Comprehensive Tax Benefits for Startups and Multinationals in the UAE
Whether you are a small business or a multinational corporation, the UAE offers one of the most business-friendly tax regimes in the world. Designed to support growth, innovation, and transparency, this guide outlines the most impactful tax incentives available in 2025 — from 0% corporate tax in Free Zones, Small Business Relief, to the new 15% minimum global tax for multinationals.
1. 0% Corporate Tax for Qualifying Free Zone Persons (QFZPs)
Qualifying Free Zone Persons (QFZPs) are entities registered in UAE Free Zones that meet certain criteria, allowing them to benefit from a 0% corporate tax rate on qualifying income. These tax incentives are applicable for tax periods starting on or after 1 June 2023 and are guaranteed until at least 31 December 2033.
QFZP Eligibility Criteria:
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Free Zone Incorporation: Must be officially registered and incorporated in a UAE Free Zone.
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Adequate Substance: Must maintain a real business presence — including office space, employees, and core operations within the UAE.
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Qualifying Income: Revenue must be generated from transactions with other Free Zone companies or international clients. Income earned from mainland UAE clients is not eligible and will be taxed at 9%.
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No Voluntary Tax Election: QFZPs cannot opt into regular mainland taxation. Doing so will revoke 0% tax eligibility.
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Transfer Pricing Compliance: All related party transactions must follow the arm’s length principle. Transfer pricing documentation and disclosure forms are required.
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Future FTA Guidelines: Compliance with any future updates by the UAE Federal Tax Authority is mandatory.
Benefits of Being a QFZP:
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0% Corporate Tax on Qualifying Income
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9% Corporate Tax Only on Non-Qualifying Income
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No Withholding Tax on dividends, royalties, or interest paid to foreign entities
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No Minimum Profit Threshold to access the 0% rate
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Guaranteed Benefits Until 2033, provided compliance is maintained
Start your Free Zone company now with E-Startup and unlock 0% corporate tax benefits effortlessly.
2. High‑Value Employment Tax Credit
The High-Value Employment Tax Credit is a refundable tax incentive for businesses in the UAE that hire highly skilled professionals in leadership or specialist roles.
Eligibility Criteria:
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The business must be registered in the UAE and subject to corporate tax.
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Employees must:
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Work full-time and reside in the UAE as tax residents.
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Be employed in high-value roles such as:
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C-suite executives (CEO, CFO, etc.)
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Technology and IT professionals
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Finance experts
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R&D specialists
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Digital transformation leaders
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Healthcare professionals
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Employers must maintain accurate salary and employment records.
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The credit must be correctly claimed when filing the corporate tax return.
Benefits:
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Reduction in Corporate Tax Liability for companies hiring eligible professionals
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Refundable Credit: Excess credit can be refunded, not just carried forward
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Supports Innovation by incentivising high-skill hiring in sectors like AI, FinTech, HealthTech, and R&D
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Attracts Global Talent to the UAE job market
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Encourages Startups to hire skilled professionals without increasing tax burdens
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Enables Long-Term HR Planning with predictable tax offsets
3. 15% Domestic Minimum Top-Up Tax (DMTT)
The UAE introduced the Domestic Minimum Top-Up Tax (DMTT) in line with the OECD’s Pillar Two framework, ensuring large multinational enterprises (MNEs) pay at least a 15% effective tax rate.
Applicability:
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The business is part of a multinational group
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The group’s global consolidated revenue is €750 million or more (approx. AED 3.2 billion)
This measure primarily targets large global players such as tech conglomerates, energy majors, and financial institutions.
Benefits of DMTT:
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Promotes Fair Taxation among multinationals
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Prevents Base Erosion and shifting of profits to tax havens
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Aligns the UAE with Global Norms, strengthening its international reputation
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Enables Local Collection: The UAE collects the 15% top-up instead of foreign jurisdictions
Protect your business from unexpected tax liabilities consult experts now.
4. Small Business Relief (SBR)
Small Business Relief is a corporate tax benefit aimed at helping small businesses in the UAE reduce their tax burden and reinvest in growth.
Eligibility Criteria:
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The business must be based and operational in the UAE.
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Revenue must be AED 3 million or less, as per the tax year starting 1 June 2023.
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The business must not be part of a multinational group with consolidated revenue exceeding AED 3.15 billion.
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The business must not operate in excluded sectors, including:
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Banking and insurance
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Oil and gas exploration or production
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Investment fund management
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Real estate development or trading
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Holding or managing investments
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Certain professional services
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Businesses must opt in to Small Business Relief when filing their corporate tax return.
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Business records must be maintained for at least 7 years.
Benefits:
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0% Corporate Tax, even if the business is profitable, provided revenue remains below AED 3 million
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Simplified Accounting, including optional cash-based accounting
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No Complex Reporting, such as transfer pricing or advanced tax disclosures
Steps to Claim:
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Register your business on the Federal Tax Authority (FTA) portal.
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Track and ensure your revenue stays within the AED 3 million limit.
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Select the Small Business Relief option while filing your corporate tax return.
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Retain all relevant business records for future audits.
Simplify your tax process and keep more profits. Get started with Small Business Relief now with E-startup .
Conclusion
The UAE continues to be a global leader in providing a progressive, transparent, and business-friendly tax system. Whether you’re:
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A Free Zone company aiming for 0% tax
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A small business under AED 3 million in revenue
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A growing firm hiring top talent
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Or a multinational facing global minimum tax rules
There is a clear path to reduce tax burdens, stay compliant, and scale your operations with confidence.
All insights in this guide are based on reliable sources including the UAE Ministry of Finance and the Federal Tax Authority.
Looking to ensure your business receives all the tax benefits it is entitled to? Allow E-Startup to assist with registration, compliance, and all in between. From setup to savings, we’re here to guide you.
Frequently Asked Questions (FAQs)
1. Who is eligible for 0% corporate tax in UAE Free Zones?
Only companies qualifying as QFZPs — incorporated in a Free Zone, with physical presence and qualifying income sources — are eligible.
2. What is qualifying income for Free Zone companies?
Income from other Free Zone entities or foreign clients. Income from mainland UAE clients is taxed at 9%.
3. What happens if a Free Zone company earns from mainland UAE?
That portion of income is treated as non-qualifying and taxed at the regular 9% rate.
4. Can a Free Zone company opt into the mainland tax regime?
No. Opting in cancels the 0% tax status and all related Free Zone benefits.
5. What is the High-Value Employment Tax Credit?
A refundable tax credit for UAE businesses hiring highly skilled professionals. It reduces tax and supports innovation.
6. Who qualifies for Small Business Relief?
UAE-based businesses with total revenue not exceeding AED 3 million, not part of a multinational group, and not in excluded sectors.
7. Is Small Business Relief automatic?
No. Businesses must actively opt in during corporate tax return filing.
8. What is the Domestic Minimum Top-Up Tax (DMTT)?
A 15% tax applicable to multinational groups with annual revenues exceeding €750 million, as part of the OECD Pillar Two reforms.
9. Are small businesses affected by DMTT?
No. Only large multinationals with revenue above AED 3.2 billion are impacted.
10. How long are the Free Zone tax benefits assured?
Until at least 31 December 2033, provided the business remains compliant with QFZP conditions.
11. What are excluded activities for Free Zone tax benefits or SBR?
These include banking, insurance, oil & gas, property trading, holding investments, and certain professional services.
Ready to start or grow your UAE business with the right tax structure?
Contact E-Startup for end-to-end support — from formation to full tax compliance.
