United Arab Emirates · Tax regime
UAE Corporate Tax and Free Zone Regime
Federal corporate tax of 9% effective for financial years starting on or after 1 June 2023. 15% domestic minimum top-up tax (DMTT) under Cabinet Decision 142 of 2024 effective for fiscal years starting on or after 1 January 2025. FTA guidance on family foundations updated June 2026.
The UAE is no longer a zero-tax jurisdiction for businesses, and the free zone 0% is conditional, not automatic — this is the single most misunderstood point in Gulf structuring. For family offices the June 2026 FTA guidance is decisive: a family foundation can be fiscally transparent, but the family office entity itself generally cannot, and pays 9% on its management fees unless it independently qualifies as a QFZP.
Qualifying routes
0% on taxable income up to AED 375,000; 9% above. 100% foreign ownership permitted for most activities since 2020 (banks, insurance, oil and gas and some strategic sectors still restricted). Small Business Relief may deem nil taxable income where revenue is under AED 3m, subject to election.
0% on qualifying income, 9% on everything else. Requires adequate substance in the free zone, qualifying activities, transfer pricing compliance, audited IFRS accounts, and non-qualifying revenue within the de minimis limit (lower of 5% of revenue or AED 5m). Breach costs QFZP status for the current period and the following four.
May elect to be treated as a fiscally transparent Unincorporated Partnership, so income is attributed to beneficiaries rather than taxed at foundation level. Per the FTA's June 2026 guidance an LLC cannot itself be a family foundation, but a wholly-owned subsidiary of a transparent foundation may elect transparency.
15% effective rate floor for MNE groups with consolidated revenue of at least EUR 750m in two of the last four fiscal years. The UAE adopted only the DMTT — no IIR or UTPR — and it has OECD Transitional Qualified Status.
The facts
- Qualifying figure
- 375k AED
- Total landed cost
- Free zone licence AED 7.5–50k per year depending on zone; audited accounts AED 10–40k per year; transfer pricing documentation AED 20–100k+ where thresholds are met; DIFC/ADGM foundations roughly USD 2–5k to establish plus USD 1.5–3k annually
- Timeline
- 1–3 months — Company formation and CT registration; DIFC/ADGM foundations typically 4–8 weeks
- Physical presence
- Substance-driven, not day-count-driven. A QFZP needs real premises, qualified staff and operating expenditure in the free zone — a plate on a wall will not hold.
- Family
- not applicable — entity-level regime
- Permanent residency
- Not applicable
- Citizenship
- Not applicable
- Language test
- Not applicable
- Dual citizenship
- Permitted
- Requirements
- corporate tax registration with the FTAadequate substance for QFZP statusaudited financial statementstransfer pricing documentation where thresholds meteconomic substance and CRS/FATCA reporting
- Free zone 0% is conditional and fragile. Exceed the de minimis limit for non-qualifying revenue in a single period and you lose QFZP status for that period plus the next four — a five-year penalty for one bad year.
- Selling to mainland UAE customers generally produces non-qualifying income. Many free zone businesses are unknowingly outside the 0% they think they have.
- Single and multi family offices generally cannot claim fiscal transparency and are taxed as Resident Persons on all income including management fees — confirmed in the FTA's June 2026 guidance.
- Natural persons are within corporate tax where business turnover exceeds AED 1m in a calendar year. The test is turnover, not profit — a low-margin business at AED 1.2m revenue is in scope. Wage income, and personal investment and real estate income held without a commercial licence, are excluded.
- For groups above EUR 750m, the DMTT means UAE structuring no longer delivers a sub-15% outcome. Pillar Two has effectively closed the UAE for large multinationals.
- Asset transfers into a family foundation from related parties must be at arm's length and can crystallise taxable gains — moving assets in is not automatically neutral.
- Audited IFRS financial statements are mandatory for QFZP status. This is a real compliance cost that free zone marketing rarely mentions.