UAE Corporate Tax for Small Companies: Thresholds, Relief and Deadlines

Two facts sit awkwardly together. Most small UAE companies will pay no corporate tax. All of them still have to register, file and keep records.

And the relief that makes the first sentence true has an expiry date that is closer than most owners realise.

Who has to register, and when

Registration is triggered by existing, not by earning. FTA Decision 3 of 2024, issued 22 February 2024 and effective 1 March 2024, sets the deadlines.

Corporate tax applies to financial years starting on or after 1 June 2023. Registration itself costs nothing.

The rate, and the threshold nobody can find in the law

Federal Decree-Law 47 of 2022, Article 3, sets the structure but not the number. Verbatim, it imposes corporate tax at "0% on the portion of the Taxable Income not exceeding the amount specified in a decision issued by the Cabinet" and "9% on Taxable Income that exceeds" it.

The AED 375,000 figure is not in the decree-law. It comes from Cabinet Decision 116 of 2022. Worth knowing if you ever have to trace it, because a surprising number of articles cite the wrong instrument.

Two structural points. Only one AED 375,000 band is available per taxable person however many businesses it runs, and there are anti-fragmentation rules aimed squarely at splitting a business to duplicate the band.

Free zone companies have their own regime. A Qualifying Free Zone Person pays 0% on qualifying income and 9% on everything else, subject to conditions covered in mainland versus free zone.

Small Business Relief: what it is

Ministerial Decision 73 of 2023 lets a small business elect to be treated as having no taxable income for a tax period.

The threshold, verbatim from Article 2(1): revenue "shall be AED 3,000,000 (three million dirhams) for each Tax Period". That applies to the relevant tax period and the previous ones. Cross AED 3 million in any relevant or previous period and Article 2(3) makes the election permanently unavailable. Not unavailable that year. Permanently.

Article 3 excludes two categories outright:

• A constituent company of a multinational enterprise group
• A Qualifying Free Zone Person

That second exclusion catches people. If your free zone company is claiming 0% as a QFZP, it cannot also elect Small Business Relief. They are alternatives, not a stack.

The 31 December 2026 sunset

This is the most time-sensitive fact in UAE corporate tax right now.

Article 2(2), verbatim: the threshold "shall apply to Tax Periods commencing on or after 1 June 2023 and such threshold shall only continue to apply to subsequent Tax Periods that end before or on 31 December 2026."

Read that against a calendar year. A company with a 1 January to 31 December financial year has a tax period ending 31 December 2026. That period qualifies. The one ending 31 December 2027 does not.

FY2026 is the last year of relief for a calendar-year taxpayer. As at 26 July 2026, no extension has been published on the Ministry of Finance website.

What Small Business Relief costs you

Relief is not free. Articles 4 and 5 of the same decision set out the price.

Tax losses incurred during a Small Business Relief period cannot be carried forward. Nor can net interest expenditure.

That matters more than it sounds. A young company that spends heavily to build something is exactly the company that generates carry-forward losses, and those losses are worth real money against future profit. Electing relief in a loss-making year throws them away.

So the calculus is: if you are profitable and under AED 3 million, elect. If you are loss-making and expect to be profitable later, run the numbers on preserving the losses instead. That is a genuine choice, and it is the kind of thing worth an hour with an accountant rather than a default.

One more line worth reading. Article 6 treats artificially separating a business to stay under AED 3 million as an arrangement to obtain a corporate tax advantage under the general anti-abuse rule in Article 50 of the decree-law. Splitting one business into two to duplicate the threshold is specifically anticipated.

Natural persons and the AED 1 million line

Individuals running a business in their own name are inside the regime too, but at a different level.

The FTA states the natural-person threshold as annual business revenue exceeding AED 1 million, excluding salary, personal investment income and real estate investment income.

So a salaried employee with an investment portfolio and a rented apartment is not a taxable person. A freelancer invoicing AED 1.2 million a year is, and their registration deadline is 31 March of the following calendar year.

If you hold a freelance permit or an e-Trader licence, this is your line, not the AED 375,000 one.

Note the separate VAT test running alongside it. VAT registration is mandatory once taxable supplies and imports exceed AED 375,000 over a rolling twelve months, which is a turnover measure rather than a profit one, so a freelancer can easily be VAT-registered and corporate-tax-exempt at the same time. See UAE VAT registration thresholds.

The AED 10,000 penalty and the waiver

The FTA said it plainly in a news release dated 23 June 2024: "Taxable Persons that fail to apply to register for Corporate Tax within the specified timelines will result in an Administrative Penalty of AED 10,000."

There was a waiver, and it is worth understanding because it is often described wrongly. The FTA release of 7 May 2025 set the condition: submit the tax return or annual declaration "within a period not exceeding seven (7) months from the end of their first Tax Period." It applied only to the first tax period. Penalties already paid were credited back. By 29 July 2025 the FTA reported more than 33,900 beneficiaries.

For a calendar-year taxpayer whose first period ran 1 January to 31 December 2024, the practical deadline was 31 July 2025. That has passed.

What to do before your year end

Six things, in order.

1. Confirm you are registeredIt is free, takes about 25 minutes to submit, and the FTA takes 20 business days. If you are not registered, this is today's job.
2. Find your first tax periodIt follows your financial year. Everything else, including the relief sunset, hangs off this date.
3. Check whether you crossed AED 3 million in any period, everOnce you have, Small Business Relief is permanently unavailable, so there is no point planning around it.
4. Decide relief versus losses for the current yearProfitable and under the threshold: elect. Loss-making with future profit expected: model preserving the carry-forward first.
5. Get the bookkeeping to a standard that survives 9%Whatever happens to the sunset, the FY2027 return is the first one where a real number is likely. Bookkeeping quality becomes a cash figure.
6. Diary the e-invoicing datesSmall and medium companies must appoint an accredited service provider by 31 March 2027 and go live 1 July 2027. Large companies above AED 50m appoint by 30 October 2026 and go live 1 January 2027.

Registration documents, if you are doing it now: certificate of incorporation, MoA or partnership agreement, commercial registration certificate, trade licence including branch licences, and Emirates ID and passport for owners holding more than 25% and for authorised signatories. Maximum 15 MB per PDF.

MSM handles corporate tax registration alongside licence and immigration files, so the documents get used once rather than assembled three times. See what comes after the trade licence or start at business setup.