How to Calculate Corporate Tax in the UAE

By Kitaab on June 19, 2025

How Is Corporate Tax Calculated in the UAE?

Calculating corporate tax in the UAE may sound complex, but it follows a clear structure based on International Financial Reporting Standards (IFRS) and UAE-specific tax adjustments. Here's how it works:

Step-by-Step Process

Start with accounting net profit as per your IFRS-compliant financial statements.
Add back non-deductible expenses, such as fines, penalties, or certain entertainment costs.
Subtract exempt income, like qualifying dividends or capital gains.
Apply the applicable tax rate based on your taxable income:
0% for income up to AED 375,000
9% on income above AED 375,000
15% from Jan 2025 for large MNEs (under OECD rules)

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SME with AED 600,000 Net Profit

Let’s say your accounting profit is AED 600,000. After adding AED 20,000 in non-deductible expenses and subtracting AED 45,000 in exempt income:

Adjusted taxable income = AED 575,000
Tax calculation:
First AED 375,000 → 0% tax
Remaining AED 200,000 → 9% tax = AED 18,000

So, AED 18,000 is your corporate tax due.

Important Reminders

Keep accurate records and supporting documentation for all adjustments and exemptions.
Use EmaraTax for submissions or bookkeeping services
Financials must follow IFRS unless otherwise permitted.
Ensure compliance with deadlines and free zone requirements, if applicable.

Disclaimer: Content posted is for informational & knowledge sharing purposes only and is not intended to be a substitute for professional advice related to tax, finance, legal, compliance, or accounting. No warranty whatsoever is made in this regard, and it is not intended to provide and should not be relied on for tax/ finance/ legal/ compliance or accounting advice. The content posted is subject to future amendments / changes / clarifications in the regulation by the authorities.

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