UAE Corporate Tax for Free Zone Companies — Complete 2026 Guide
UAE introduced Corporate Tax in 2023. Here is the complete 2026 guide specifically for UAE free zone company owners on how UAE CT applies to you.
In this guide:
When Did UAE CT Start?
- Effective date: UAE CT applies to financial years starting on or after 1 June 2023
- Most companies: Financial year starting 1 January 2024 is the first CT year (for December year-end companies)
- First CT return: Due 9 months after financial year end; for Dec 2024 year-end companies, first return due 30 September 2025
UAE CT Rate Structure
- 0%: On taxable income up to AED 375,000 (all UAE businesses)
- 9%: On taxable income above AED 375,000
- Small Business Relief: Revenue under AED 3 million; eligible for simplified 0% treatment (until at least 2026)
- QFZP 0% rate: Free zone companies meeting QFZP criteria may pay 0% on qualifying income
QFZP — The Key Free Zone Tax Break
- Qualifying Free Zone Person: A free zone company that meets all UAE CT QFZP criteria
- Criteria: Must have adequate substance in free zone; adequate employees and assets in UAE; must not be deriving income from excluded activities; de minimis non-qualifying income test
- 0% rate: QFZP pays 0% on qualifying income; 9% on non-qualifying income
Substance Requirements for QFZP
- Employees: Real employees based in UAE; not just nominee directors
- Assets: Core income-generating assets in UAE free zone
- Decision-making: Key management decisions made in UAE
- Office: Physical office in free zone (virtual desk may not be sufficient for QFZP)
CT Registration
- Mandatory: All UAE companies must register for UAE CT; even if 0% rate applies
- How: Register via EmaraTax (tax.gov.ae)
- When: Within 3 months of financial year start (or sooner if required by FTA)
- Penalty for non-registration: AED 10,000