The introduction of corporate tax in the UAE marked a significant shift for every business operating in the country, including the thousands of restaurants, cafes, and food and beverage outlets that power the UAE’s hospitality sector. Under Federal Decree-Law No. 47 of 2022, a 9% corporate tax now applies to taxable profits above AED 375,000. Whether you run a single neighbourhood shawarma counter or a multi-outlet dining group, understanding your obligations under this law is no longer optional. Penalties for non-compliance are real, the Federal Tax Authority is actively enforcing registration, and the window for certain relief mechanisms is already narrowing. This guide explains every rule that matters to restaurant operators in plain terms.

What Is UAE Corporate Tax and Does It Apply to Restaurants?

UAE corporate tax is a federal tax on net business profits. It applies to all UAE-resident businesses, including mainland restaurants and most food and beverage operations, for financial years starting on or after 1 June 2023.

Corporate tax in the UAE is governed by Federal Decree-Law No. 47 of 2022. It is administered by the Federal Tax Authority (FTA) through the EmaraTax digital platform at eservices.tax.gov.ae. The tax became effective for financial years starting on or after 1 June 2023, meaning a restaurant whose financial year runs from 1 January to 31 December first became liable for corporate tax for the year ending 31 December 2024.

The law applies to all UAE-resident juridical persons (companies and other incorporated entities) and to natural persons (sole traders and individual business owners) who operate a business in the UAE. Restaurants, cafes, cloud kitchens, catering companies, and food and beverage outlets of every kind fall squarely within scope unless a specific exemption applies. The common question among restaurant owners — “Does this really apply to me?” — has a straightforward answer: yes, unless your turnover and profits are genuinely modest and you elect for Small Business Relief (discussed below).

The 9% Rate and the AED 375,000 Threshold Explained

UAE corporate tax is charged at 0% on taxable income up to AED 375,000 and at 9% on taxable income above that threshold. The tax is applied to net profits, not to gross restaurant sales.

The rate structure is designed to protect smaller businesses while taxing larger profitable operations at a modest 9% — one of the lowest corporate tax rates in the world. The critical point for restaurant operators is that the AED 375,000 threshold refers to taxable profit (net income after allowable deductions), not to total revenue. A restaurant turning over AED 4 million in food and beverage sales but carrying high rent, payroll, and food costs may have taxable income well below the threshold.

To make this concrete: a restaurant that earns AED 800,000 in taxable profit in a given year pays zero tax on the first AED 375,000 and 9% on the remaining AED 425,000. The resulting tax liability is AED 38,250. There is no slab or graduated rate — the 9% applies only to the amount above the threshold, not to the full profit.

Restaurant operators should also note that deductible expenses must be wholly and exclusively incurred in the production of taxable income. Food costs, staff salaries, rent, utilities, marketing spend, and depreciation on kitchen equipment are generally deductible. Personal expenses, fines, and non-business expenditure are not. Maintaining clean, well-categorised accounts is therefore essential to ensuring the taxable income figure is accurate.

Small Business Relief: The AED 3 Million Safety Net

UAE resident businesses with annual revenue of AED 3 million or less may elect for Small Business Relief, which treats their taxable income as zero. However, this relief expires after tax periods ending on or before 31 December 2026, and losing it permanently if revenue exceeds AED 3 million even once.

Small Business Relief is an elective mechanism — a restaurant must actively choose it each period by making the election in its corporate tax return. When elected, the business is treated as having no taxable income for that period, eliminating any corporate tax liability regardless of actual profit levels. For many smaller independent restaurants whose annual revenue sits below AED 3 million, this relief effectively means no corporate tax is payable for the period it remains available.

There are several conditions and limitations restaurant owners must understand:

• Revenue threshold: Annual revenue must not exceed AED 3 million in the tax period for which relief is claimed.
• Sunset clause: The relief is only available for tax periods starting on or after 1 June 2023 that end on or before 31 December 2026. After that date, Small Business Relief is no longer available regardless of revenue size.
• One-strike permanent loss: If a restaurant’s revenue exceeds AED 3 million in any single tax period, it permanently loses the ability to claim Small Business Relief in all future periods. This is not a temporary suspension — the relief is gone forever for that entity.
• Exclusions: Qualifying Free Zone Persons cannot claim Small Business Relief. Neither can members of Multinational Enterprise (MNE) Groups where the group’s consolidated global revenue exceeds AED 3.15 billion.
• Anti-abuse: The FTA may disregard artificial business arrangements designed to stay below the AED 3 million threshold. Splitting a single restaurant operation across multiple legal entities specifically to access relief may be challenged.

Restaurant operators approaching the AED 3 million revenue mark should plan carefully and seek professional advice before the sunset date. For comprehensive support on both VAT and corporate tax compliance, see our restaurant VAT and corporate tax services.

Who Must Register with the FTA and When

All UAE taxable persons — both companies and individual business owners meeting the turnover threshold — must register for corporate tax with the FTA via EmaraTax. Companies incorporated after 1 March 2024 have 3 months from incorporation; individuals register when turnover exceeds AED 1 million.

Corporate tax registration is mandatory. There is no revenue or profit minimum that excuses a business from registering — even if you expect to owe zero tax. The registration deadlines differ depending on the legal structure of the restaurant:

• Juridical persons (companies, LLCs, branches): Must register for corporate tax. Companies incorporated before 1 March 2024 had earlier registration windows tied to their licence renewal month. Companies incorporated on or after 1 March 2024 must register within 3 months of the date of incorporation.
• Natural persons (sole traders, individual restaurant owners): Must register for corporate tax if their total business turnover in a calendar year exceeds AED 1 million. The registration deadline is 31 March of the year following the calendar year in which turnover exceeded AED 1 million. For example, if your restaurant’s turnover first exceeded AED 1 million in 2024, you must register by 31 March 2025.

The penalty for failing to register on time is AED 10,000. However, the FTA has announced a penalty waiver initiative: the late-registration penalty is waived if the business files its first corporate tax return within 9 months of the end of its first tax period. This waiver is a one-time opportunity and should not be relied upon as a routine strategy.

Registration is completed through the EmaraTax portal at eservices.tax.gov.ae. You will need the trade licence, Emirates ID of the authorised signatory, and basic financial information about the business. For support with the registration process and broader business setup compliance, our restaurant pro services and trade license support team can assist.

Free-Zone Restaurants: The Qualifying Free Zone Person (QFZP) Rules

A free-zone restaurant can qualify for the 0% corporate tax rate on qualifying income as a Qualifying Free Zone Person, but typical F&B activities serving mainland customers are classified as non-qualifying income and taxed at 9%. Exceeding the de minimis threshold pulls all income to 9%.

The UAE corporate tax law creates a special category for businesses operating in designated free zones: the Qualifying Free Zone Person (QFZP). A QFZP pays 0% on qualifying income and 9% on non-qualifying income. This sounds attractive, but the QFZP rules are strict and the practical implications for restaurant operators are often unfavourable:

• Qualifying vs. non-qualifying income: Qualifying income broadly covers transactions with other free-zone businesses and certain international activities. For restaurant and F&B businesses, the revenue earned from serving customers — whether dine-in, takeaway, or delivery to mainland UAE addresses — is typically classified as non-qualifying income. This means the 0% rate does not apply to the core trading income of most free-zone restaurants.
• De minimis threshold: A QFZP is allowed a de minimis level of non-qualifying revenue. The threshold is the lower of 5% of total revenue or AED 5 million. If a free-zone restaurant’s non-qualifying revenue (i.e., its restaurant sales) exceeds either of these limits, the de minimis protection is lost. Critically, exceeding the de minimis threshold causes all income — including income that would otherwise be qualifying — to be taxed at 9% for that entire period. For most free-zone restaurants with meaningful revenue, the de minimis threshold will be breached.
• Substance requirements: A QFZP must maintain adequate substance in the free zone, meaning genuine operational presence, qualified staff, and core income-generating activities carried out within the free zone.
• Audited IFRS financial statements: QFZPs are required to prepare audited financial statements complying with International Financial Reporting Standards (IFRS). This is a more onerous requirement than the general record-keeping rules that apply to other businesses.
• Disqualification penalty: If a business loses its QFZP status — by breaching substance requirements, failing the de minimis test, or other non-compliance — it is disqualified for a 5-year period and cannot re-qualify during that time.

The bottom line for most free-zone restaurant operators is that QFZP status provides limited practical benefit because restaurant sales to end customers are non-qualifying. Before structuring a restaurant business around a free-zone entity, operators should carefully model whether the QFZP conditions can realistically be maintained. For a full comparison of licence structures, see our guide on DED mainland vs free zone restaurant licence.

Record-Keeping: What Your Restaurant Must Retain

UAE corporate tax law requires restaurants to retain all financial and business records for a minimum of 7 years after the end of the tax period to which they relate. Failure to maintain adequate records attracts penalties of AED 10,000 for a first violation and AED 20,000 for repeat violations.

The record-keeping obligation under the corporate tax law is more demanding than many restaurant operators may expect. The required documents include:

• General ledger and trial balance
• Profit and loss (income) statements
• Sales invoices and purchase invoices
• Bank statements for all business accounts
• Contracts with suppliers, landlords, delivery platforms, and service providers
• Payroll records and WPS (Wage Protection System) transfer records
• Fixed asset register showing all depreciable assets (kitchen equipment, fit-out, point-of-sale systems)
• Filed corporate tax returns and any supporting workings
• All correspondence with the FTA, including registration certificates, assessments, and responses to queries

Electronic records are permitted, but they must be stored in a format that is unalterable, readable, and capable of being produced to the FTA in Arabic if requested. Records stored in cloud-based accounting software generally satisfy this requirement, provided the data cannot be retroactively modified without an audit trail.

Restaurant-specific accounting challenges make clean record-keeping more difficult than in many other industries. Revenue recognition can be complex when delivery platforms remit net settlements rather than gross sales figures. Food cost tracking must account for spoilage and wastage. Payroll classification across service, kitchen, and management roles must be consistent. These are all areas where professional bookkeeping support pays for itself. Our restaurant bookkeeping services are designed specifically for UAE food and beverage operators navigating these requirements.

Corporate Tax vs. VAT: Key Differences for Restaurant Operators

VAT is 5% charged on gross food and beverage sales and collected from customers, with a registration threshold of AED 375,000 in annual revenue. Corporate tax is 9% on net profit above AED 375,000. They are entirely separate obligations with separate registrations, returns, and record-keeping cycles.

Many restaurant operators who have been managing VAT since its introduction in 2018 assume that corporate tax is simply an extension of the same system. It is not. The two taxes are structurally different:

A practical consequence of having two separate tax obligations is that restaurants must maintain clearly separated accounts for VAT-collected funds (which are not income) and actual trading profit (which is the basis for corporate tax). Mixing these creates reconciliation problems at year-end and during FTA audits. Maintaining a dedicated business bank account for restaurant operations is one of the simplest ways to keep these records clean. For help setting up the right banking structure, see our guide on restaurant business bank account opening UAE.

Filing Deadlines and Penalties at a Glance

The corporate tax return must be filed within 9 months of the end of the tax period. For a restaurant with a 31 December financial year-end, the filing deadline is 30 September of the following year. Late filing penalties apply even when no tax is due.

The 9-month window is generous compared to many jurisdictions, but it can pass quickly if a restaurant’s accounts are not kept current throughout the year. Key deadlines and penalties include:

• Filing deadline: 9 months after the end of the tax period. A restaurant with a financial year ending 31 December 2024 must file its corporate tax return by 30 September 2025.
• Tax payment deadline: The same date as the filing deadline — 9 months after year-end. There is no separate payment date.
• Late registration penalty: AED 10,000. This may be waived under the FTA’s penalty waiver initiative if the first tax return is filed within 9 months of the first tax period end.
• Late return filing penalty: AED 500 per month for the first 12 months, increasing to AED 1,000 per month thereafter. These penalties apply even if the tax liability for the period is zero.
• Late tax payment penalty: 14% per annum on the unpaid amount, charged monthly.

The FTA has demonstrated willingness to enforce these penalties, particularly on registration failures. Restaurant operators who have not yet registered should do so immediately via EmaraTax at eservices.tax.gov.ae.

This article is for general information purposes only and does not constitute tax or legal advice. Restaurant operators should consult a qualified UAE tax advisor or the Federal Tax Authority (tax.gov.ae) for guidance specific to their circumstances.

Frequently Asked Questions

Do restaurants below AED 375,000 profit need to register for corporate tax?

Yes. Registration is mandatory for all UAE businesses regardless of profit level. The AED 375,000 threshold determines the rate of tax (0% below, 9% above), but it does not exempt a business from the obligation to register, file a return, and maintain records. The only exception is that natural persons (sole traders) whose annual business turnover does not exceed AED 1 million are not required to register. Incorporated companies must register regardless of turnover or profit.

Can a free-zone restaurant pay 0% corporate tax?

Only if it qualifies and maintains Qualifying Free Zone Person status, and only on qualifying income. For most free-zone restaurants whose revenue comes from selling food and beverages to customers — whether dine-in, delivery, or takeaway — those sales are typically classified as non-qualifying income and taxed at 9%. If non-qualifying revenue exceeds the de minimis threshold (the lower of 5% of total revenue or AED 5 million), all income in that period is taxed at 9%. Free-zone restaurant operators should obtain specific advice before assuming QFZP status delivers a tax benefit.

What happens if my restaurant misses the corporate tax registration deadline?

The FTA will impose a penalty of AED 10,000 for late registration. However, if this is your first tax period and you file your corporate tax return within 9 months of that period ending, the FTA’s penalty waiver initiative may cancel the AED 10,000 penalty. This waiver is not automatic — it is tied to timely filing of the return. Operators who have missed their registration deadline should register immediately via EmaraTax and take advantage of the waiver window rather than continuing to delay.

How is corporate tax different from the 5% VAT restaurants already pay?

VAT and corporate tax are completely separate obligations. VAT is a 5% consumption tax charged on every food and beverage sale, collected from your customers and remitted to the FTA on a quarterly basis — the restaurant acts as a collector, not a taxpayer. Corporate tax is a 9% tax on the restaurant’s own net profit above AED 375,000, paid once a year. VAT records must be kept for 5 years; corporate tax records for 7 years. Both require separate registrations on EmaraTax and separate returns. A restaurant that charges VAT correctly and remits it on time has fulfilled its VAT obligation, but this has no bearing on its corporate tax obligation.