UAE corporate tax for free zone companies (2026): 0% or 9%?
“Free zone” does not mean automatically tax-free anymore. Here’s exactly when you keep 0%, when you owe 9%, and the deadline that costs AED 10,000 to miss.
01 The rates, in one table
| Situation | Rate |
|---|---|
| Taxable profit up to AED 375,000 | 0% |
| Taxable profit above AED 375,000 (standard) | 9% |
| Qualifying Free Zone Person — on qualifying income | 0% |
| Free Zone Person — on non-qualifying income | 9% |
| Very large multinationals (revenue €750m+) | 15%* |
*Domestic Minimum Top-up Tax for in-scope multinational groups. Corporate tax applies to financial years starting on or after 1 June 2023.
02 When a free zone company keeps 0%
You stay at 0% only as a Qualifying Free Zone Person (QFZP). All of these must be true:
- Adequate substance in the UAE — real people, premises and activity in the zone, not just a paper address.
- Qualifying income — income from qualifying activities (e.g. trading with other free zone entities, certain wholesale, manufacturing, holding, fund management, logistics). Income from UAE mainland customers is often not qualifying.
- Transfer pricing — arm’s-length pricing with related parties, plus documentation.
- Audited financial statements — mandatory for a QFZP.
- No election out — you haven’t chosen to be taxed at the standard rate.
- De minimis limit — non-qualifying income stays under the lower of 5% of total revenue or AED 5 million. Breach it and you lose QFZP status for that period and typically the next four.
03 The deadline that costs AED 10,000
This is the one that catches people. Registration is mandatory for every company — including a dormant or 0%-rated free zone company — and the deadline is tied to your licence. Miss it and the FTA charges a AED 10,000 administrative penalty.
- Register with the Federal Tax Authority via the EmaraTax portal, by your deadline.
- File a corporate tax return within 9 months of your financial year-end.
- Keep records — and audited statements if you’re claiming QFZP — for at least 7 years.
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Compare all 9 free zones →Frequently asked questions
Do free zone companies pay corporate tax in the UAE?
Not automatically exempt. A free zone company is 0% on qualifying income only if it meets the Qualifying Free Zone Person conditions; otherwise 9% applies on profit above AED 375,000. Every company must still register with the FTA and file.
What is the UAE corporate tax rate in 2026?
0% up to AED 375,000 of taxable profit and 9% above, for years starting on/after 1 June 2023. A QFZP can be 0% on qualifying income. A 15% top-up tax applies to very large multinational groups.
Must a free zone company register even at 0%?
Yes — registration and annual filing are mandatory for every UAE company, even at AED 0 due. Late registration carries an AED 10,000 penalty.
What is a Qualifying Free Zone Person?
A free zone company that qualifies for 0% on qualifying income by maintaining adequate substance, earning qualifying income, complying with transfer pricing, preparing audited financials, not electing standard rate, and staying within the de minimis limit.
What is Small Business Relief?
A resident business with revenue ≤ AED 3 million can elect to be treated as having no taxable income (effectively 0%) for tax periods up to 31 December 2026. It still must register and file.
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