If you run a business in Australia and plan to expand to the UAE, you must understand the new tax system. The UAE has changed how company tax works. These changes affect how much tax you pay, how you file, and how you plan your growth in Dubai and other Emirates.
The UAE is still business friendly. But it is no longer a zero tax country for most companies. The rules are clearer now. The government wants global companies to follow fair tax standards.
This guide by Flyingcolour® explains the full picture in simple words. It covers what changed, what is coming in 2026, and how Australian businesses can prepare.
UAE Corporate Tax Introduction
UAE corporate tax to align with global tax rules. Before this, most companies paid no corporate tax.
From 1 June 2023, many businesses started paying corporate tax. The standard rate is 9 percent. This applies to profits above a set limit.
This change affects companies operating in Dubai and across the UAE, including Abu Dhabi and Sharjah.
If you are a Australia company setting up in the UAE, you must register for corporate tax. You must file returns every year. You must keep proper records.
The UAE government wants to keep the country attractive to foreign investors. So the tax rate is still low when compared to many countries in Europe. The Australia corporate tax rate is much higher.
The corporate tax applies to mainland companies and many free zone companies. Some free zone businesses can still enjoy tax benefits if they meet strict rules.
The aim is simple. The UAE wants fair tax and global trust. This builds long term stability for business.
Domestic Minimum Top Up Tax (DMTT) in 2026
The UAE introduced the Domestic Minimum Top Up Tax in 2026. This is also called DMTT.
This rule follows the global tax agreement led by the Organisation for Economic Co-operation and Development.
The goal is to make sure large global companies pay a minimum level of tax in each country. The minimum level is 15 percent.
If a multinational group pays less than 15 percent tax in the UAE, the UAE can charge extra tax to reach 15 percent. This affects large groups only.
DMTT mainly applies to multinational enterprises with global revenue above a set level. This rule targets big global brands. It does not affect small and medium firms.
Australian companies with global offices must check if they fall under this rule. If your group is large, your tax bill in the UAE may increase.
The UAE is aligning with global tax fairness. This improves trust with other countries. It also protects the UAE tax base.
For Australian firms, this means tax planning must be global. You cannot only focus on one country. Your group structure matters.
Who Is Exempt and Who Is Not from Corporate Tax in Dubai
Not all businesses pay corporate tax in Dubai. Some are exempt. Some pay 9 percent. Some fall under special rules.
Government entities are exempt. Some government owned companies are also exempt. Certain charities and public benefit bodies are exempt if they register.
Free zone companies can enjoy a 0 percent rate on qualifying income. But they must follow rules. They must not trade with the mainland in certain ways. They must meet substance rules.
Mainland companies pay 9 percent on taxable profits above the limit. The current limit is AED 375,000. Profits below this are taxed at 0 percent.
This rule supports small businesses and startups.
Australian firms setting up in Dubai mainland should expect to pay 9 percent tax. This is still low compared to Australia tax levels.
If you operate in both free zone and mainland, your tax position becomes complex. You must separate income streams. You must follow transfer pricing rules.
Professional advice is key here. A small mistake can lead to fines.
Tax Incentives Announced for 2025 to 2026
The UAE still wants to attract foreign investors. So it offers tax incentives and business support.
Free zones continue to offer tax benefits for qualifying income. This includes tech, media, logistics, and trading firms.
Research and development costs may qualify for deductions. This supports innovation. Many Australian tech firms benefit from this.
The UAE also supports green projects and sustainability. Companies working in clean energy may get incentives.
Double tax treaties help Australia firms avoid paying tax twice. The UAE has strong tax treaties with the Australian and many other countries.
The UAE is also improving digital tax systems. This makes filing easier. This reduces errors.
These incentives help balance the new tax burden. The goal is growth with fairness.
What Multinational Enterprises Must Prepare For
Multinational enterprises face stricter tax rules in the UAE. The government expects strong compliance.
Transfer pricing rules apply. You must show that transactions between group companies are at fair market value.
You must keep detailed records. You must submit reports on related party transactions.
If your group falls under DMTT, you must calculate effective tax rates carefully. This requires strong tax systems.
Australia based multinationals should prepare early. You may need to update accounting systems. You may need expert support.
The UAE tax authority can request documents. You must respond on time.
Good planning reduces risk. Poor planning leads to fines and audits.
Simplify Tax Compliance and Financial Control with Flyingcolour®
Managing tax in a new country can feel complex. Many Australia firms struggle with local rules at first.
Digital finance tools can help. They help track spending. They help manage expenses. They support compliance.
Platforms like Alaan help UAE businesses manage corporate cards, expenses, and controls in one place. This supports clean records. This supports tax filing.
When your financial data is organised, tax filing becomes easier. Your team saves time. Your risk drops.
Flyingcolour® helps Australia firms set up strong finance processes in the UAE. We focus on simple systems that grow with your business.
Conclusion on UAE Corporate Tax Guide
The UAE corporate tax system is now part of global tax standards. The tax rate is still low. The business environment is still strong.
For Australian firms, Dubai remains an attractive base for Middle East growth. The key is to understand the rules early. Plan your structure. Keep clean records. Use digital tools.
Flyingcolour® supports Australian businesses entering the UAE. We help with setup, tax guidance, compliance, and growth planning.
With the right approach, UAE corporate tax is not a barrier. It is just a cost to plan for.
FAQs on Corporate Tax Rate in UAE
How much tax does a company pay in Dubai?
Most mainland companies pay 9 percent corporate tax on profits above AED 375,000. Profits below this limit are taxed at 0 percent.
Who pays 9 percent tax in Dubai?
Mainland companies and non qualifying free zone companies pay 9 percent on taxable profits above the limit.
Does Dubai have 5 percent tax?
Dubai has 5 percent VAT on goods and services. This is not corporate tax. Corporate tax is separate and set at 9 percent.
Is Dubai a tax haven for companies?
Dubai is no longer a zero tax location. But it is still low tax compared to many countries. The system is transparent and business friendly.
Bonus Section: How to Calculate Corporate Tax in UAE
To calculate corporate tax in the UAE, follow these simple steps.
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Calculate your total business income.
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Subtract allowed expenses.
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Apply adjustments based on UAE tax rules.
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Find your taxable profit.
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Apply 0 percent tax on the first AED 375,000.
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Apply 9 percent tax on profits above this limit.
Example:
If your taxable profit is AED 500,000.
First AED 375,000 is taxed at 0 percent.
Remaining AED 125,000 is taxed at 9 percent.
Tax due is AED 11,250.
To learn more about UAE Corporate Tax Rate in 2026, book a free consultation with one of the Flyingcolour team advisors.
Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.