The six GCC countries apply five different corporate tax models, ranging from 0 % in Bahrain to 20 % in Saudi Arabia for foreign-owned entities. The UAE’s 9 % federal corporate tax — introduced in June 2023 — sits in the middle, with a 0 % rate available for qualifying free zone entities. No GCC country levies personal income tax. VAT applies in four of six countries at 5 % to 15 %. Last updated: May 2026.
For the GCC setup context, see how to set up a business in the GCC: a complete guide for foreign founders. For the free zone tax framework, see GCC free zones explained: complete guide for foreign founders.
How do corporate tax rates compare across the GCC?
| Country | Standard CIT rate | Free zone / SEZ rate | VAT rate | Personal income tax |
|---|---|---|---|---|
| UAE | 9 % above AED 375,000 | 0 % for QFZPs | 5 % | 0 % |
| Saudi Arabia | 20 % (foreign) / 2.5 % Zakat (GCC nationals) | 5 % in SEZs for 20 years | 15 % | 0 % |
| Bahrain | 0 % (DMTT 15 % for MNEs from 1 Jan 2026) | 0 % | 10 % (from 1 Jan 2022) | 0 % |
| Qatar | 10 % | 0 % in QFZA / 10 % in QFC | Not implemented | 0 % |
| Oman | 15 % (3 % for SMEs below OMR 100,000) | Tax holidays up to 30 years | 5 % | 0 % |
| Kuwait | 15 % (foreign entities only) | 15 % (KFTZ does not reduce) | Not implemented | 0 % |
The absence of personal income tax across the entire GCC remains the region’s strongest structural tax incentive. Corporate founders retain 100 % of salary and dividend distributions after corporate-level taxation.
How does the UAE’s corporate tax work?
The UAE’s Federal Decree-Law No. 47 of 2022 introduced a 9 % corporate tax on net taxable income above AED 375,000, effective 1 June 2023. The first AED 375,000 of taxable income is taxed at 0 %. All UAE entities — mainland, free zone, and offshore — must register with the Federal Tax Authority (FTA) through the EmaraTax portal. Late registration incurs an AED 10,000 penalty under FTA Decision No. 3 of 2024.
According to Crimson Legal’s May 2026 compliance guide, Small Business Relief (SBR) is available for resident taxpayers with revenue below AED 3 million for tax periods ending on or before 31 December 2026. SBR must be actively elected on the tax return — it does not apply automatically. Electing SBR treats taxable income as zero but forfeits loss carry-forward and net interest deductions for the elected period. SBR is unavailable to QFZPs and members of multinational enterprise groups.
Free zone entities qualifying as Qualifying Free Zone Persons (QFZPs) under Ministerial Decision No. 229 of 2025 pay 0 % on qualifying income. Failure of any QFZP condition triggers 9 % taxation on all income for the current year and the four following tax periods — a five-year lockout.
For the detailed UAE corporate tax mechanics, see UAE Corporate Tax: how the 9 % rate works in 2026.
How does Saudi Arabia’s tax system work?
Saudi Arabia applies a dual CIT/Zakat system. Foreign-owned entities pay 20 % corporate income tax on net profits. Saudi and GCC nationals pay 2.5 % Zakat on the entity’s Zakat base instead of CIT. Mixed-ownership entities split the base proportionally.
The four core SEZs (KAEC, Ras Al-Khair, Jazan, Cloud Computing) — with regulatory frameworks in force since 16 April 2026 under Cabinet Decision No. 468/1447 — offer a 5 % CIT rate for up to 20 years, plus full Zakat exemption, 0 % withholding tax on profit repatriation, and 0 % customs duty on capital equipment. SILZ at Riyadh Airport offers 0 % CIT for 50 years.
Saudi VAT stands at 15 % — the highest in the GCC — after the rate was tripled from 5 % in July 2020. For Saudi SEZ details, see Saudi free zones and special economic zones explained.
What about Bahrain, Qatar, Oman, and Kuwait?
Bahrain has no corporate tax on most businesses. The exception is the Domestic Minimum Top-up Tax (DMTT) at 15 %, effective 1 January 2026, which applies only to multinational enterprises with consolidated global revenue exceeding EUR 750 million. Smaller businesses continue to operate at 0 %. Bahrain introduced 10 % VAT on 1 January 2022.
Qatar applies a flat 10 % CIT on all taxable income. QFZA entities pay 0 % on qualifying free zone income. QFC entities pay the standard 10 %. Qatar has not implemented VAT.
Oman applies 15 % CIT, with a reduced 3 % rate for SMEs with taxable income below OMR 100,000. Free zone entities in Sohar, Duqm, and Salalah can receive tax holidays of up to 30 years. Oman charges 5 % VAT.
Kuwait applies 15 % CIT on profits attributable to foreign entities. Kuwait-national-owned entities are subject to Zakat at 1 % and NLST (National Labour Support Tax) at 2.5 %. Kuwait and Qatar are the only GCC countries without VAT.
What are the key compliance deadlines across the GCC?
| Country | Filing deadline | Penalty for late filing |
|---|---|---|
| UAE | 9 months after fiscal year-end | AED 500 first offence, AED 1,000 repeat; 14 % p.a. on late payment |
| Saudi Arabia | 120 days after fiscal year-end | 1 % of unpaid tax per 30 days |
| Bahrain | DMTT follows OECD GloBE rules | TBD — DMTT regime new for 2026 |
| Qatar | 4 months after fiscal year-end | 1 % monthly on unpaid tax |
| Oman | 4 months after fiscal year-end | OMR 1,000 per month of delay |
| Kuwait | 3.5 months after fiscal year-end | 1 % monthly on unpaid tax |
Under the UAE’s revised penalty framework (Cabinet Decision No. 129 of 2025, effective 14 April 2026), voluntary disclosures filed before an FTA audit notice incur 1 % per month on the tax difference. Post-audit-notification disclosures trigger 15 % fixed plus 1 % monthly.
Frequently asked questions
Is the GCC still “tax-free”?
No. The phrase “tax-free” applied historically to personal income — which remains untaxed in all six GCC countries. Corporate taxation now exists in five of six countries, with rates from 9 % (UAE) to 20 % (Saudi Arabia for foreign entities). Bahrain remains 0 % for most businesses but introduced DMTT at 15 % for large MNEs from January 2026.
Which GCC country has the lowest effective corporate tax?
Bahrain at 0 % for businesses below the DMTT threshold (EUR 750 million consolidated revenue). Among GCC countries with active CIT regimes, the UAE offers the lowest standard rate at 9 %, with a 0 % QFZP rate for qualifying free zone entities.
Do GCC countries tax dividends or capital gains?
The UAE does not tax dividends from qualifying shareholdings or capital gains from the sale of qualifying shares. Saudi Arabia does not tax capital gains for foreign investors on the sale of shares listed on Tadawul. Qatar, Oman, and Kuwait generally include capital gains in taxable income. No GCC country taxes personal income.
Sources and further reading
- Federal Decree-Law No. 47 of 2022 — UAE Corporate Tax Law
- Cabinet Decision No. 129 of 2025 — UAE revised penalty framework, effective 14 April 2026
- Cabinet Decision No. 468/1447 (December 2025) — Saudi SEZ regulatory frameworks
- Bahrain DMTT — Legislative Decree implementing 15 % top-up tax from 1 January 2026
- PwC GCC Tax Summaries — Annual country briefs (taxsummaries.pwc.com)
- ZATCA — Saudi CIT and Zakat filing (zatca.gov.sa)
- UAE Federal Tax Authority — EmaraTax portal and compliance guidance (tax.gov.ae)