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UAE Corporate Tax Calculations

Comprehensive guide to calculating corporate tax liability in the UAE, including taxable income computation, allowable deductions, and tax rate applications.

UAE Corporate Tax Rates

Small Business Relief

0%

Revenue ≤ AED 3M

Standard Rate

9%

Revenue > AED 375K

Below Threshold

0%

Revenue ≤ AED 375K

Tax Calculation Process

1

Determine Accounting Income

Start with accounting profit from financial statements prepared according to acceptable accounting standards (IFRS, UAE GAAP, etc.).

2

Apply Tax Adjustments

Add back non-deductible expenses and subtract non-taxable income to arrive at taxable income per UAE Corporate Tax Law.

3

Calculate Gross Tax

Apply the relevant tax rate (0% or 9%) to taxable income to determine gross corporate tax liability.

4

Apply Credits & Relief

Deduct any available tax credits, foreign tax credits, or relief provisions to arrive at net tax payable.

Common Tax Adjustments

Add Back (Non-Deductible)

  • Entertainment expenses (50% limitation)
  • Penalties and fines
  • Donations exceeding limits
  • Personal expenses
  • Excessive interest on borrowings

Deduct (Non-Taxable Income)

  • Dividends from UAE resident companies
  • Capital gains on shares
  • Income from business activities outside UAE
  • Income already subject to UAE tax
  • Certain foreign permanent establishment income

Calculation Examples

Example 1: Standard Business

Trading company with AED 2,000,000 annual revenue

Accounting Profit:AED 400,000
Add: Non-deductible entertainment:AED 10,000
Add: Traffic fines:AED 2,000
Less: Dividend income:(AED 50,000)
Taxable Income:AED 362,000
Tax Rate:0%
Corporate Tax Payable:AED 0

*Below AED 375,000 threshold - no tax payable

Example 2: Larger Business

Service company with AED 5,000,000 annual revenue

Accounting Profit:AED 1,200,000
Add: Entertainment (50% disallowed):AED 15,000
Add: Donations above limit:AED 5,000
Less: Capital gains on shares:(AED 100,000)
Taxable Income:AED 1,120,000
Tax Rate:9%
Corporate Tax Payable:AED 100,800

Allowable Deductions

Fully Deductible

  • Cost of goods sold
  • Employee salaries and benefits
  • Rent and utilities
  • Professional fees
  • Depreciation allowances

Limited Deductions

  • Entertainment: 50% limitation
  • Donations: Subject to limits
  • Interest: Thin capitalization rules
  • Related party transactions: Transfer pricing

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