VERIFIED 2026 · FORMENZO
Is a UAE free-zone company tax-free?
A UAE free-zone company is highly tax-efficient but not entirely tax-free in 2026. Personal income tax is 0%. Corporate tax is 0% for a Qualifying Free Zone Person on qualifying income, otherwise 9% on profits above AED 375,000. VAT of 5% applies once taxable supplies exceed AED 375,000 a year. There is 100% foreign ownership and full profit repatriation.
Formenzo publishes real, all-in 2026 figures, confirmed in writing, with no sales call. See the full Cost Index or the open price dataset (CC-BY).
Build your exact price →By the Formenzo Research Team · compare all 9 zones
What "tax-free" means in practice
Three separate figures on this page do different jobs. The 0% personal rate covers salaries and dividends you take out. The 0% corporate rate applies only to qualifying income of a Qualifying Free Zone Person; anything outside that definition is taxed at 9% once profits pass AED 375,000. VAT is a third, unrelated test — 5% once taxable supplies cross AED 375,000 a year, measured on turnover rather than profit. The corporate tax guide and the accounting and VAT page unpack each one.
Who benefits most from the regime
The rules favour companies whose income is naturally qualifying: firms trading with other free-zone entities, distribution businesses operating from designated zones, and holding companies earning dividends. A consultancy whose clients sit mainly on the UAE mainland should instead budget for 9% on profits above the threshold.
Two things founders ask
Do we register with the Federal Tax Authority even at 0%? Yes. Corporate-tax registration and an annual return are compulsory for every free-zone company, whatever rate it ends up paying.
What could cost us Qualifying Free Zone Person status? Missing audited financial statements, insufficient substance in the zone, or earning too much non-qualifying income — the conditions are tested each financial year.