Direct Legal Rule: Under UAE Federal Decree-Law No. 47/2022, taxable net business profit is taxed at 0% up to AED 375,000 and 9% on any profit exceeding AED 375,000. Eligible businesses with gross annual revenue under AED 3,000,000 may elect for Small Business Relief (SBR) paying zero tax.
Taxable Profit & Revenue Model
Federal Tax Authority (FTA) corporate taxation calculation parameters.
SBR threshold check (AED 3M)
AED
Accounting profit after tax adjustments
AED
100k AED1.3M AED2.5M+ AED
Ministerial Decision No. 73/2023
Corporate Tax Payable
AED0.00
Statutory Federal Tax Liability
Tax-Free Profit Tier (0%):375,000.00 AED
Taxable Profit Tier (> 375k):0.00 AED
Standard Statutory Tax (9%):0.00 AED
Effective Corporate Tax Rate:0.00%
Small Business Relief Status:Active (0 Tax)
UAE Corporate Tax Architecture: Federal Decree-Law No. 47 of 2022
Effective for financial years commencing on or after June 1, 2023, the United Arab Emirates enacted a headline 9% Corporate Tax regime codified under Federal Decree-Law No. 47 of 2022. Designed to maintain the nation's competitive standing while aligning with the OECD Base Erosion and Profit Shifting (BEPS Pillar Two) framework, the UAE corporate tax system introduces clear tiers.
The Headline Two-Tier Rate Structure
Article 3 of the Corporate Tax Law establishes a deliberate progressive relief threshold:
Taxable Net Profits up to AED 375,000: Taxed at 0%. This generous threshold shields micro-enterprises and freelancers from any federal tax burden.
Taxable Net Profits Exceeding AED 375,000: Taxed at 9% exclusively on the amount exceeding the AED 375,000 threshold.
Small Business Relief (SBR) Under Ministerial Decision No. 73 of 2023
To support entrepreneurship, the Ministry of Finance issued Ministerial Decision No. 73 of 2023 introducing Small Business Relief (SBR):
Any resident taxable business whose gross turnover does not exceed AED 3,000,000 in the relevant tax period may elect for SBR. Upon election, the business is treated as having no taxable income for that tax period, reducing corporate tax liability to AED 0 regardless of profit margin.
Net Taxable Profit
Tax at 0% Tier
Tax at 9% Tier
Total Tax Payable
Effective Tax Rate
AED 350,000
AED 0
AED 0
AED 0
0.00%
AED 500,000
AED 0
AED 11,250 (on 125k)
AED 11,250
2.25%
AED 1,000,000
AED 0
AED 56,250 (on 625k)
AED 56,250
5.63%
AED 3,000,000
AED 0
AED 236,250 (on 2.625M)
AED 236,250
7.88%
Real-World Scenario Walkthroughs
Case 1: SBR Election (Turnover ≤ 3M)
Digital Consultancy Firm
Annual Revenue: AED 2,400,000 Net Profit: AED 600,000 Without SBR: Tax = (600k - 375k) × 9% = AED 20,250. With SBR: Revenue is under AED 3,000,000. Electing SBR results in AED 0 Corporate Tax.
What is the standard UAE Corporate Tax rate and statutory exemption threshold?
Under UAE Federal Decree-Law No. 47/2022 Article 3, taxable income up to AED 375,000 is taxed at zero percent (0%), while all net taxable profit exceeding AED 375,000 is subject to a statutory rate of 9%.
Who qualifies for UAE Corporate Tax Small Business Relief up to 3 million AED revenue?
Under Ministerial Decision No. 73/2023, resident taxable persons with gross revenue under AED 3,000,000 in current and prior tax periods can elect for Small Business Relief, treating their taxable profit as zero.
Can Free Zone companies in the UAE benefit from a zero percent corporate tax rate?
Under Cabinet Decision No. 55/2023, a Qualifying Free Zone Person (QFZP) that maintains adequate economic substance and derives Qualifying Income from designated commercial activities is entitled to a 0% corporate tax rate.
What is the statutory filing deadline for the UAE Corporate Tax return?
Under Article 53 of Federal Decree-Law No. 47/2022, corporate tax returns and associated tax liabilities must be electronically submitted to the Federal Tax Authority within nine (9) months from the end of the tax period.
Are salaries paid to business owners tax deductible under UAE Corporate Tax?
Under Article 28 and Ministerial Decision No. 115/2023, salary and bonuses paid to connected persons (such as shareholders or directors) are deductible only if they reflect arm length market value for services rendered.
Related GCC Financial Utilities
UAE
UAE Golden Visa Property Calculator
Evaluate the AED 2,000,000 property investment threshold, DLD closing costs, and projected net rental yields.