UAE corporate tax is now in its third year. The basics have not moved: 0% on taxable income up to AED 375,000 and 9% above it, under Federal Decree-Law 47 of 2022. What has changed is the detail around it.
Small Business Relief extended to 2029
Businesses with revenue of AED 3 million or less in the current and every earlier tax period can elect Small Business Relief and be treated as having no taxable income. The relief was due to end with tax periods ending in 2026. Ministerial Decision 131 of 2026 extends it to tax periods ending on or before 31 December 2029. The AED 3 million limit is unchanged. Qualifying free zone persons and members of large multinational groups cannot use it, and it must be elected in the return.
Audited financial statements now required more widely
Under Ministerial Decision 84 of 2025, for tax periods starting on or after 1 January 2025, a business needs audited financial statements to support its corporate tax return if its revenue is above AED 50 million, and every qualifying free zone person needs them whatever its revenue. For many free zone companies, the first audited year is the 2025 financial year.
Free zone 0%: the rules were rewritten
Ministerial Decision 229 of 2025 replaced the list of qualifying and excluded activities for the 0% free zone rate, with effect back to 1 June 2023. The de minimis test is unchanged: non-qualifying revenue must stay at or below the lower of 5% of total revenue or AED 5 million. Failing it loses 0% status for that year and the following four years. Free zone companies now trading on the Dubai mainland under the 2025 rules should check how that income is treated.
A new R&D tax credit
Cabinet Decision 215 of 2025 and Ministerial Decision 24 of 2026 introduce a research and development tax credit for tax periods starting on or after 1 January 2026. Track qualifying spend from the start of the year so you can claim it.
Penalties and the waiver
Late corporate tax registration carries an AED 10,000 penalty. The FTA's waiver initiative refunded that penalty for businesses that filed their first return within seven months of their first period end. Do not assume a waiver is still available: register and file on time.
Year-end checklist
- Confirm whether you can elect Small Business Relief, and keep the evidence of revenue.
- If you are a free zone company, test the de minimis rule now, not after year end.
- Line up audited statements if you are above AED 50 million or a qualifying free zone person.
- Check payments to owners, directors and related parties against market value.
- Diary the return deadline: nine months after your period end.
How iConsult can help
We prepare audit-ready IFRS statements, review corporate tax positions and support you through the external audit. See audit readiness and tax or book a free consultation.
This article is general information, not legal or tax advice. It reflects the rules as we understand them on the date shown; laws and guidance change, so check the current position or talk to us before you act.