadline
Use the deadline for your category and register for a Tax Registration Number even where you expect no tax.
Set up books and a filing calendar
Keep monthly records and diarise the return due nine months after your period end.
💼 How One Desk Solution Can Help
Our tax services team can confirm your Corporate Tax status, register you and prepare returns. Our accounting & bookkeeping services team keeps the books behind them, and our audit & assurance services team reviews records and controls. Our advisory & consultancy services team helps with structures such as groups and partnerships, and our business setup team helps you choose a licence and entity with the tax result in mind. Browse everything on our services page.
❓ Frequently Asked Questions
Q1: Who is required to pay corporate tax in the UAE?
Taxable persons pay Corporate Tax. These are UAE companies, including free zone companies, foreign companies managed and controlled in the UAE, foreign companies with a UAE branch or nexus such as property income, and individuals whose business turnover exceeds AED 1 million in a calendar year. The rate is 0% on the first AED 375,000 of taxable income and 9% above it. Employees and personal investors are generally outside the tax, and exempt persons are exempt if they meet the conditions.
Q2: Do individuals and freelancers pay corporate tax in the UAE?
Only for business activity, and only if turnover from it exceeds AED 1 million in a Gregorian calendar year. The Ministry of Finance has said that salaries, personal investment income and personal rental income fall outside Corporate Tax. A freelancer with licensed turnover of AED 900,000 is below the threshold, while one with AED 1,200,000 is above it and taxed on business income.
Q3: Do free zone companies have to pay corporate tax?
Free zone companies are taxable persons. A Qualifying Free Zone Person pays 0% on qualifying income and 9% on other income, and must meet conditions including a limit on non-qualifying revenue. Sales to individuals are generally excluded from qualifying income. A free zone company that fails the conditions can lose the 0% status, so check your position before relying on it.
Q4: Which businesses are exempt from corporate tax in the UAE?
Exempt categories include government entities, extractive and natural resource businesses, government-controlled entities and qualifying public benefit entities listed in a Cabinet Decision, and qualifying investment funds, pension and social security funds and certain wholly owned subsidiaries that apply to the FTA. Government entities and extractive businesses need not register unless they carry on a taxable business, while other categories must register.
Q5: Do I need to register for corporate tax if my profit is below AED 375,000?
Usually yes, if you are a taxable person. The first AED 375,000 of taxable income is taxed at 0%, but that does not remove the duty to register and file. Late registration carries a AED 10,000 penalty, and the return is due nine months after the end of the tax period. Individuals are different, because they need to register only once business turnover exceeds AED 1 million in a calendar year.
🔗 Related Resources
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