Last reviewed: 1 October 2026. The first corporate tax returns for December year-end companies fell due on 30 September 2026, and many UAE owners with India-linked finance teams discovered that tax readiness is really a bookkeeping question. Whether you run a mainland LLC or a company in a free zone, the corporate tax outcome depends on how revenue, related-party dealings and expenses were recorded through the year, not on what is reconstructed in the last month.
Mainland, free zone and Small Business Relief at a glance
| Point | Mainland / regular taxpayer | Qualifying Free Zone Person (QFZP) | Small Business Relief (SBR) |
|---|---|---|---|
| Rate | 0% to AED 375,000; 9% above | 0% on Qualifying Income; 9% on non-qualifying taxable income | Treated as having no taxable income for the period |
| Who | Resident taxable persons | Free zone persons meeting every QFZP condition | Resident persons with revenue of AED 3 million or less in the current and all previous tax periods; elected each year |
| Audited financials | Depends on the person and revenue; confirm with the local auditor | Required regardless of revenue size | Simplified compliance; transfer pricing documentation not required, arm's length principle still applies |
| Excluded | Not applicable | Cannot claim SBR | QFZPs and members of MNE groups with consolidated revenue above AED 3.15 billion |
What changed recently: Small Business Relief extended to 2029
On 7 August 2026 the UAE Ministry of Finance announced, under Ministerial Decision No. 131 of 2026, that Small Business Relief may be claimed for tax periods ending on or before 31 December 2029. The AED 3 million revenue threshold in Ministerial Decision No. 73 of 2023 continues for tax periods starting on or after 1 June 2023. If your own planning or an older checklist still says the relief stops with periods ending 31 December 2026, update it. The relief is an election, so record the decision and the supporting revenue figures in the working file each year.
Free zone: where 0% is lost
The FTA's Free Zone Persons guide sets out the conditions a company must meet together to be a Qualifying Free Zone Person:
- adequate substance: core income-generating activities carried out in the free zone, with sufficient assets, full-time staff and operating expenditure there;
- income that falls within the prescribed Qualifying Income categories;
- non-qualifying revenue within the de minimis limit, which is the lower of 5% of total revenue or AED 5,000,000;
- no election to be taxed under the regular regime;
- related-party transactions at arm's length, with transfer pricing documentation maintained;
- audited financial statements, whatever the revenue size.
Failing any one condition means loss of QFZP status for that tax period and the next four, so the cost of a slip is five years, not one. That makes the 5% de minimis test the number to watch month by month, not at year end.
Worked example 1: mainland company
A Dubai mainland trading company records taxable income of AED 1,200,000 for the year. Tax is 9% of the amount above AED 375,000: (1,200,000 − 375,000) × 9% = AED 74,250. If the books wrongly include AED 200,000 of personal or non-business spending as expense, taxable income is understated and the return is exposed on review. Tax follows the ledger.
Worked example 2: free zone, the 5% test
A free-zone company reports total revenue of AED 20,000,000. The de minimis limit is the lower of 5% of revenue (AED 1,000,000) and AED 5,000,000, so AED 1,000,000. If non-qualifying revenue is AED 800,000 (4%) the test is met. If a late-year contract pushes it to AED 1,400,000 (7%), the test fails and QFZP status is lost for that period and four more. Tracking qualifying and non-qualifying revenue in separate ledger accounts or tags through the year is what makes this visible in time.
Deadlines
| Financial year end | Return and payment due (nine months) |
|---|---|
| 31 December 2025 | 30 September 2026 (just passed) |
| 31 March 2026 | 31 December 2026 |
| 31 December 2026 | 30 September 2027 |
The FTA has stated the administrative penalty for late filing as AED 500 for each month or part of a month during the first twelve months, and AED 1,000 for each month or part from the thirteenth month. If you missed 30 September, file at the earliest and check the position with your UAE tax agent.
The bookkeeping checklist we use for UAE and GCC entities
- Chart of accounts that separates qualifying and non-qualifying revenue for free-zone entities.
- Related-party and connected-person ledger, with the basis of every transaction price on file.
- Monthly bank, credit-card and wallet reconciliations signed off by the 10th working day.
- VAT reconciliation of the ledger to returns, plus an audit-trail for adjustments.
- Fixed-asset register and prepayment/accrual schedules, so the trial balance is closing-ready.
- Records stored for the period the law requires (seven years from the end of the tax period) in an organised, retrievable folder.
- A year-end pack for the licensed auditor and tax agent: trial balance, schedules, reconciliations and open-item list.
This runs on whatever system the entity already uses. Our Zoho Books migration checklist covers moving from spreadsheets, and our offshore bookkeeping data-security control map sets out how access to client books should be handled when part of the team works from India.
Who does what
| Task | Where it sits |
|---|---|
| Bookkeeping, month-end close, reconciliations, trial balance, schedules, India-side compliance | Our team, working on the client's own accounting software |
| Statutory audit of financial statements | Auditor licensed and registered in the UAE |
| Filing and representation before the FTA as tax agent | Tax agent registered with the FTA, or the company itself through EmaraTax |
Frequently asked questions
What is the UAE corporate tax rate for a mainland company?
Taxable income up to AED 375,000 is taxed at 0% and the portion above it at 9%, under the UAE Corporate Tax Law. Taxable income is accounting profit adjusted for the items the law disallows or exempts, which is why clean books come first.
Does a free-zone company automatically pay 0% corporate tax?
No. Only a Qualifying Free Zone Person meeting every condition gets 0% on Qualifying Income. A free-zone company that fails a condition, or elects regular treatment, is taxed under the ordinary rules, and non-qualifying income is taxed at 9% in any case.
Can a Qualifying Free Zone Person also claim Small Business Relief?
No. The FTA's Small Business Relief guidance excludes Qualifying Free Zone Persons and members of multinational groups with consolidated revenue above AED 3.15 billion. A free-zone person can elect to be taxed under regular rules, which opens up reliefs a QFZP cannot use.
Until when is Small Business Relief available?
The Ministry of Finance announced on 7 August 2026, under Ministerial Decision No. 131 of 2026, that the relief can be claimed for tax periods ending on or before 31 December 2029, with the revenue threshold remaining AED 3 million. Relief is elected, and revenue must stay at or below AED 3 million in the current and all previous tax periods.
What is the corporate tax return due date and the penalty for being late?
The return and the tax payable are due within nine months of the end of the tax period. For a December year-end that is 30 September of the next year. The FTA has stated a late-filing penalty of AED 500 for each month or part of a month in the first twelve months, rising to AED 1,000 from the thirteenth month.
Can an Indian CA firm file or sign a UAE corporate tax return?
We support the accounting side: bookkeeping, monthly close, reconciliations and a clean trial balance. Statutory audit signing and filing or representation before the FTA as a tax agent must be done by a locally registered and licensed professional, and we say so up front in every engagement.
We provide monthly bookkeeping, reconciliations and close support on the software you already use, and coordinate with your UAE auditor and tax agent.
Outsourced bookkeeping for foreign firms Foreign subsidiary accounting Zoho Books Talk to usThis article summarises UAE Ministry of Finance and Federal Tax Authority publications as understood on the date of review. It is general information, not UAE legal or tax advice; confirm your position with a UAE-licensed tax agent or auditor before filing. CA Somesh Chandak & Associates, FRN 158694W.