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 |
|---|---|
| Standard Taxable Person: taxable income up to AED 375,000 | 0% |
| Standard Taxable Person: taxable income above AED 375,000 | 9% |
| Qualifying Free Zone Person — on qualifying income | 0% |
| Qualifying Free Zone Person — taxable income that is not qualifying (no AED 375,000 band) | 9% |
| In-scope multinational groups under domestic minimum top-up tax rules | 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 — this depends on the activity, counterparty, beneficial-recipient and other FTA-rule facts. Geography alone does not determine the result.
- 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 revenue stays under the lower of 5% of total revenue or AED 5 million. Breach it and QFZP status is lost for that tax period and the following four tax periods.
03 The deadline that costs AED 10,000
Taxable Persons must register under the applicable FTA rules, including most free-zone juridical persons. The deadline is tied to your licence and category. The FTA can impose a AED 10,000 late-registration administrative penalty; check its current waiver and registration guidance directly before relying on a deadline.
- 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?
They are not automatically exempt. A QFZP is 0% on qualifying income and 9% on taxable income that is not qualifying, without the AED 375,000 standard band. A free-zone company that is not a QFZP uses the standard 0%/9% bands.
What is the UAE corporate tax rate in 2026?
A standard Taxable Person is 0% up to AED 375,000 of taxable income and 9% above. A QFZP has 0% on qualifying income and 9% on taxable income that is not qualifying. A separate 15% top-up rate is for in-scope multinational groups.
Must a free zone company register even at 0%?
Most free-zone juridical persons are Taxable Persons and must register and file under the applicable FTA rules, even where tax due is AED 0. Check the current FTA deadline and any waiver initiative.
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?
An eligible resident person with revenue at or below AED 3 million in the current and prior tax periods may elect it, subject to FTA conditions. A QFZP cannot elect Small Business Relief.
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