UAE corporate tax: adjustments, add-backs and common risks
UAE corporate tax is 0% on taxable income up to AED 375,000 and 9% above it, and it is charged on taxable income after adjustments, not on accounting profit. This page explains the add-backs that most often change the result, the free zone conditions that decide 0% or 9%, and the risks to check before you file.
For the rates and reliefs in full, read the guides:
What does this page cover?
This page focuses on decision-critical areas of UAE Corporate Tax, including:
It is designed for owners, CFOs and decision-makers, not as legislative commentary.
Which rate applies: 0% or 9%?
| Category / Entity | Tax Rate | Application Condition | CT Law Reference |
|---|---|---|---|
| Mainland Taxable Income | 0% | Taxable Income up to AED 375,000 per Tax Period | Article 3 |
| Mainland Taxable Income | 9% | Taxable Income above AED 375,000 | Article 3 |
| Qualifying Free Zone Person (QFZP) | 0% | On Qualifying Income only, subject to all conditions | Article 18 |
| QFZP, Non-Qualifying Revenue | 9% | Applies if De Minimis threshold is breached | Article 18 |
| Small Business Relief (SBR) | 0% | Revenue up to AED 3,000,000, tax periods ending by 31 December 2029 (election required) | Article 21 |
| Non-Qualifying Free Zone Person | 9% | Entire taxable income taxed if QFZP fails | Article 18 |
Mainland Taxable Income
0%Mainland Taxable Income
9%Qualifying Free Zone Person (QFZP)
0%QFZP, Non-Qualifying Revenue
9%Small Business Relief (SBR)
0%Non-Qualifying Free Zone Person
9%How do free zone companies lose the 0% rate?
Hypothetical examples. Figures are illustrative.
| Scenario | Business Case | Risk & Calculation | Recommendation |
|---|---|---|---|
| De Minimis Breach | FZ Revenue AED 15M; NQRI AED 0.8M | Limit = lower of AED 5M or 5% of revenue (AED 0.75M here). A breach ends QFZP status from the start of the period and for the next four tax periods | Monitor NQRI monthly, segregate Mainland activity MD 229/2025 |
| Lack of Adequate Substance | FZ entity outsources all operations | Loss of 0% status due to failure of CIGA requirements | Ensure UAE-based decision-making, staff and assets Article 18 |
| Dealing with Natural Persons | Services provided to UAE individuals | Income becomes Non-Qualifying; counts toward De Minimis | Avoid B2C unless explicitly permitted MD 229/2025 |
| Immovable Property Income | Residential vs Commercial rent | Income from immovable property is an excluded activity, except commercial property in a free zone let to free zone persons | Segregate revenue and costs MD 229/2025 |
De Minimis Breach
FZ Revenue AED 15M; NQRI AED 0.8M
Limit = lower of AED 5M or 5% of revenue (AED 0.75M here). A breach ends QFZP status from the start of the period and for the next four tax periods
Monitor NQRI monthly, segregate Mainland activity
Lack of Adequate Substance
FZ entity outsources all operations
Loss of 0% status due to failure of CIGA requirements
Ensure UAE-based decision-making, staff and assets
Dealing with Natural Persons
Services provided to UAE individuals
Income becomes Non-Qualifying; counts toward De Minimis
Avoid B2C unless explicitly permitted
Immovable Property Income
Residential vs Commercial rent
Income from immovable property is an excluded activity, except commercial property in a free zone let to free zone persons
Segregate revenue and costs
Which adjustments change taxable income?
Corporate Tax is calculated after statutory add-backs, not directly from accounting profit.
Hypothetical examples. Figures are illustrative.
| Adjustment Item | Scenario | Add-Back Calculation | Risk | Law Reference |
|---|---|---|---|---|
| Client Entertainment | AED 50,000 incurred | 50% disallowed → Add back AED 25,000 | Over-deduction risk | Article 32 |
| Fines & Penalties | Traffic & VAT penalties AED 20,000 | 100% Add-Back | Non-deductible by law | Article 33(2) |
| Personal Expenses | Owner’s car lease AED 40,000 | Add-Back AED 40,000 | Audit exposure | Article 28 |
| Transfer Pricing | RPT payment exceeds ALP | Excess added back | Profit shifting risk | Article 34 |
Client Entertainment
Article 32AED 50,000 incurred
50% disallowed → Add back AED 25,000
Fines & Penalties
Article 33(2)Traffic & VAT penalties AED 20,000
100% Add-Back
Personal Expenses
Article 28Owner’s car lease AED 40,000
Add-Back AED 40,000
Transfer Pricing
Article 34RPT payment exceeds ALP
Excess added back
What are the common risks in UAE corporate tax computations?
- Treating accounting profit as taxable profit
- Missing mandatory add-backs
- Free Zone income misclassification
- Weak substance documentation
- Unsupported related-party pricing
These risks usually surface during FTA reviews, not at filing stage.
When should you get professional advice?
This knowledge hub covers most standard CT scenarios.
Advice is worth getting when:
- Free Zone status is at risk
- Group structures or related-party transactions exist
- Adjustments materially change tax outcomes
- FTA reviews or assessments arise
Important Disclaimer
This content is for general guidance only. Corporate Tax outcomes depend on specific facts, documentation and current legislation.
Professional advice should be obtained before filing or restructuring.
Last reviewed: 22 October 2026 · Reviewed by Muhammad Imran, ACMA
General information only, not legal or tax advice.
Valorin is an independent advisory firm, not affiliated with the FTA or MoF.