Dubai Corporate Tax: A Complete Guide to the 9% Tax Regime

How does Corporate Tax work in Dubai?

Corporate Tax in Dubai applies to all companies and commercial activities operating in the seven emirates of the United Arab Emirates, including Dubai.

It is levied on the profits earned by the company after deducting expenses from the income. Generally, all expenses related to the business are tax-deductible.

However, there are certain types of income that are exempt from Corporate Tax in the United Arab Emirates:

• Dividend income received by the UAE company from its qualified participations (to be defined in the law), known as the participation exemption.
• Capital gains.
• Profits from group reorganizations.
• Profits from intra-group transactions.
• There will be no UAE tax withholding on domestic and cross-border payments.

Additionally, the OECD transfer pricing rules will be applicable in the United Arab Emirates, including companies based in Dubai. All companies must comply with transfer pricing rules and documentation requirements.

Which companies have to pay Corporate Tax in Dubai?

All companies operating within the seven emirates of the United Arab Emirates, including Dubai, are required to pay Corporate Tax unless they are exempt.

Corporate Tax in the United Arab Emirates does not apply to the following types of entities:

• Companies operating in the extraction of natural resources, which will continue to be subject to the tax decrees issued by the respective emirate.
• Individuals receiving personal income (such as salaries or investment income) as long as the income-generating activity does not require a commercial license.
• Companies registered in the Free Trade Zones, provided they meet all regulatory requirements and do not conduct business with companies based in the United Arab Emirates.

In general, if your company is operating in Dubai, has annual taxable profits exceeding AED 375,000 (approximately $102,000), and conducts business with companies based in the Emirati territory (mainland business), it will be subject to Corporate Tax in Dubai.

However, if your company is registered in a Free Trade Zone and does not conduct business in the mainland territory of the United Arab Emirates, it may be exempt from Corporate Tax as long as it meets all regulatory requirements.

For example, a company providing hospitality services to hotels in Dubai, which are considered mainland business, would be subject to Corporate Tax. On the other hand, a company incorporated in a Free Trade Zone that provides online affiliate marketing services outside of the United Arab Emirates would not be liable for Corporate Tax.

Are Free Trade Zone companies required to pay taxes in Dubai?

As mentioned above, companies registered in the Dubai Free Trade Zones may be exempt from corporate income tax provided that they do not do business with the UAE mainland and comply with all regulatory requirements.

However, it is very important to note that in all Free Trade Zones a corporate tax return has to be filed annually, even if only for information purposes.

How is it possible for a Free Trade Zone company not to pay taxes?

A company registered in a Dubai Free Trade Zone must either generate all its income from abroad the United Arab Emirates or be considered a 'Qualifying Free Zone Person' to continue enjoying a 0% tax rate.

To achieve this, the Free Trade Zone company in Dubai must:

• Have appropriate economic substance in accordance with the regulations of the United Arab Emirates (ESR) https://www.moec.gov.ae/en/economic-substance-regulations
• Earn income that qualifies as 'Qualifying Income', which is a list of activities defined by the Government of the United Arab Emirates.
• Comply with transfer pricing rules and maintain relevant transfer pricing documentation.
• Not have voluntarily opted to be subject to Corporate Tax.

In summary, a company registered in a Dubai Free Trade Zone can be exempt from corporate taxes if it meets the above requirements and does not conduct business with companies based in the Emirati mainland:

What's new for 2025-2026? Recent tax developments

The UAE continues to evolve its tax framework to align with international standards. Here are the key developments businesses should be aware of:

15% Domestic Minimum Top-Up Tax (DMTT)

Effective for fiscal years starting on or after January 1, 2025, the UAE has introduced a Domestic Minimum Top-Up Tax aligned with the OECD's Pillar Two Global Anti-Base Erosion (GloBE) rules. This applies to multinational enterprises with consolidated global revenues of €750 million or more in at least two of the four preceding fiscal years. The DMTT ensures a minimum effective tax rate of 15% on profits in the UAE.

R&D Tax Credits (2026)

Starting from tax periods on or after January 1, 2026, the UAE will offer R&D tax incentives with a potential 30% to 50% refundable tax credit. Qualifying R&D activities must align with OECD Frascati Manual guidelines and be conducted within the UAE. This is designed to encourage innovation and technology investment.

High-Value Employment Tax Credits

A refundable tax credit for high-value employment activities became available from January 2025. This incentive is granted as a percentage of eligible salary costs for C-suite executives and senior personnel performing core business functions that add substantial value to the UAE economy.

Mandatory E-Invoicing (2026-2027)

The UAE is implementing a mandatory e-invoicing framework. A voluntary pilot is expected to begin in July 2026, with mandatory adoption for large businesses starting from January 2027. Businesses will need to report e-invoices in real time via government-approved platforms.

Updated Tax Procedures Law

Federal Decree-Law No. 17 of 2025, effective January 1, 2026, introduces significant amendments including a fixed five-year deadline for requesting refunds of credit balances, updated audit procedures, and harmonized penalty frameworks across Corporate Tax, VAT, and Excise Tax.

Is it worth moving to Dubai after the implementation of Corporate Tax?

There has been discussion about whether Dubai would lose its competitiveness with the implementation of Corporate Tax.

However, nothing could be further from the truth.

The Corporate Tax in Dubai is one of the most attractive internationally, with an effective tax rate well below the OECD average.

It is easy to understand, provides exemptions in various relevant areas, and creates a relatively limited compliance burden, primarily focused on small and medium-sized enterprises.

Furthermore, we believe that the majority of potential clients of The Global Wealth (digital nomads, successful entrepreneurs, professional athletes, and innovators) would not be subject to taxes in Dubai because their companies, registered in a Free Trade Zone, do not invoice companies located in the United Arab Emirates. 100% of their income comes from outside the UAE.

How to take the first step?

At The Global Wealth, we have been assisting entrepreneurs, high-net-worth individuals, athletes, and cryptocurrency professionals in relocating their tax residency to Dubai over the past years.

In fact, our presence and connections in Dubai make us an ideal partner to understand whether you should pay this tax and to help you settle in Dubai and relocate your residency with us.

The Global Wealth is an official partner of IFZA, one of Dubai's leading Free Trade Zones, offering world-class infrastructure, state-of-the-art facilities, and business-friendly regulations, making it an ideal destination for foreign investors looking to establish and develop their business.

If you have any doubts and would like assistance with the visa application process, please write to us at secretary@theglobalwealth.com or through the contact form.