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%
Practical Business Case Studies
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.
Are Free Zone companies exempt from UAE Corporate Tax?
Free Zone companies can benefit from a 0% corporate tax rate on "Qualifying Income" provided they qualify as a Qualifying Free Zone Person (QFZP), meet adequate substance requirements, and do not elect to be subject to regular corporate tax.
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