How to Calculate Corporate Tax in the UAE

Corporate Tax
How to Calculate Corporate Tax in the UAE

How is corporate tax calculated in UAE?

Upon the announcement of federal corporate tax (CT) by the Ministry of Finance in January 2022, the CT becomes applicable on 1st June, 2023 or 1st January, 2024, depending on the company’s financial year (fiscal year). Thus, 2024 is considered the financial year for most companies or businesses in the United Arab Emirates (UAE). 

The CT is fixed at 9% for taxable income greater than AED 375,000 and 0% for taxable income less than AED 375,000, while it becomes 15% for large multinationals that meet a specific criteria set with reference to pillar two.

Before paying the CT, it is important to have a proper understanding of how it is calculated depending on the income level your company falls on, and this article aims to provide the answer.

Calculation of Corporate Tax in the UAE

To calculate the CT, here’s what you need to do:


First, you need to prepare a financial statement for your company according to the International Financial Reports Standard (IFRS) or any other accounting standards verified by the UAE authorities for CT conditions. If you need help with this, we are here to help.


Second, once your financial statement is ready, you need to show the 9% CT rate on your financial statement if your taxable income is greater than AED 375,000 after removing all applicable deductions and exemptions, including any paid foreign tax.


For instance, if, after removing all deductions, your net profit remains above AED 375,000, you do the calculation this way:


Total net income = AED 450,000

Total deductions  = AED 50,000

Taxable income after all deductions = AED 400,000

CT = AED 400,000 – AED 375,000 x 9%

      = AED 25,000 x 9%

      = AED 2,250

Therefore, you will pay AED 2,250 for CT, and a CT of AED 2,250 will be stated in your financial statement.

How We Can Help

To ensure correct CT payment, the financial statements must be precise and free from errors. A lot depends on the accuracy of your business data for this to occur. Any inaccuracy in financial statements or business data could mean paying excessive taxes, which would be a loss for your company, or it could cause a shortfall. 

This explains the significance of RSN. You can remit the correct amount of tax thanks to our CT financial experts and professionals, who guarantee the accuracy of the financial statements and other data. 

The best aspect is that you can be in accordance with the law while saving time, money, and effort.

So, if you are concerned about your CT and how to calculate it, we have the right solutions for you. 

Moreso, in order to keep your company abreast of other changes made in the financial sector, we offer other services like corporate finance advisory, tax consultation, CFO, accounting, bookkeeping, and company formation. 

Do well to get in touch with us if you need any assistance or have any other questions concerning corporate tax. Our professionals will respond to you right away.

Frequently Asked Questions

Q: What is corporate tax and how is it calculated in the UAE?

A: Corporate tax is a form of direct tax levied on the net business profits of a taxable person. In the UAE, the corporate tax is calculated based on the fiscal year, which is from 1 January to 31 December.

Q: When was corporate tax introduced in the UAE?

A: The UAE introduced corporate tax as part of the new corporate tax regime, with the law coming into effect on 1 June 2023.

Q: Who needs to register for corporate tax in the UAE?

A: Any resident person or person for corporate tax purposes in the UAE with taxable income needs to obtain a corporate tax registration number and register for corporate tax.

Q: What are the requirements for filing a corporate tax return in the UAE?

A: A resident person for corporate tax in the UAE must file a corporate tax return, reporting their taxable income, deductions, and any tax losses incurred during the tax period.

Q: What is the impact of corporate tax on UAE sourced income?

A: Corporate tax in the UAE applies to the profits derived from business activities within the country, known as UAE sourced income.

Q: What are the key considerations for compliance with the UAE corporate tax law?

A: Companies operating in the UAE need to ensure compliance with the federal decree-law on corporate tax by registering for corporate tax, obtaining a corporate tax registration number, and filing accurate corporate tax returns as per the prescribed deadlines.

Q: What are the penalties for non-compliance with the UAE corporate tax law?

A: Non-compliance with the UAE corporate tax law may result in penalties imposed by the tax authorities, including fines and other enforcement actions, impacting the company’s financial and legal standing.

Q: Where can I find more information about the corporate tax regime in the UAE?

A: For detailed information on the UAE corporate tax regime, including the application process, tax laws, and compliance requirements, individuals and companies can refer to the official websites of the UAE federal tax authorities or consult with our professionals.

RSN Consultancy Accounting & bookkeeping firm

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