UAE Corporate Tax 2026: Complete Compliance Guide for Businesses

The UAE introduced corporate tax in 2023, with a 15% rate on profits exceeding AED 375,000. Whether your business is in mainland UAE, a free zone, or uses transfer pricing, this guide covers filing deadlines, exemptions, and compliance requirements for 2026.

Corporate Tax Rate and Qualifying Income

The standard UAE corporate tax rate is 15% on taxable income above AED 375,000. Taxable income is calculated as gross income less deductible expenses. The AED 375,000 exemption threshold applies to all businesses regardless of structure, meaning profitable companies with income below this threshold pay zero corporate tax.

Qualifying income includes revenue from operations, investments, rental income, and capital gains. Non-qualifying income such as cash gifts, capital contributions, and loan proceeds are excluded from the tax calculation.

Key Timeline: Tax filings are due by June 30 each year for the preceding financial year. Extensions are rare and require prior approval. Penalties for late filing start at 0.5% of unpaid tax monthly.

Free Zone and Establishment Exemptions

Businesses in UAE free zones retain their pre-2023 tax exemptions until December 31, 2024. Starting January 1, 2025, free zone businesses must comply with corporate tax rules. However, many free zone authorities have granted extended exemptions for certain sectors.

Mainland establishments in designated development areas may also qualify for exemptions or reduced rates. Check with the relevant authority in your emirate. Oil and gas, banking, and certain fund activities have specific rules; consult a tax advisor if your business operates in these sectors.

"The UAE's tiered approach to corporate tax â with the AED 375,000 threshold and exemptions for free zones â remains one of the most business-friendly frameworks globally." â International Tax Review, 2026

Transfer Pricing and Intercompany Transactions

If your business has transactions with related parties (subsidiary, parent company, or sibling entity), you must apply transfer pricing rules. The Federal Tax Authority requires transfer prices to reflect arm's length principles â meaning the price you'd charge an unrelated third party.

Documentation requirements include transfer pricing studies, functional analysis, and contemporaneous records. Non-compliance risks penalties of 5% to 100% of the underpaid tax. If your intercompany transactions exceed AED 5 million annually, a formal transfer pricing study is mandatory.

Compliance Cost: Transfer pricing documentation for a mid-sized business costs AED 50,000-150,000 but is essential if audited. The cost of non-compliance is substantially higher.

Filing and Compliance Requirements

All businesses must register with the Federal Tax Authority if they have annual turnover above AED 375,000. Registration is free and can be completed online. File your tax return through the FTA portal using the standardized form, with supporting schedules for income, expenses, and deductions.

Keep all financial records for at least five years. Audits can occur up to four years after filing. If you have significant changes from prior years, document your positions clearly. Work with a local tax advisor; hiring one costs less than the penalties for non-compliance.

Learn More at Federal Tax Authority