UAE Business Tax Guide by Business Type 2026

Mainland LLCs are fully subject to UAE Corporate Tax under Federal Decree-Law No. 47 of 2022. The tax applies to financial years starting on or after 1 June 2023. The standard rate is 9% on taxable income exceeding AED 375,000 per year. Income up to AED 375,000 is taxed at 0%.

Mainland LLCs must register for Corporate Tax with the FTA via the EmaraTax portal, regardless of whether they have taxable income. Failure to register carries a penalty of AED 10,000. The CT return is due within 9 months of the financial year-end.

VAT registration is mandatory when taxable supplies exceed AED 375,000 in the previous 12 months or are expected to exceed that threshold in the next 30 days. Voluntary registration is available for businesses with supplies above AED 187,500. The standard VAT rate is 5%.

VAT returns are filed quarterly (or monthly for businesses with turnover exceeding AED 150 million) via EmaraTax. Late filing or late payment triggers FTA penalties under Cabinet Decision No. 129 of 2025.

If a Mainland LLC employs staff under MOHRE, UAE Labour Law (Federal Decree-Law No. 33 of 2021) applies. End-of-service gratuity is mandatory for employees with at least 1 year of continuous service. Calculated at 21 days of basic salary per year for the first 5 years, then 30 days per year beyond that.

Applies only if the business manufactures, imports, or stockpiles excise goods (tobacco, energy drinks, carbonated drinks, sweetened beverages, electronic smoking devices). Monthly returns due by the 15th.

Qualifying Free Zone Persons (QFZPs) benefit from a 0% corporate tax rate on qualifying income under Cabinet Decision No. 55 of 2023. To maintain QFZP status, the entity must:

1. Maintain adequate substance in the free zone
2. Earn qualifying income from qualifying activities
3. Not elect for standard CT treatment
4. Comply with the de minimis rule: non-qualifying income must not exceed 5% of total revenue OR AED 5 million, whichever is lower

If non-qualifying income exceeds the de minimis threshold in any tax period, the entity loses 0% status for that period AND the following 4 consecutive tax periods. All income becomes subject to 9% CT. This is the most common QFZP compliance failure.

Per Ministerial Decision No. 139 of 2023: manufacturing, processing of goods, holding of shares and securities, treasury and financing activities, distribution in or from a designated zone, shipping, fund management, wealth and investment management, headquarter services, financing and leasing of aircraft, and certain intellectual property activities.

VAT obligations for free zone entities depend on whether transactions are within the free zone (typically outside scope), into mainland UAE (standard VAT rules apply), or exports (zero-rated). QFZP entities involved in mainland UAE supplies must register for VAT.

Free zone entities that do not meet QFZP conditions, or those that earn non-qualifying income above the de minimis threshold, are subject to standard UAE Corporate Tax at 9% on taxable income above AED 375,000. This includes entities in free zones that conduct business with mainland UAE customers without meeting the designated zone transaction requirements.

Natural persons conducting business or business activities in the UAE are subject to corporate tax only if their annual turnover exceeds AED 1,000,000. Below this threshold, no CT registration or filing is required. This threshold is assessed on a calendar year basis.

Freelance income, consulting fees, professional service fees, trading income, and any other revenue from an ongoing business activity. Investment income (dividends, capital gains from personal investments not linked to a business) is generally excluded.

If annual taxable supplies exceed AED 375,000, VAT registration is mandatory regardless of the AED 1M corporate tax threshold. A freelancer can be VAT-registered without being subject to corporate tax.

Sole establishments are subject to the same AED 1,000,000 annual turnover threshold as natural persons. If turnover exceeds AED 1M, CT registration is mandatory and the 9% rate applies on profits above AED 375,000.

Standard VAT registration thresholds apply. Mandatory above AED 375,000 in taxable supplies.

UAE branches of foreign companies are subject to UAE Corporate Tax on income attributable to UAE activities. The branch is treated as a separate taxable person from the parent. The 9% rate applies on taxable income exceeding AED 375,000.

Transactions between the UAE branch and its foreign parent or related parties must follow arm's length pricing under the UAE Transfer Pricing rules (Ministerial Decision No. 97 of 2023). Branches must maintain transfer pricing documentation if transactions exceed specified thresholds.

Even dormant companies must register for corporate tax with the FTA. Failure to register triggers the AED 10,000 penalty. A dormant company with zero revenue and zero expenses will file a nil CT return, but must still file within 9 months of the financial year-end.

If the company has no taxable supplies and is not VAT-registered, no VAT obligations apply. However, if the company was previously VAT-registered, deregistration must be done correctly through EmaraTax.