Corporate tax on a UAE home business

Three numbers circulate in every conversation about this, and they sit in three separate instruments. Mixing them up is how a licensed seller comes to believe she owes a tax she does not.

Do you pay corporate tax on a home business in the UAE?

Only above AED 1,000,000 of turnover. Federal Decree-Law No. 47 of 2022 opens as though it catches everyone: Article 11(3) makes "a natural person who conducts a Business or Business Activity in the State" a Resident Person. Article 11(6) then hands the Cabinet the job of naming which categories of business a natural person conducts are actually subject to the tax, and Cabinet Decision No. 49 of 2023 fills that in. Its Article 2(1) says they are subject to corporate tax "only where the total Turnover ... exceeds AED 1,000,000 ... within a Gregorian calendar year", and Article 2(3) adds that a natural person below that line "shall not be required to register for Corporate Tax". The FTA is firmer on its own site: natural persons "should not register" where turnover does not exceed AED 1 million.

Turnover is "the gross amount of income derived during a Gregorian calendar year", and the FTA's guide for natural persons draws out the consequence: it is "the sum of all the income before any costs are deducted". Ingredients, packaging and delivery do not come off it. Top line, not profit.

The FTA's own worked example happens to be a food business. Example 16 gives Mr. O a salary of AED 300,000, bonuses of AED 150,000 and turnover of AED 900,000 "from baking and selling cupcakes". Wage is left out, so the turnover tested is AED 900,000 and the guide concludes he "is not subject to Corporate Tax in the calendar year." One structural point behind all of it: a sole establishment is not a separate taxpayer. The sole proprietorship and the person "are one and the same", so the natural-person rules govern a licence held in your own name.

Why does everyone quote AED 375,000 instead?

Because the figure is real, and the two places most people meet it never mention the million.

Article 3 of the Corporate Tax Law contains no figure at all. It imposes 0% on taxable income up to "the amount specified in a decision issued by the Cabinet", and 9% above. Cabinet Decision No. 116 of 2022 supplies the number: AED 375,000 at 0%, "irrespective of whether the Taxable Person conducts multiple Businesses". So it is a rate band on profit, not an entry test on sales, and the habit of crediting it to the law rather than the decision is part of how it floats free of its context.

The other source is the government's own portal. The u.ae corporate tax page, updated 30 March 2026, puts scope at "all businesses and individuals conducting business activities under a commercial licence in the UAE" and gives "0 per cent for taxable income up to AED 375,000". It names no AED 1,000,000 figure anywhere. A licensed seller with AED 400,000 of sales reading only that page would conclude, reasonably and wrongly, that she owes corporate tax, when Cabinet Decision No. 49 and the FTA's natural-person page say she is not even required to register. Those two government pages do not sit together, and since the u.ae page attributes its text to the Ministry of Finance rather than answering for it, the FTA on 800 82923 is the body to settle it.

The FTA's guide puts both figures in the right order: once turnover "exceeds the AED 1 million", taxable income is taxed at 0% up to AED 375,000 and 9% above. The gate first, the bands only once you are through it.

Which number is which, and which tax does each belong to?

The third number is VAT, where the digits 375,000 turn up again for an unrelated reason. VAT registration is mandatory at AED 375,000 of taxable supplies and imports and voluntary from AED 187,500: the same digits as the corporate tax band, measured on sales rather than profit, under a different law and over a different window. That test is covered in VAT registration for a UAE home business. Here is the full set.

Figure	Measured on	Window	Set by	What it decides
AED 1,000,000	Turnover: gross income before any costs	Gregorian calendar year	Cabinet Decision No. 49 of 2023, Article 2(1)	Whether an individual is in corporate tax at all, and must register
AED 375,000	Taxable income: profit after deductions	The tax period	Cabinet Decision No. 116 of 2022	The 0% band; 9% applies above it
AED 3,000,000	Revenue, the same figure as turnover for an individual	This tax period and every previous one	Ministerial Decision No. 73 of 2023, as amended by No. 131 of 2026	Whether you can elect Small Business Relief
AED 375,000 (VAT)	Taxable supplies and imports	Previous 12 months, or next 30 days	Published by the FTA, VAT registration	Mandatory VAT registration, a separate tax
AED 187,500 (VAT)	Taxable supplies and imports, or taxable expenses	Previous 12 months, or next 30 days	Published by the FTA, VAT registration	Voluntary VAT registration becomes available

Four details change how the million is counted. Wage, Personal Investment income and Real Estate Investment income are excluded "regardless of the amount", under Article 2(2) of Cabinet Decision No. 49. Turnover is combined across everything you run rather than tested business by business, so two side businesses add together. It is measured on an accrual basis unless you apply the cash basis. And foreign sales go by relationship, not geography: income relating to your UAE business counts even when earned abroad, while a wholly separate business "not related or connected to the Business conducted in the UAE" is out entirely.

When do you register, file and pay?

A natural person's tax period is the calendar year, 1 January to 31 December, with no pro-rating for a part year. The FTA's registration guide works that through: someone starting on 1 October 2024 "would need to assess whether he/she exceeds the AED 1 million threshold by 31 December 2024", and if so their first tax period is the whole of 2024.

Registration is due by 31 March of the following Gregorian calendar year, under Article 5 of FTA Decision No. 3 of 2024, which sets that for a resident natural person whose turnover exceeds "the threshold specified in the relevant tax legislation". A non-resident gets three months from meeting the conditions instead. Neither natural-person guide states the 31 March date, because both predate that decision.

The return and the money share one deadline. Article 53(1) requires the return "no later than (9) nine months from the end of the relevant Tax Period" and Article 48 requires the tax settled in the same nine months, so on the calendar year both land on 30 September. Records go back seven years under Article 56(1).

Miss that deadline and Article 6 of the same decision applies penalties under Cabinet Decision No. 75 of 2023. The FTA's registration service page and its news release of 28 January 2025 both put that at "an Administrative Penalty of AED 10,000". We could not read Decision No. 75 itself: the Ministry of Finance URL returns a 404 and the tax.gov.ae path serves an error page instead of the document, so treat AED 10,000 as the figure the FTA publishes rather than one checked against the instrument setting it. Staying quiet does not help either. Article 51(3) lets the FTA register someone "effective from the date the Person became a Taxable Person", and Example 4 of the registration guide applies exactly that to a person who crossed the line in 2025 and never applied.

Getting back out is harder than getting in, and many pages have it backwards. Falling below AED 1,000,000 again does not undo the registration. Someone already registered "should not file a Tax Deregistration application if any of the natural person's Business or Business Activities are still active or being conducted, even if the natural person's total Turnover falls under the AED 1 million threshold". You keep it and file a nil return. Deregistration is for actually stopping, within three months of the date the business ceased. Crossing the line once therefore commits you to a filing every year for as long as you trade, which belongs in your costs rather than your paperwork; pricing a home business is the companion piece.

Is Small Business Relief still available after 2026?

Yes, to 2029, and this is the most important thing on this page, because two federal authorities currently publish different answers.

Article 21 of the law lets a Resident Person elect to be treated as not having derived any taxable income, with the ceiling left to the Minister. Ministerial Decision No. 73 of 2023 set it at AED 3,000,000 per tax period and, as enacted, stopped it at tax periods ending "before or on 31 December 2026", which is this calendar year. Ministerial Decision No. 131 of 2026, issued on 29 July 2026 and published by the Ministry of Finance, replaced that clause: the threshold now "shall continue to apply to subsequent Tax Periods that end on or before 31 December 2029".

The FTA's material has not caught up. As of 3 October 2026 the copy of Decision No. 73 published on tax.gov.ae still carries the 2026 wording, and the FTA's Small Business Relief Guide, dated August 2023, still runs a section headed "Restriction to Tax Periods ending on or before 31 December 2026". Both are live. The amending decision is the operative law, and the Small Business Relief Guide says on its own face that it is "not a legally binding document" and is "based on the legislation as it stood when the guide was published", which is how a careful reader resolves this in favour of 2029. Anyone landing on tax.gov.ae first will get 2026. If the difference carries real money for you, ask the FTA on 800 82923 whether Decision No. 131 of 2026 is reflected in the copy of Decision No. 73 on its own site, and whether the guide will be reissued.

The relief has sharp edges worth knowing before counting on it:

It is once and for all. Revenue above the ceiling "in any relevant or previous Tax Period" bars the election permanently.
It must be actively elected in your tax return, each period, and nothing happens automatically.
It does not excuse registration, which starts "as soon as his/her total Turnover exceeds the AED 1 million threshold". Example 18 works the band: AED 1,900,000 of turnover means you must register, and may then elect.
It costs carry-forwards. Tax losses from a period where you elect it "cannot be carried forward to any subsequent Tax Periods", and net interest expenditure goes the same way.
Only a Resident Person can elect it, excluding multinational group companies and Qualifying Free Zone Persons. Neither reaches a home business, though note the FTA's web page glosses the first with a consolidated-revenue figure of AED 3.15 billion that the decision itself never states.

For a natural person the AED 3,000,000 test and the AED 1,000,000 gate read off the same number, since revenue and turnover are both gross income over the calendar year. Splitting one operation across people or licences to sit under either ceiling is anticipated: where the FTA establishes an artificial separation, that "would be considered an arrangement to obtain a Corporate Tax advantage" under Article 50, whether the split aimed at the relief ceiling (Article 6 of Ministerial Decision No. 73 of 2023) or at the 0% band (Article 2(2) of Cabinet Decision No. 116 of 2022). Both decisions require the FTA first to weigh "whether the arrangement was undertaken for a valid commercial purpose" and whether the people involved carry on substantially the same business.

What no authority will tell you yet

Each of these is open. Ask the FTA on 800 82923, and for anything with money attached, a registered tax agent.

Whether tax.gov.ae publishes Ministerial Decision No. 131 of 2026 at all. We confirmed it only on mof.gov.ae: the FTA's legislation index reports 144 items but renders its list in the browser, so a plain fetch of the page returned none of them. A limit on our reading, not evidence the FTA fails to publish it.
Whether AED 10,000 is still the current late registration penalty, since the decision setting it is the one document we could not read.
Whether a natural person can use the penalty waiver initiative by filing a first return within seven months of the first tax period's end. The FTA's waiver page, updated 7 November 2025, puts the target group as "All entities required to register for Corporate Tax" and sets no end date; the corporate tax registration page is broader, offering it to "taxable persons" and to "persons who registered late, have not yet submitted a registration application". Neither uses the words natural person.
Whether marketplace turnover is the gross order value or the amount net of commission. Cabinet Decision No. 49 says "the gross amount of income derived", and no guidance we found addresses a platform's position in the transaction. On KLU the two readings differ by 5% commission plus 2% card processing.
Whether the relief survives past 31 December 2029. Unanswerable today. What is on record is that the date has already moved once.
Whether revised FTA guides are coming. We found no edition later than November 2023, December 2023 and August 2023 respectively.
Whether crossing the million late in a year makes that whole year your first tax period. The worked example says yes for 2024; no source restates it for later years. The reasoning carries over, but confirm it for yours.
Whether a licence holder under AED 1,000,000 owes any notification at all, as opposed to simply no registration. Nothing we found says.

One note on the texts. Most of the texts quoted above are published in English under a header reading "This is not an official Translation", so where a single word changes your answer, the Arabic governs. Cabinet Decision No. 116 of 2022 and both Ministerial Decisions, including No. 131 of 2026, carry no such header in the copies we read.

Frequently asked questions

Does holding a home business licence put me into corporate tax?

By itself, no. The test for an individual is turnover above AED 1,000,000 in a calendar year, not whether a licence exists. Licensing is a separate matter and remains yours as the seller; see home business licence in the UAE for how it works emirate by emirate.

My sales were AED 1.2 million and my profit AED 200,000. What do I owe?

You are past the gate, so you must register, by 31 March of the following year. The tax is charged on taxable income, and the first AED 375,000 of that sits in the 0% band under Cabinet Decision No. 116 of 2022. Small Business Relief may also be available at that revenue level if you elect it in the return. Have a registered tax agent confirm the computation before you file.

Is the corporate tax AED 375,000 the same as the VAT one?

No. One is a rate band on profit in a tax period, the other a registration threshold on taxable supplies and imports over the previous 12 months or the next 30 days. What a sale on KLU itself costs you is in the fees and payouts FAQ.

I registered last year and sales have dropped. Can I deregister?

Not while you are still trading. Keep the registration and file a nil return. Deregistration is for when the business actually ceases, within three months of that date.

Sources

Last verified: 3 October 2026.