UAE Free Zone Company Tax and Annual Compliance in 2026

"No tax in the UAE" was never quite true even before 2023, and it's less true now. Federal Corporate Tax exists, registration is mandatory for every taxable person, and — this is the detail that catches people out — the annual return is required even for a free zone company sitting at 0% tax. Here's the current picture direct from the Federal Tax Authority.

What you owe on income

The UAE's federal Corporate Tax (Federal Decree-Law No. 47 of 2022), in force for financial years starting on or after 1 June 2023, applies 0% on taxable income up to AED 375,000 and 9% above that. There's no personal income tax. Free zone companies can potentially do better: a Qualifying Free Zone Person (QFZP) can get 0% on Qualifying Income specifically — but only by maintaining adequate substance in the UAE, deriving genuinely Qualifying Income, not electing to be taxed at standard rates, and meeting transfer-pricing requirements. One nuance worth flagging: a QFZP doesn't get the AED 375,000 zero-rate band applied to its non-qualifying income the way a standard taxpayer does — non-qualifying income above a small de-minimis threshold is taxed at the standard 9% regardless of free zone status.

What you owe every year, regardless

Corporate Tax registration and annual return, with the Federal Tax Authority via the EmaraTax portal. This is mandatory — confirmed directly by the FTA — even for a company genuinely owing 0% tax; the return is still due within 9 months of the end of the tax period (a calendar-year company's FY2025 return is due by 30 September 2026).

VAT, if applicable: mandatory registration once taxable supplies exceed AED 375,000 over 12 months (voluntary above AED 187,500), at a standard rate of 5%, with periodic returns.

Free zone trade licence renewal, paid annually to the specific free zone authority rather than the FTA — and this varies significantly by free zone: RAK ICC's registered-agent renewal runs AED 12,500/year with a 30-day grace period; ADGM's non-financial category renewal is USD 5,000/year (down from USD 8,000 as of a January 2025 fee reduction), with Tech Startup and Retail categories priced lower; DIFC renews via its Registrar of Companies on the licence anniversary, with confirmation-statement filing replacing the older annual return format.

What happens if you're late

The UAE's penalty schedule (Cabinet Decision No. 75 of 2023, as amended by Cabinet Decision No. 10 of 2024) is unusually specific:

AED 10,000 flat penalty for failing to register for Corporate Tax within the required timeframe.
AED 500/month (or part) for late or non-submission of the Corporate Tax Return, for the first 12 months — rising to AED 1,000/month from month 13 onward.
14% per annum, applied monthly, on any unpaid Corporate Tax.
AED 10,000 per violation for failing to keep required records (AED 20,000 for a repeat violation within 24 months).
AED 500 for submitting an incorrect return (waived if corrected before the filing deadline).

Where to confirm this yourself

Federal Tax Authority — Corporate Tax: tax.gov.ae
FTA Free Zone Persons Corporate Tax Guide (PDF): tax.gov.ae
RAK ICC — renewals: rakicc.com/faqs/renewals
ADGM — fee schedule: adgm.com
DIFC — Registrar of Companies: difc.com

How Otonomos helps

We structure and maintain UAE free zone entities across ADGM, DIFC, RAK and other free zones, tracking both the FTA's mandatory annual Corporate Tax filing — required even at 0% tax — and the separate trade licence renewal with your specific free zone authority.

Set up your UAE entity with Otonomos: Book a free call · Browse the jurisdiction catalog

Sources: UAE Federal Tax Authority, tax.gov.ae; Ministry of Finance, Cabinet Decision No. 75 of 2023 and amendments (PDF); RAK ICC, rakicc.com; ADGM, adgm.com; DIFC, difc.com. Verified against official UAE government sources, Aug 2026.

Disclaimer: No legal, tax, or regulatory advice. Confirm current fees, QFZP eligibility, and deadlines with the Federal Tax Authority or your specific free zone authority before relying on any figure above.