Executive Summary: UAE corporate tax is set by Federal Decree-Law No. 47 of 2022, effective for financial years starting on or after 1 June 2023. It is not a single rate. Taxable income up to AED 375,000 is taxed at 0% and income above it at 9%, a Qualifying Free Zone Person can still earn 0% on qualifying income under Cabinet Decision No. 100 of 2023 and Ministerial Decision No. 229 of 2025, dividends and capital gains can be fully exempt under the participation exemption in Articles 22 and 23, small businesses under AED 3 million in revenue can elect to pay nothing through 2029, and only very large multinationals face the 15% Domestic Minimum Top-up Tax. Personal income tax remains 0%. GenZone builds the company, the residency, and the compliance so your position is defensible from day one.
Ask ten people what corporate tax you pay in Dubai and you will get two answers that contradict each other. Half will tell you Dubai is tax free. The other half will tell you there is now a 9% tax and the party is over. Both are wrong as blanket statements, and the gap between them is where most of the confusion, and most of the bad structuring, happens.
Here is the truth, taken directly from the law that defines it. UAE corporate tax for businesses is governed by Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, issued on 9 December 2022 and effective for financial years beginning on or after 1 June 2023, together with a series of Cabinet and Ministerial Decisions that fill in the detail.
Read together, they do not set one rate. They set a tiered system, and which tier touches you depends on what you are, where you are set up, and what kind of income you earn. Once you see the tiers clearly, the “0% versus 9%” argument dissolves, and the structure that keeps an internationally mobile founder at or near 0% becomes obvious.
This guide is the definitive plain-language explainer of the corporate tax law from the perspective of what actually matters to a founder relocating from a high-tax country. For the personal side of the move, see our guide on UAE tax residency and the 90-day rule. For the complete picture of how a 0% position is built, see 0% Tax in Dubai: The Complete Blueprint.
First, Untangle Three Things People Wrongly Call “Dubai Tax”
Almost every mistake in this topic comes from collapsing three separate things into one. Get them straight and the rest is simple.
Personal income tax is what you pay on your salary, your personal investment returns, and money you draw for yourself. In the UAE this is still 0%. Nothing in the corporate tax law changed that. A founder living in Dubai who draws a salary from their company pays no personal income tax on it.
Corporate tax is what a business pays on its profits. This is the tax that Federal Decree-Law No. 47 of 2022 introduced. It runs at 0%, 9%, or in rare cases 15%, and the rest of this article is about how those tiers work.
Reliefs and exemptions are the carve-outs that can take taxable profit back down to zero even when the 9% rate would otherwise apply. Small Business Relief, the Qualifying Free Zone Person regime, and the participation exemption for dividends and capital gains all sit here. Most founders who structure well end up paying far less than the 9% headline suggests, and many pay nothing, precisely because of these.
Confusing the headline 9% with your actual bill is the single most common error we see. The headline is where the conversation starts, not where it ends.
What the Law Actually Says: A Tiered System, Not One Rate
Under Federal Decree-Law No. 47 of 2022, a UAE business faces one of three effective outcomes, and the reliefs can move you between them.
The 0% tier. This applies to the first AED 375,000 of taxable income for every business, to a Qualifying Free Zone Person on its qualifying income, to a small business that elects Small Business Relief, and to income that is specifically exempt such as qualifying dividends and capital gains.
The 9% tier. This is the standard rate. It applies to taxable income above AED 375,000 for a mainland company, and to the non-qualifying income of a free zone company.
The 15% tier. This is the Domestic Minimum Top-up Tax under Cabinet Decision No. 142 of 2024. It applies only to members of multinational groups with global revenue of US $870 million. If that is not you, it is not your concern, and we explain why below.
That is the whole framework. The reason “Dubai is tax free” and “Dubai now taxes you 9%” both circulate is that they are each describing one tier and ignoring the others. Neither is the universal answer.
The 9% Headline and the AED 375,000 Threshold
Start with the baseline, because every business sits on top of it. Under the law, the first AED 375,000 of taxable income is taxed at 0%, and everything above that is taxed at 9%. The rate applies equally to a mainland company and, for its non-qualifying income, to a free zone company. The Federal Tax Authority administers registration, filing, and payment through its EmaraTax portal.
Two points matter here. Taxable income is not the same as revenue. It is accounting profit adjusted for the specific add-backs and deductions the law requires, so ordinary business costs, salaries, rent, and the like reduce the figure the 9% is calculated on. And the 9% rate is low by any international comparison. A founder arriving from a country with a 25% to 35% corporate rate, on top of personal income tax on every dividend, is looking at a very different arithmetic even before any relief is applied.
For many businesses, though, the goal is to stay off the 9% tier entirely. That is what the next sections are about.
The 0% Free Zone Route: The Qualifying Free Zone Person
For internationally mobile founders, the Qualifying Free Zone Person regime, usually shortened to QFZP, is the route that matters most, because it can keep qualifying income at 0% rather than 9%. It is also the route people misunderstand most, because they assume that simply registering in a free zone delivers the 0% rate automatically. It does not. The 0% rate is conditional, and the conditions are strict.
The 0% is on qualifying income, not all income
A QFZP pays 0% on its qualifying income and 9% on its non-qualifying income. The two are not blended. This is the point casual summaries miss most often. Being in a free zone does not make your income qualifying by default. Qualifying income is defined by Cabinet Decision No. 100 of 2023, and it is a closed list, not a general category. Income that does not appear on the list is non-qualifying by definition.
In broad terms, qualifying income includes income from transactions with other free zone persons where that person is the genuine end user of the goods or service, and income from a defined set of qualifying activities carried on with any counterparty. The current list of qualifying and excluded activities lives in Ministerial Decision No. 229 of 2025, which replaced the earlier Ministerial Decision No. 265 of 2023 and applies retroactively from 1 June 2023.
That 2025 update widened the door, bringing in areas such as commodity trading and treasury and financing services for the company’s own account, so more free zone businesses now qualify than did under the original list. For a fuller breakdown, see our guide to the 2026 QFZP rules.
The conditions you have to meet at the same time
To be a QFZP, a free zone company must satisfy all of the following together. It must be a juridical person, meaning a company with its own legal personality, because a natural person cannot be a QFZP. It must maintain adequate substance in the free zone, meaning the core income-generating activity actually happens in the UAE with real staff, premises, and spending behind it, rather than a nameplate.
It must earn only qualifying income, or keep any non-qualifying income within the de minimis limit described below. It must comply with the transfer pricing rules in the corporate tax law. It must prepare audited financial statements, a requirement confirmed by Ministerial Decision No. 84 of 2025. And it must not have elected to be taxed at the standard 9% rate, which a free zone company is free to do if it prefers simplicity.
Miss any single one of these, not just the de minimis test, and the company loses QFZP status. You can test your own position quickly with our QFZP eligibility checker before you commit to a structure.
The de minimis limit
The law allows a QFZP to earn a small amount of non-qualifying income without losing the 0% rate. Under Cabinet Decision No. 100 of 2023 and the implementing decisions, the de minimis requirement is met where non-qualifying revenue does not exceed the lower of 5% of total revenue or AED 5 million in the tax period. Cross that ceiling and the consequence is severe.
Why the penalty for getting it wrong is so heavy
This is the part that makes professional structuring worth it. If a QFZP breaches the conditions, it does not simply pay 9% on the offending slice. It loses QFZP status entirely for that tax period and for the following four tax periods, a five-year lockout during which the standard 9% rate applies to all of its taxable income, not just the part that caused the breach.
There is no partial version of this penalty. That is the difference between a defensible 0% position and a fragile one, and it is why the substance, the activity mix, and the de minimis math need to be right from the start rather than fixed after a filing.
Dividends and Capital Gains: The Participation Exemption
For founders relocating from high-tax countries, this is often the most valuable part of the entire regime, because it directly addresses the tax on dividends, share sales, and gains that their home country used to take.
Under Article 22 of the corporate tax law, dividends and profit distributions received from a UAE resident company are exempt from corporate tax with no further conditions. A UAE holding company receiving dividends from a UAE subsidiary simply does not pay tax on them.
Under Article 23, the participation exemption extends the same idea across borders and to capital gains. Dividends, capital gains, and liquidation proceeds from a qualifying shareholding, called a Participating Interest, are exempt from the 9% corporate tax.
The shareholding qualifies where the UAE company holds at least 5% of the shares, or an ownership interest that cost at least AED 4 million, held for an uninterrupted period of at least 12 months, in a company that is subject to tax at a rate of at least 9% or meets the related tests. The current rules sit in Ministerial Decision No. 302 of 2024, which replaced Ministerial Decision No. 116 of 2023 for tax periods from 1 January 2025.
The practical effect is powerful. A founder who builds or holds operating companies and later sells them, or who receives dividends up a group, can structure so that those flows are exempt in the UAE rather than taxed. Combined with 0% personal income tax on what they then draw for themselves, the result is a genuinely low total burden that is very hard to match in a traditional high-tax jurisdiction. Building this correctly is part of what we handle when we set up your Dubai company and group structure.
Small Business Relief: The AED 3 Million Route to Zero
Alongside the free zone regime, there is a simpler path to 0% for smaller businesses. Under Article 21 of the corporate tax law and Ministerial Decision No. 73 of 2023, a UAE resident business with revenue at or below AED 3 million in the current tax period, and in every prior tax period since 1 June 2023, can elect to be treated as having no taxable income. In plain terms, it pays no corporate tax for that period.
Three things about it are easy to get wrong. The relief is not automatic. You have to elect it on your corporate tax return, every year you want it. The AED 3 million figure is a revenue test, not a profit test, and it looks at your history, so a single earlier year above the ceiling closes the door for later years. And electing it suspends your ability to carry forward tax losses and certain interest costs for that period, which is a genuine trade-off for a business that is investing heavily.
The relief was originally due to end with tax periods closing on 31 December 2026. That has now changed. Ministerial Decision No. 131 extended Small Business Relief so that eligible businesses can continue to claim it through tax periods ending on or before 31 December 2029, with the AED 3 million threshold unchanged.
We covered this development in detail in our note on the Small Business Relief extension to 2029. One caveat worth stating plainly: Small Business Relief is not open to a Qualifying Free Zone Person or to a member of a large multinational group, so it is a route for smaller standalone businesses rather than something every structure can stack.
Natural Persons and Freelancers: The AED 1 Million Line
Corporate tax does not only reach companies. It can reach individuals who carry on a business in their own name. Under Cabinet Decision No. 49 of 2023, a natural person is subject to corporate tax only where the total turnover from their business or business activities exceeds AED 1 million within a Gregorian calendar year. Below that line, no corporate tax applies and no registration is required.
What sits outside the count matters as much as the threshold. Wages and other employment income, personal investment income, and real estate investment income held in a personal capacity without a licence are all disregarded, and none of them count toward the AED 1 million. So a salaried executive, or someone earning rent on personally held property, is not pulled into corporate tax by that income at all.
Once a natural person does cross the line on genuine business turnover, the same 0% up to AED 375,000 and 9% above structure applies to the profit. Note too that the QFZP 0% regime is for companies, not individuals, so a freelancer operating in their own name is taxed under these natural-person rules rather than the free zone rules.
The 15% Tier: Why the Global Minimum Tax Almost Certainly Is Not Your Problem
A lot of headlines in 2025 announced a 15% tax in the UAE, and this frightened founders who assumed it applied to them. For the overwhelming majority, it does not.
The 15% figure comes from the Domestic Minimum Top-up Tax, introduced by Cabinet Decision No. 142 of 2024 and effective for financial years starting on or after 1 January 2025. It implements the OECD’s global minimum tax, known as Pillar Two, and it ensures a minimum effective tax rate of 15% in the UAE. But it applies only to multinational enterprise groups with consolidated global revenue of approximately US $870 million in at least two of the four preceding years.
This is a rule for the largest global groups, not for founders, small companies, or ordinary free zone businesses. The UAE chose to adopt only this top-up tax and did not bring in the wider Pillar Two collection rules. If your group is nowhere near US $870 million, the 15% tier is simply not part of your picture, and your position remains governed by the 0% and 9% tiers described above.
Companies Have a Tax Residency Too
One more piece completes the corporate side. Under Article 3 of the corporate tax law, a company incorporated or otherwise recognised in the UAE is a UAE tax resident, which is what allows it to access the UAE’s tax treaty network and the exemptions above. This excludes a local branch of a foreign company.
A company formed abroad can also be treated as UAE tax resident if it is effectively managed and controlled from the UAE, meaning the real decisions are made here. This matters for how a cross-border group is arranged, and our tax and accounting team handles the corporate residency and filing side so the company position is as clean as the personal one.
The Bigger Picture: Personal and Corporate Together
The reason founders move to the UAE is not any single rate. It is the combination. On the personal side, income tax is 0%, so salary and personal investment returns are kept in full, and UAE tax residency can be established on as little as 90 days a year with the right structure.
Meanwhile, on the corporate side, the first AED 375,000 of profit is free, a well-built free zone company can keep qualifying income at 0%, dividends and capital gains can be exempt under the participation exemption, and even where the 9% rate applies it is a fraction of what a high-tax home country charges.
Put those together and you have the core of the 0% tax blueprint: a founder who lives in the UAE, runs a genuine company here, and draws income here can lawfully reduce the tax previously paid to their home government on dividends, gains, and business profits to a level that is often close to zero. The essential caveat is that your home country applies its own exit and residency rules, so leaving its tax net is a separate step that has to be done properly, not assumed.
What This Means for You, by Situation
The mobile founder
You run an online or services business and want to keep your effective rate as low as the law allows without living in Dubai full time. A free zone company that qualifies as a QFZP keeps your qualifying income at 0%, the company sponsors the residence permit that supports your personal tax residency, and you draw salary and dividends into a 0% personal environment. This is the most common GenZone setup.
The holding company owner
You hold operating companies or investments and your concern is dividends and exit gains. A UAE holding company can receive qualifying dividends and realise qualifying capital gains free of corporate tax under Articles 22 and 23. Structured correctly, a future sale of a subsidiary can be exempt rather than taxed.
The free zone trader or service business
Your income comes from trading or from serving clients. Whether you sit at 0% depends entirely on whether your income is qualifying under Cabinet Decision No. 100 of 2023 and Ministerial Decision No. 229 of 2025, and on staying inside the de minimis limit. This is the case where getting the activity mix and substance right is worth real care, because the penalty for a breach is a five-year loss of the 0% rate.
The smaller standalone business
Your revenue is under AED 3 million and you are not part of a large group or a QFZP. Small Business Relief lets you elect to pay nothing through 2029, provided you claim it each year and you have never crossed the threshold in a prior period.
The large multinational
Your group turns over around US $870 million or more globally. Then the 15% Domestic Minimum Top-up Tax under Cabinet Decision No. 142 of 2024 is live for you, and free zone incentives will not take your UAE effective rate below 15%. This is a specialist compliance exercise rather than a structuring choice.
A Real Example: What Paying Tax in Tax-Free Dubai Looks Like
Theory is one thing. To see how these rules land in practice, including where a business does end up paying, read our full walkthrough, We Paid Taxes in Tax-Free Dubai: Our Complete UAE Corporate Tax Case Study. It shows the difference between the headline and the actual bill, and where the reliefs do and do not reach.
Myths and Mistakes
“Dubai is completely tax free.” Outdated since June 2023. Personal income tax is still 0%, but businesses now sit inside a corporate tax system, even if many of them pay nothing because of the reliefs.
“A free zone company always pays 0%.” No. A free zone company pays 0% only on qualifying income and only while it meets every QFZP condition. Non-qualifying income is taxed at 9%, and a breach can cost the 0% rate for five years.
“If I stay under AED 375,000 I never register.” No. Registration for corporate tax is mandatory for taxable persons, including free zone companies, regardless of profit. The AED 375,000 figure affects what you pay, not whether you register.
“Small Business Relief is an automatic tax-free allowance.” No. It is an election you make on the return each year, it is a revenue test with a memory, and it suspends loss and interest carryforwards for the years you use it.
“The 15% global minimum tax applies to me.” Only if your group turns over US $870 million globally. For almost every founder and SME, it does not apply.
“Setting up a UAE company cancels my home-country tax.” Not by itself. Your home country applies its own rules on residency and exit, and that has to be handled as a separate and deliberate step.
Compliance: Registration, Filing, and Penalties
Whatever tier you land in, the administrative baseline is the same. Every taxable person, mainland or free zone, must register for corporate tax and obtain a registration number through the FTA’s EmaraTax portal. The corporate tax return is filed within nine months of the end of the tax period, and any tax due is paid by the same date.
Missing the registration deadline carries an administrative penalty of AED 10,000. The FTA introduced a waiver initiative under which that penalty is waived, or refunded if already paid, where the business files its first corporate tax return or annual declaration within seven months of the end of its first tax period rather than the usual nine. Getting the registration, the audited accounts where required, and the return done correctly and on time is exactly the kind of work our tax and accounting team manages so nothing slips.
How GenZone Sets You Up to Qualify Properly
Landing in the right tier is straightforward when the pieces are built in the correct order, and that is what we do end to end. We form your Dubai company, choosing between a free zone and a mainland structure based on where your income actually comes from, so your qualifying income sits at 0% rather than accidentally falling to 9%.
The same company sponsors the residence permit behind your personal tax residency, and where a property route suits you better we can secure a Golden Visa through qualifying real estate. We arrange your banking and Emirates ID so your economic life genuinely sits in the UAE, which also strengthens your personal residency position.
And our tax and accounting team handles registration, audited financial statements, the QFZP conditions, the participation exemption where it applies, and your ongoing filings, so the structure that looks good on paper actually holds up under scrutiny.
One Platform for the Whole Move: GenZone LaunchPad
Everything above, the company, the visa, the banking, the compliance, and your corporate tax filings, runs through GenZone LaunchPad, our end-to-end platform for Dubai relocation with real advisors behind every step. And if your business also needs a US footprint, the same platform sets up a US LLC with US banking and Stripe access, structured to work alongside your UAE company rather than against it. You can start on the portal or book a free strategy call.
Frequently Asked Questions
Is corporate tax in Dubai 0% or 9%?
Both, depending on the income. The first AED 375,000 of taxable income is taxed at 0% for everyone. Above that, the standard rate is 9%. A Qualifying Free Zone Person keeps qualifying income at 0%, and dividends and qualifying capital gains can be exempt entirely, so many businesses pay well below the 9% headline.
Do free zone companies really pay no corporate tax?
Only on qualifying income, and only while they meet every condition to be a Qualifying Free Zone Person, including real substance, audited accounts, and staying within the de minimis limit. Non-qualifying income is taxed at 9%, and losing the status triggers a five-year loss of the 0% rate.
Is personal income still tax free in the UAE?
Yes. The corporate tax law taxes business profits, not individuals’ salaries or personal investment income. Personal income tax in the UAE remains 0%.
Are dividends and capital gains taxed?
Dividends from a UAE company are exempt with no conditions under Article 22. Dividends, capital gains, and liquidation proceeds from a qualifying shareholding are exempt under the Article 23 participation exemption, where the 5% or AED 4 million ownership test, the 12-month holding period, and the subject-to-tax test are met.
What is the AED 3 million Small Business Relief?
A resident business with revenue at or below AED 3 million can elect to be treated as having no taxable income and pay 0%. It has to be claimed on the return each year, it is a revenue test that looks at your history, and it has now been extended through tax periods ending on or before 31 December 2029.
Do freelancers pay corporate tax?
Only if their business turnover exceeds AED 1 million in a calendar year. Employment income, personal investment income, and personally held real estate income do not count toward that line.
Does the 15% global minimum tax apply to my company?
Only if you are part of a multinational group with global revenue of approximately US $870 million. For founders and SMEs, it does not apply.
Do I have to register even if I will not owe anything?
Yes. Registration is mandatory for taxable persons, including free zone companies and businesses expecting to pay 0%. Late registration carries an AED 10,000 penalty, though a waiver applies if you file your first return within seven months of your first tax period ending.
This article explains the law in plain terms and is not tax or legal advice. Your position depends on your nationality, your home country’s rules, your activities, and your specific facts. Confirm your situation with a qualified adviser before acting.
