United Arab Emirates · Tax regime
UAE Corporate Tax and Free Zone Regime
Federal corporate tax sits at 9%, effective for financial years starting on or after 1 June 2023. A 15% domestic minimum top-up tax, known as the DMTT, arrived under Cabinet Decision 142 of 2024 and applies to fiscal years starting on or after 1 January 2025. The FTA updated its guidance on family foundations in June 2026.
The UAE is no longer a zero-tax jurisdiction for businesses. The free zone 0% rate is conditional, not automatic, and 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 it pays 9% on its management fees unless it independently qualifies as a QFZP.
Qualifying routes
Taxable income up to AED 375,000 is taxed at 0%. Anything above that is taxed at 9%. Foreign investors have been able to own 100% of most businesses since 2020, though banks, insurance, oil and gas and a handful of strategic sectors remain restricted. Small Business Relief can bring taxable income down to nil where revenue is under AED 3m, provided the business elects for it.
Qualifying income is taxed at 0%. Everything else is taxed at 9%. To keep that rate, a business needs real substance in the free zone, activities that qualify, transfer pricing compliance, audited IFRS accounts, and non-qualifying revenue that stays within the de minimis limit, which is the lower of 5% of revenue or AED 5m. Breach any of it, and the business loses QFZP status for the current period and the following four.
A family foundation can elect to be treated as a fiscally transparent Unincorporated Partnership. That means income is attributed to the beneficiaries rather than taxed at the foundation level. Under the FTA's June 2026 guidance, an LLC cannot itself be a family foundation. A wholly-owned subsidiary of a transparent foundation, though, can elect transparency of its own.
Multinational groups with consolidated revenue of at least EUR 750m in two of the last four fiscal years face a 15% effective rate floor. The UAE has adopted only the DMTT, not the IIR or UTPR, and holds OECD Transitional Qualified Status.
The facts
- Minimum
- 375k AED
- Total landed cost
- A free zone licence runs AED 7.5–50k a year, depending on the zone. Audited accounts cost AED 10–40k a year. Transfer pricing documentation adds AED 20–100k+ where the thresholds apply. A DIFC or ADGM foundation costs roughly USD 2–5k to set up, plus USD 1.5–3k a year after that.
- Route type
- Tax regime, not a visa
- Timeline
- 1–3 months (Company formation and CT registration. DIFC/ADGM foundations typically take 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. This is an 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 are 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. That is 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. They are taxed as Resident Persons on all income including management fees, a point confirmed in the FTA's June 2026 guidance.
- Natural persons fall within corporate tax where business turnover exceeds AED 1m in a calendar year. The test is turnover, not profit, so 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 off for large multinationals.
- Asset transfers into a family foundation from related parties must be at arm's length. They can crystallise taxable gains, so 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.