The AED 375,000 UAE Corporate Tax Rule, Made Simple
The AED 375,000 Corporate Tax figure sounds complicated, but it's simple: you pay 0% tax on your first AED 375,000 of profit. Here's what that means for your tech startup, in plain English.
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.
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.
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.
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.
Not sure where your business stands? Contact Khizr UAE and we'll work it out with you.
Email: info@khizruae.com | Phone: 050 428 3999
Frequently Asked Questions
Is the AED 375,000 a tax exemption?+
Not exactly — it's a 0% rate band. You pay 0% Corporate Tax on your first AED 375,000 of profit, and 9% on profit above that. It applies to every business, not just some.
Is the AED 375,000 based on revenue or profit?+
Profit (taxable income), not revenue. It's the money left after your allowable business costs — not your total sales.
How is this different from Small Business Relief?+
They're separate. The 0% band applies to everyone on the first AED 375,000 of profit. Small Business Relief is an optional election for businesses with revenue of AED 3,000,000 or less, which can treat taxable income as zero — but it must be claimed.
Disclaimer
The information in this article is for general informational purposes only and does not constitute financial, tax, or legal advice. Tax laws and regulations in the UAE are subject to change, and every business situation is unique. We strongly recommend consulting a qualified accounting professional before making any financial or business decisions. Khizr UAE accepts no liability for any loss or damage arising from reliance on the content of this article.
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