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0% Corporate Tax in the UAE — a legal way to keep profits

Since June 1, 2023, the UAE has introduced Corporate Tax at a rate of 9%. However, not all companies are required to pay it: under certain conditions, a 0% rate applies. This is a key advantage of the UAE jurisdiction, allowing tax optimization and profit retention. MIRAD supports clients at every stage: from eligibility check to structuring that withstands tax audits.

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Who can apply the 0% rate?

  1. Small Business Relief:
    — annual revenue up to AED 3M;
    — company registered in Mainland or Free Zone;
    — not part of an international structure;
    — not engaged in excluded activities (banking, insurance, real estate).
    Relief valid until 2026.
  2. Qualifying Free Zone Person (QFZP):
    — licensed in an official Free Zone;
    — income from international trade, services, export;
    — substance: office, employees, expenses;
    — IFRS reporting, ESR compliance.
    Qualified income taxed at 0%, other income at 9%.

Important nuances of applying 0%

  • QFZP status must be confirmed annually.
  • If conditions are not met, the relief is revoked for 4 years.
  • Even with 0% tax, a declaration must be filed with the FTA.
  • ESR and IFRS are mandatory elements of substance confirmation.
  • The FTA actively checks transfer pricing and deal structures.

Comparison: 0% vs 9% Corporate Tax

Criteria0% Corporate Tax9% Corporate Tax
ApplicabilitySmall Business Relief / QFZPAll other companies
Annual RevenueUp to AED 3M / qualified incomeAbove AED 3M
RequirementsSubstance, ESR, IFRS reportingGeneral tax declaration
Risks of non-complianceRelief cancellation for 4 yearsFines and tax reassessments
Benefit9% profit savingsFull tax burden
Want to keep 0% tax legally?

MIRAD helps Mainland and Free Zone companies obtain the 0% rate, build a substance-based structure, and protect against FTA risks.

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What MIRAD does

  • Audit of company structure and eligibility for 0%.
  • FTA registration and filing of notifications.
  • Preparation of IFRS reporting and income segregation.
  • Support for substance: employees, office, expenses.
  • Communication with the FTA during audits.
  • Setup of accounting and control systems.

HowTo: how to get the 0% Corporate Tax rate

  1. Check eligibility under Small Business Relief or QFZP.
  2. Register the company with the FTA and obtain a TRN.
  3. Set up IFRS-based accounting and substance model.
  4. Prepare ESR and financial reporting.
  5. File the tax return indicating the 0% relief.
  6. Renew confirmations annually.

FAQ: 0% Corporate Tax in the UAE

❓ Do I need to file a return if the rate is 0%?
✅ Yes. Filing is mandatory even with zero tax.

❓ What income qualifies for QFZP?
✅ International trade, exports, services to non-residents. Local income is often taxed at 9%.

❓ How long is Small Business Relief valid?
✅ Until 2026 inclusive, after which it may be reviewed.

❓ Can ESR and Corporate Tax benefits be combined?
✅ Yes, ESR is integrated into Corporate Tax and affects QFZP status.

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