Dubai, a global hub for trade, innovation, and investment, has long been recognized as one of the most business-friendly economies in the world. For years, companies have been attracted to the UAE not just for its strategic location, modern infrastructure, and stable government—but also for its favorable tax environment.
As of 2025, many entrepreneurs and corporations are asking:
Does Dubai still offer the world’s lowest corporate tax?
Let’s explore this in detail.
Understanding Corporate Tax in Dubai
Until 2023, Dubai—and the UAE at large—had no federal corporate tax for most businesses. However, as part of the UAE’s commitment to align with global tax standards, the country introduced a corporate tax regime, effective 1 June 2023.
Despite this, Dubai still offers one of the most competitive tax rates globally, especially when compared to other major economies.
Corporate Tax Rate in Dubai, UAE (2025)
As of 2025, the UAE imposes a standard corporate tax rate of 9% on business profits that exceed AED 375,000 per year.
0% Corporate Tax
Profits up to AED 375,000 are exempt—this benefits startups, small businesses, and individual entrepreneurs.
9% Corporate Tax
Any taxable income above AED 375,000 is taxed at a flat 9% rate, making it one of the lowest corporate tax rates in the world.
15% for Multinationals
Large multinational corporations that fall under the OECD’s Pillar Two framework (i.e., with global revenues over €750 million) may be subject to a 15% corporate tax under the global minimum tax rule.
How Dubai Compares to Other Countries
Here’s how Dubai’s corporate tax stacks up against other global financial centers:
| Country | Corporate Tax Rate (2025) |
| United States | 21% |
| Germany | ~30% |
| United Kingdom | 25% |
| India | 22%–30% |
| Singapore | 17% |
| UAE (Dubai) | 9% (0% below AED 375,000) |
Dubai’s flat 9% rate and 0% for small profits make it one of the world’s most tax-efficient jurisdictions.
Free Zone Businesses and Tax Exemptions
Dubai is home to more than 30 Free Zones, including:
- Dubai Multi Commodities Centre (DMCC)
- Dubai Internet City (DIC)
- Jebel Ali Free Zone (JAFZA)
- Dubai Airport Free Zone (DAFZA)
- IFZA and RAKEZ (nearby Emirates)
Free Zone Benefits (2025)
Free Zone entities that do not conduct business with the UAE mainland may still enjoy 0% corporate tax for certain qualifying activities. These include:
- Holding companies
- Trading with foreign entities
- Export-focused businesses
- Certain tech and IP-related companies
These tax incentives are preserved under the UAE’s Free Zone Corporate Tax Regime, provided businesses meet qualifying income criteria and maintain adequate substance in the UAE.
Why Dubai’s Corporate Tax Is Still Among the Lowest
Dubai’s corporate tax remains among the lowest globally with a flat 9% rate on profits above AED 375,000 and 0% below that threshold. There’s no personal income tax, no capital gains tax, and no withholding tax, making it highly attractive for businesses looking to grow with minimal tax pressure.
Flat 9% with 0% Buffer
The AED 375,000 threshold acts as a cushion for startups and small businesses, offering zero tax on modest profits.
No Personal Income Tax
Even if you pay 9% on business profits, you won’t pay any income tax as an individual—a huge plus for owner-operators.
No Withholding or Capital Gains Tax
Dubai doesn’t impose taxes on dividends, interest, or capital gains earned by businesses or individuals.
No Payroll or Social Security Tax for Expats
Employers do not need to pay national insurance or employment taxes for foreign employees.
No VAT on Exports
While the UAE has a 5% VAT, it’s not applicable to exported goods and services, reducing overall tax burden.
Who Is Exempt from Corporate Tax in Dubai?
Certain categories are exempt from corporate tax even above the AED 375,000 threshold:
Natural Resource Companies
Oil, gas, and extraction companies taxed under emirate-level laws are excluded from the federal tax.
Government Entities and Sovereign Wealth Funds
Entities owned by the UAE government or royal families often enjoy special exemptions.
Charities and Public Benefit Organizations
Registered nonprofit organizations are exempt under certain conditions.
Tax Residency and Substance Requirements
To benefit from Dubai’s low corporate tax, companies must:
Be a UAE Tax Resident
This means the business is managed and controlled from within the UAE and has a valid trade license.
Maintain Economic Substance
Especially for Free Zone companies, having a physical office, local staff, and real operations in Dubai is essential to prove genuine presence.
Impact on Global Investors and Entrepreneurs
For international investors, Dubai remains a top choice for:
- Offshore wealth management
- Global trading operations
- Holding companies
- Startups and SaaS businesses
- Logistics, shipping, and real estate investments
Despite introducing corporate tax, Dubai continues to offer financial freedom, clarity, and flexibility, unmatched in most global cities.
Conclusion
Dubai has indeed introduced corporate tax, but with a 0% rate for small businesses and only 9% for larger profits, it continues to offer one of the lowest corporate tax rates in the world. Add to this the absence of personal income tax, capital gains tax, and wealth tax—and you have a system that’s built to attract and support business growth.
If you’re planning to launch or expand your business in Dubai, our team at Incorpyfy is here to assist with everything from company formation to licensing, compliance, and strategic tax planning. Let us help you benefit from Dubai’s competitive business environment while staying fully compliant.
FAQs
Is Dubai still tax-free for businesses in 2025?
Dubai is no longer fully tax-free. As of 2025, a 9% corporate tax applies to profits over AED 375,000. But small businesses and Free Zone firms may still enjoy 0% tax under certain conditions.
Do Free Zone companies pay corporate tax in Dubai?
Yes and no. Qualifying Free Zone companies with no UAE mainland activity may remain exempt (0%). However, they must meet substance and qualifying income conditions.
How much is the corporate tax in Dubai?
It is 0% on profits up to AED 375,000, and 9% on profits above that. Multinationals may face 15% under global tax rules.
Is there any tax on individual income in Dubai?
No. The UAE does not levy personal income tax on salaries, dividends, or business income.
What’s the benefit of setting up a company in a Free Zone?
Free Zones offer tax exemptions, custom duty waivers, 100% foreign ownership, and fast-track licensing—ideal for international entrepreneurs.
