Key takeaways
- Individuals still pay no personal income tax on salaries or investment income.
- Companies pay 9% Corporate Tax on taxable income above AED 375,000 — free zone companies included, unless they qualify for 0%.
- VAT at 5% applies to most goods and services; registration is mandatory above AED 375,000 of taxable supplies.
- Registrations, bookkeeping and annual filings are required even when no tax is due.
For years, the UAE was synonymous with “no taxes”. That picture changed in 2018 with the introduction of VAT and, above all, in 2023 with the federal Corporate Tax. The UAE remains one of the most competitive jurisdictions in the world, but it now has a real tax system, with registrations, deadlines and penalties.
This guide summarises the main taxes that affect entrepreneurs and digital businesses operating from the UAE.
Personal taxation: still no income tax
The UAE does not levy personal income tax on salaries, dividends, interest or capital gains obtained by individuals. There is no federal wealth tax or inheritance tax either.
The exception is business activity: individuals who carry out a business or professional activity in the UAE become subject to Corporate Tax once their turnover from that activity exceeds AED 1 million in a calendar year.
Corporate Tax: 9% above AED 375,000
The federal Corporate Tax applies to financial years starting on or after 1 June 2023. The standard rates are:
| Taxable income | Rate |
|---|---|
| Up to AED 375,000 | 0% |
| Above AED 375,000 | 9% |
Large multinational groups with consolidated revenue of at least €750 million are also subject to a 15% domestic minimum top-up tax from 2025.
All taxable persons must register with the Federal Tax Authority (FTA) and file an annual return within nine months of the end of their financial year — even if the tax payable is zero.
Small Business Relief
Resident businesses with revenue of up to AED 3 million can elect Small Business Relief and be treated as having no taxable income for tax periods ending on or before 31 December 2026. The relief must be claimed in the return, and it is not available to qualifying free zone persons or members of large multinational groups.
Free zone companies: 0% is not automatic
Free zone companies are subject to Corporate Tax like any other company. However, they can apply a 0% rate on their qualifying income if they meet the conditions to be a Qualifying Free Zone Person:
- Maintaining adequate substance in the free zone: assets, employees and operating expenses
- Earning qualifying income, such as income from transactions with other free zone persons or from certain qualifying activities
- Keeping non-qualifying revenue below the de minimis threshold: 5% of total revenue or AED 5 million, whichever is lower
- Preparing audited financial statements and complying with transfer pricing rules
Income that does not qualify is taxed at 9%. If the conditions stop being met, the company loses the 0% rate for that tax period and the following four. That is why choosing the right structure — and knowing where your customers are — matters. We explain the differences in Free zone or mainland in Dubai.
VAT: 5% on most goods and services
VAT has applied in the UAE since 1 January 2018 at a standard rate of 5%. Some supplies are zero-rated, such as certain exports of services, and others are exempt, such as certain financial services and residential property.
- Mandatory registration: when taxable supplies exceed AED 375,000 in the last 12 months or are expected to exceed it in the next 30 days.
- Voluntary registration: possible from AED 187,500.
- Returns: usually quarterly, with a filing and payment deadline for each period.
Non-resident businesses that supply services to consumers in the UAE, such as digital services, may have to register regardless of the threshold. If you sell digital products, read our guide on VAT on digital products and online courses.
Other obligations to keep in mind
- Excise tax: on specific goods such as tobacco, energy drinks and sugary drinks.
- Beneficial ownership: companies must keep an up-to-date register of their ultimate beneficial owners.
- Record keeping: accounting and tax records must be kept for at least seven years.
- E-invoicing: the UAE has announced a phased roll-out of mandatory electronic invoicing, starting with larger businesses.
What this means for a digital business
The UAE is still an extremely competitive place to run an international business: no personal income tax, a 9% Corporate Tax with a generous threshold and, for well-structured free zone companies, a 0% rate on qualifying income.
But “competitive” is not the same as “no obligations”. Every company needs to be registered, keep proper books and file on time — this is exactly what our tax management in Dubai service covers, and we handle the business setup in Dubai itself. And moving your company to Dubai does not change where you personally pay tax: that depends on your own tax residency, as we explain in Does a Dubai company pay tax in Spain?
Frequently asked questions
Is Dubai tax-free for companies?
Not anymore. Since 2023, companies pay 9% Corporate Tax on taxable income above AED 375,000. Free zone companies can pay 0% on qualifying income if they meet the requirements.
Do I pay income tax on my salary in the UAE?
No. The UAE does not tax employment income, dividends or capital gains obtained by individuals.
Do I need to register for Corporate Tax if I make no profit?
Yes. Registration and the annual return are required for taxable persons even when no tax is payable.
When is VAT registration mandatory in the UAE?
When your taxable supplies exceed AED 375,000 over the last 12 months or are expected to exceed that amount in the next 30 days.
