UAE Corporate Tax for SMEs in 2026: What You Need to Know

The UAE introduced corporate tax effective June 2023 at 9% on taxable income exceeding AED 375,000. Two years in, compliance gaps remain widespread, particularly around registration, accounting standards, and transfer pricing. This guide covers what SME owners need to do to be fully compliant.

Corporate Tax Registration

All UAE legal entities including free zone companies must register for corporate tax with the Federal Tax Authority through the EmaraTax portal. Failure to register by the stipulated deadline results in fines of AED 10,000. Free zone entities qualifying as Qualifying Free Zone Persons can benefit from a 0% rate on qualifying income but must still register and file.

Calculating Your Taxable Income

Taxable income is based on net accounting profit, adjusted for disallowed expenses including fines, penalties, and entertainment expenses above thresholds. SMEs below AED 3 million in revenue may qualify for Small Business Relief, effectively a 0% rate, but must elect this on their tax return and maintain qualifying accounting records.

Filing Deadlines and Record-Keeping

Corporate tax returns must be filed within nine months of the end of the financial year. For companies with a December 31 year-end, this means a September 30 filing deadline. Companies must retain tax records for seven years. The FTA conducts risk-based audits and can assess additional tax, penalties, and interest for under-reported income.

Transfer Pricing for Group Entities

If your UAE entity transacts with related parties, those transactions must be conducted at arm's length and documented accordingly. Companies with related party transactions above AED 40 million per year must file a Disclosure Form with their tax return. Gulf Oasis Business Management works with specialist tax advisors to prepare compliant transfer pricing documentation.