AED 375,000 UAE Corporate Tax Threshold: 0% Below, 9% Above

The Short Answer

UAE Corporate Tax charges 0% on your first AED 375,000 of taxable profit and 9% on profit above it. That figure is a rate band rather than an exemption, so you are inside the system, registered and filing, with the first slice taxed at nil. It measures profit, not sales. VAT uses the same AED 375,000 figure but tests turnover, which is a different tax and a different measure. Separately, Small Business Relief lets a business with revenue of AED 3,000,000 or less elect to be treated as having no taxable income, though it must be claimed on the return and is available only for tax periods ending on or before 31 December 2029. Zero tax still means registering and filing.

The Simple Version

UAE Corporate Tax is easy to understand at its core:

• You pay 0% tax on your first AED 375,000 of profit.
• You pay 9% only on the profit above AED 375,000.

That's it. The AED 375,000 is about your profit — the money left after you subtract your business costs from your sales — not your total sales.

A Quick Example

Say your tech business makes AED 1,000,000 in sales. After paying salaries, software, rent, and other costs, you're left with AED 300,000 in profit.

Because AED 300,000 is under AED 375,000, your Corporate Tax is zero.

Now say your profit was AED 500,000 instead. You'd pay 0% on the first AED 375,000, and 9% only on the remaining AED 125,000.

Is It Really 0% Up to AED 375,000?

Yes. UAE Corporate Tax is 0% up to AED 375,000 of profit, for every business — mainland or free zone, big or small.

It's not a special scheme you apply for. It's simply how the tax is worked out.

Is AED 375,000 a Threshold or an Exemption?

The AED 375,000 corporate tax threshold is a rate band, not an exemption — a small but important difference.

An exemption would mean you're outside the tax system. You're not. You're inside it, registered, filing a return — and the first AED 375,000 of your profit is simply taxed at 0%.

One more thing people mix up: VAT also has an AED 375,000 figure, and it's a completely different test. VAT looks at your total sales; Corporate Tax looks at your profit. Same number, different tax.

Small Business Relief

There's also a separate rule that helps smaller businesses even more, called Small Business Relief.

If your business earns AED 3,000,000 or less in revenue in a year, you can choose to be treated as having no taxable profit — meaning you pay no Corporate Tax at all for that year.

Two things to remember:

• It's based on your revenue (your total sales), not your profit.
• It's not automatic — you have to claim it when you file your tax return.
• It has an end date. Small Business Relief was due to expire after 2026, but Ministerial Decision 131 of 2026 extended it to tax periods ending on or before 31 December 2029. After that it's gone, and Corporate Tax becomes a real cost. (See what that means for you.)

What This Means for You

Most small UAE tech startups either sit under the AED 375,000 profit band or qualify for Small Business Relief. So in the early years, many pay little or no Corporate Tax.

But here's the key point: even if your tax is zero, you still have to register for Corporate Tax and file your return. Zero tax does not mean zero paperwork.

The return has to come from proper books. If your accounts are still a spreadsheet and a bank statement, that is the first thing to fix, and it is what our bookkeeping service does for software and IT businesses. And if you have not set the company up yet, the free zone you choose affects which rate applies from day one: see tech business setup service or our DMCC guide if you are heading there. One more date on the horizon: from 1 July 2027 your invoices must go through an accredited e-invoicing provider, whatever your tax bill is.

Conclusion

Keep it simple: 0% on your first AED 375,000 of profit, 9% above that. And if your revenue is AED 3,000,000 or less, you can claim Small Business Relief and pay nothing — as long as you register and file.

One date to diarise: Small Business Relief now runs until tax periods ending 31 December 2029, after an extension announced in August 2026. The AED 375,000 band stays.

Want the full picture of the rates, including the 15% top-up for large groups? See the UAE Corporate Tax rate in 2026 explained.

Not sure where your business stands? Explore our Corporate Tax service, or contact Khizr UAE and we'll work it out with you.

Email: info@khizruae.com | Phone: 050 428 3999