How to Calculate Corporate Tax Payable in UAE

The UAE's Corporate Tax is set at 9% for taxable income over AED 375,000, with adjustments for expenses and deductions. To get this right, you need to understand the impact of Corporate Tax on your business and ensure your financial statements are accurate. That’s where Finanshels comes in—our expert advisors are here to guide you through preparing your financial statements and implementing Corporate Tax (CT) for your UAE business

Why the UAE is a Hub for Entrepreneurs The UAE has long been a beacon for entrepreneurs and small business owners from around the world, particularly in Dubai and other Emirates. With its business-friendly environment, it’s no wonder people flock here to turn their dreams into reality. The UAE’s Ministry of Finance introduced a public consultation document outlining the key elements of the upcoming Corporate Tax policy.

Let’s break down how Corporate Tax in the UAE is calculated so you can be fully prepared.

How to Calculate Corporate Tax in the UAE:

Understanding Corporate Tax doesn’t have to be complicated. Here’s how you can do it.

1. Prepare Your Books: Your company’s accounts should be prepared following the International Financial Reporting Standards (IFRS) or similar standards recognized by UAE authorities. Don’t worry—Finanshels can help simplify this process for you.

2. Know the Corporate Tax Rates: The Corporate Tax in UAE is 9% on net profit, but only if your taxable income exceeds AED 375,000. If your profit is AED 375,000 or less, you won’t be taxed

○ Income up to AED 375,000: 0% Corporate Tax

○ Income over AED 375,000: 9% Corporate Tax on the amount exceeding AED 375,000

For instance, if your income is AED 475,000, here’s how you calculate it: (475,000- 375,000) * 9% = AED 9,000

Adjusting Your Corporate Tax

To ensure you’re paying the right amount of Corporate Tax in Dubai or any other Emirate, there are certain adjustments you’ll need to make:

● Exclude Non-Taxable Income: Remove unrealized capital gains and similar non-taxable items from your Profit & Loss account.

● Entertainment Expenses: Only 50% of expenses related to customer, shareholder, producer, or business partner entertainment can be deducted.

● Non-Deductible Expenses: Exclude penalties, non-approved charity donations, and recoverable VAT from your deductions.

Our certified professionals at Finanshels are here to help you accurately calculate your taxable income by making the necessary adjustments and ensuring your financial statements are precise

How Finanshels Can Support You

Calculating Corporate Tax in UAE doesn’t have to be stressful. Finanshels has a team of professionals who specialize in Corporation Tax Services for both Mainland and Free Zone businesses. We’re here to ensure you’re fully compliant and confident in your financial planning