Tax Guide
Every Tax a UAE Business Actually Pays, in One Place
The UAE is still a low-tax jurisdiction and is still described, often by people running businesses here, as a no-tax one. That stopped being true in 2018 and stopped being nearly true in 2023. What follows is every tax and government levy a UAE company can meet, with the rate, the threshold that brings you into it, and the deadline that matters — current as at September 2026.
The short version
| Tax | Rate | Who it catches |
|---|---|---|
| Corporate tax | 0% / 9% | Every taxable person. 0% on the first AED 375,000 |
| Domestic Minimum Top-up Tax | 15% | Groups with consolidated revenue of EUR 750m or more |
| VAT | 5% | Taxable supplies above AED 375,000 in twelve months |
| Excise tax | Per-litre or up to 100% | Importers, producers and stockpilers of excise goods |
| Customs duty | 5% of CIF | Goods entering the UAE for consumption |
| Withholding tax | 0% | In the law, currently set at nil |
| Personal income tax | None | — |
| Pension contributions | Up to 26% of salary | UAE and GCC national employees only |
Corporate tax
Federal Decree-Law No. 47 of 2022. Nil on taxable income up to AED 375,000, 9% above it. The threshold itself sits in Cabinet Decision No. 116 of 2022, not in the law.
- Everyone registers. Free zone companies, loss-making companies, dormant companies. Registration and payment are separate obligations, and the 0% band removes the tax without removing the return.
- Natural persons are caught once business turnover passes AED 1 million in a calendar year. Wages, personal investment income and personal real estate income are outside it at any amount.
- Return and payment: nine months after the financial year end. A 31 December year end means 30 September.
- Small Business Relief: revenue at or below AED 3 million, elected in the return, now available for tax periods ending on or before 31 December 2029.
- Free zones: a Qualifying Free Zone Person applies 0% to qualifying income. The qualifying and excluded activity lists are in Ministerial Decision No. 229 of 2025, which replaced the 2023 decision. Non-qualifying revenue must stay under the lower of 5% of total revenue or AED 5 million.
The 0% is conditional, always. Free zone status comes from the licence. QFZP status is earned each year through substance in the zone, audited IFRS accounts, transfer pricing documentation and the de minimis test. Fail one and 9% applies to all income for the period — not just the part that failed.
Domestic Minimum Top-up Tax
The UAE's piece of the global minimum tax. A 15% effective rate for groups with consolidated revenue of EUR 750 million or more in at least two of the four preceding fiscal years, for financial years starting on or after 1 January 2025. Cabinet Decision No. 142 of 2024.
Worth being precise about scope: the UAE has enacted the domestic top-up only. The Income Inclusion Rule and the Undertaxed Profits Rule are not in force here. If someone tells you the UAE has adopted Pillar Two in full, they have overstated it.
VAT
5% standard rate since 2018, under Federal Decree-Law No. 8 of 2017.
| Threshold or rule | |
|---|---|
| Mandatory registration | Taxable supplies and imports above AED 375,000 in the past twelve months, or expected in the next thirty days |
| Voluntary registration | Supplies or taxable expenses above AED 187,500 |
| Non-residents making taxable supplies here | No threshold — registration is required |
| Default tax period | Quarterly; larger taxpayers are assigned monthly periods |
| Return and payment | Within 28 days of the end of the tax period |
Zero-rated supplies include exports outside the implementing states, international transport, crude oil and natural gas, investment-grade precious metals, the first supply of new residential property within three years of completion, and qualifying education and healthcare. Exempt supplies include margin-based financial services, residential property other than that first supply, bare land and local passenger transport. The difference matters: zero-rated supplies carry input tax recovery, exempt ones do not.
Two sets of amendments land in 2026 — the law changes from 1 January and a new Executive Regulation from 1 October. They have their own article →
Excise tax
Federal Decree-Law No. 7 of 2017, with rates now set by Cabinet Decision No. 197 of 2025 from 1 January 2026. This is where the biggest rate change of the year happened.
| Product | Rate from 1 January 2026 |
|---|---|
| Tobacco and tobacco products | 100% |
| Electronic smoking devices and tools | 100% |
| Liquids used in electronic smoking devices | 100%, with a minimum excise price of AED 1.00 per ml from 1 September 2026 |
| Energy drinks | 100% — unchanged, and outside the tiered model |
| Sweetened drinks, 8g or more sugar per 100ml | AED 1.09 per litre |
| Sweetened drinks, 5g to under 8g per 100ml | AED 0.79 per litre |
| Sweetened drinks, under 5g per 100ml | Nil |
| Artificially sweetened only | Nil |
The old flat 50% on carbonated and sweetened drinks is gone, replaced by a charge per litre banded by sugar content. Carbonated drinks are no longer a category of their own — they are taxed on what is in them.
- Honey, agave syrup and malt extract count as sweeteners. Artificial sweeteners do not.
- Outside the definition: drinks that are at least 75% milk or milk substitute, baby formula, and beverages for medical use.
- No laboratory report, highest band. Products without an accredited lab report are taxed at AED 1.09 per litre until evidence is filed.
- Registration has no threshold. Any importing, producing, stockpiling or warehouse-keeping of excise goods triggers it, within 30 days.
- Returns are monthly, due by the 15th of the following month, with payment on the same date.
Customs duty
5% of the CIF value under the GCC Common Customs Law, with alcohol at 50% and tobacco at 100%. GCC-origin goods are exempt, as are goods from a widening list of free trade agreement partners. Goods entering a free zone are not charged at the point of entry — duty crystallises when they are released to the mainland.
One distinction worth holding onto: a customs free zone and a VAT Designated Zone are different things with different lists. A company can be in one and not the other, and the two get conflated constantly.
Withholding tax
The corporate tax law provides for withholding on certain UAE-sourced income of non-residents, and the rate is currently 0%. There is no registration or filing obligation while it stays there. The rate and the categories can be changed by Cabinet decision, which is why it is worth knowing the mechanism exists.
Personal income tax
There is none. No tax on salaries, no capital gains tax, no inheritance tax, no wealth tax.
The accurate version of that sentence for anyone advising clients: the UAE imposes no personal income tax, but an individual carrying on a business here is inside the corporate tax regime once turnover passes AED 1 million in a calendar year. That is corporate tax at 0% and 9%, not an income tax — but it is a filing obligation, and "there is no tax on individuals" is no longer a safe thing to say.
Pension and social security
Applies to UAE and GCC nationals only. Expatriate employees are outside the pension system and receive end-of-service gratuity under the Labour Law instead.
| Joined on or before 30 Oct 2023 | First joined from 31 Oct 2023 | |
|---|---|---|
| Employee | 5% | 11% |
| Employer and government combined | 15% | 15% |
| Total | 20% | 26% |
| Salary cap, private sector | AED 50,000 / month | AED 70,000 / month |
For the newer regime, the 15% is met by the employer, except that where a private-sector salary is below AED 20,000 a month the government subsidises 2.5 percentage points of it. Abu Dhabi and Sharjah public-sector employees sit under separate emirate schemes. GCC nationals working here contribute under their own country's rules through GPSSA.
Penalties, which changed in April
Cabinet Decision No. 129 of 2025 replaced the 2021 penalty framework with effect from 14 April 2026.
| Failure | Consequence |
|---|---|
| Tax paid late | 14% per annum, accrued monthly, non-compounding |
| Voluntary disclosure before the FTA finds it | 1% per month on the difference |
| Disclosure after an audit notification | 15% fixed, plus 1% per month |
| Tax invoice not issued within 14 days | AED 2,500 per detected case |
| Incorrect return | AED 500 first time, AED 2,000 repeated |
| Late corporate tax registration | AED 10,000 |
The failures accumulate independently. A company late on registration, filing and payment has three exposures, not one, which is how a modest tax liability turns into a disproportionate bill.
What is not on this list
Emirate-level charges — property transfer fees, municipality fees on rent, tourism levies on hotels — are set by each emirate rather than federally, change without much notice, and differ enough between Dubai, Abu Dhabi and the northern emirates that a single figure would be misleading. Check them per emirate and per activity rather than relying on a published rate. There is no stamp duty anywhere in the UAE.
Two legacy taxes are still live and often forgotten: branches of foreign banks pay 20% under emirate-level decrees, and oil, gas and petrochemical concessions are taxed under their own agreements at much higher rates.
Figures, thresholds and deadlines in this article were accurate on 14 September 2026. UAE tax rules change. This is general information, not advice on your circumstances — confirm your own position before acting.
Frequently asked
Is the UAE still a tax-free country?
No, and it has not been since 2018. VAT arrived that year, corporate tax in 2023, and a 15% top-up tax for large multinational groups in 2025. What remains true is that there is no personal income tax, no capital gains tax and no inheritance tax on individuals, and that a 9% headline corporate rate is low by international standards.
Do I pay both VAT and corporate tax?
They are unrelated and most businesses pay both. VAT is charged on supplies and collected from customers — it is not a cost to you if you are registered and recovering properly. Corporate tax is charged on profit. Registration thresholds, returns and deadlines are entirely separate.
My company is in a free zone. Which of these apply?
All of them. Free zone companies register for corporate tax, register for VAT on the same thresholds, and pay excise and customs on the same basis. What a free zone can offer is 0% corporate tax on qualifying income — conditional, assessed annually, and lost entirely for the period if any condition fails.
What changed in 2026?
Excise moved to a per-litre model for sweetened drinks from 1 January. The VAT Law and Tax Procedures Law were amended from the same date. The penalty framework changed on 14 April. Small Business Relief was extended to 2029 in August. A new VAT Executive Regulation takes effect on 1 October. It has been a busy year.
Not sure where you stand?
Thirty free minutes with a senior advisor. We will tell you what applies to you, what is due, and whether anything is already overdue.