The UAE corporate tax rate is based on income earned by companies operating within the country. The standard corporate tax rate applies at 0 percent on taxable income up to AED 375,000, and at 9 percent on taxable income exceeding AED 375,000. This article explains how to calculate corporate tax in the UAE and outlines the steps businesses must follow to ensure compliance in 2025 and beyond.
How To Calculate Taxable Income in the UAE?
To calculate corporate tax in the UAE, businesses have to calculate taxable income. This is done by taking accounting profits as a starting point and then making specific adjustments based on FTA corporate tax rules.
The standard corporate tax formula in the UAE is as follows:
Accounting Net Profit (financial statements)
- Exempted income (qualifying dividends, etc.)
- Relief or incentives (such as free zone benefits if conditions are met)
- Allowances for non-deductible expenses (such as fines, penalties, or some entertainment expenses)
= Taxable Income
Step-by-Step Corporate Tax Calculation in the UAE
The process includes:
Step 1 – Review Financial Statements
Start with your financials audited as per IFRS norms. The net profit figure is the basis for the UAE business tax calculation.
Step 2 – Determine Exempt Income
Exclude income sources that are exempt from corporate tax, such as dividends on qualifying shareholdings.
Step 3 – Make adjustments for Non-Deductible Expenses
Deduct back costs which do not qualify to be deducted under UAE law. Common non-deductible expenses in the UAE corporate tax include fines, bribes, and personal spending entered into as business expenses.
Step 4 – Account for Deductions and Reliefs
Deduct qualifying costs such as wages to staff, rent, electricity, depreciation, and interest (within limits).
Step 5 – Calculate Taxable Income
Arrive at your taxable base after adjustments.
Step 6 – Apply Corporate Tax Rates
Apply 0% up to AED 375,000 and 9% above that threshold.
Step 7 – File Return with the FTA
Submit your return through the FTA's portal to remain compliant.
What Are the Corporate Tax Filing Requirements?
Once you have completed the calculation of corporate tax in the UAE, the next step is filing. The corporate tax law states:
- Returns should be submitted annually through the FTA portal.
- Submission must be made within 9 months from the end of the financial year.
- Businesses must maintain accounting records, which are properly maintained, for a period of at least seven years.
Corporate Tax for Small Businesses in the UAE
Under the Small Business Relief Scheme in the UAE, eligible businesses with revenues below a specified threshold are considered to have no taxable income. Thus, many small enterprises and newly established businesses may not incur an immediate tax liability. However, such entities are still required to fulfill their corporate tax obligations in the UAE, including registration requirements.
How to File Corporate Tax in the UAE Using the FTA Portal?
The final step is return filing. Enterprises must file their returns online using the FTA portal. The process includes:
- Logging on to the FTA account.
- Filling the corporate tax return form.
- Uploading mandatory financial statements.
- Verification of calculations-most companies use the FTA tax calculator.
- Paying any tax due.
Accurate corporate tax return calculation in the UAE is key to avoiding penalties.
Importance of Ensuring Accuracy when Calculating Corporate Tax in the UAE
Errors in the tax filing can be costly. They may trigger:
- Administrative penalties.
- Additional audits by the FTA.
- Revocation of free zone privileges.
Therefore, most companies prefer outsourcing to professionals for UAE corporate tax calculation and filing. Professionals ensure compliance, minimize liabilities, and free management time.
How Professional Help Makes It Simple
Professional tax advisors make it simple to calculate corporate tax in the UAE by:
- Ensuring compliance with all FTA corporate tax rules.
- Claiming reliefs and deductions precisely.
- Identifying risk from non-deductible expenses.
- Filing on time to avoid penalties.
Seek the Expert Services of Top Tax Consultants in the UAE
At Corporate Tax UAE, we provide precise corporate tax calculation, return preparation, and full compliance support, delivered on time. Contact us today for accurate, compliant, and hassle-free tax filing, and we shall be glad to assist you.
FAQs
- How do I calculate my company’s taxable income in the UAE?
Taxable income is calculated by taking your company’s accounting profits (as per IFRS) and then adjusting them for items that are either not deductible (like fines and penalties) or exempt. The result is your “taxable income,” which is used to apply the UAE corporate tax rate.
- What is the current UAE corporate tax rate in 2025?
As of 2025, the standard UAE corporate tax rate is 9% on taxable profits above AED 375,000. Profits below that threshold are taxed at 0%, giving relief to small and start-up businesses.
- Are all business expenses deductible when calculating corporate tax?
Not all expenses are deductible. For example, penalties, bribes, and certain entertainment costs cannot be deducted. On the other hand, genuine business expenses such as salaries, rent, and utility bills are deductible when calculating taxable income.
- Do free zone companies also need to calculate and pay corporate tax?
Yes, free zone companies are subject to corporate tax, but many can benefit from qualifying free zone exemptions if they meet specific requirements under the FTA’s corporate tax rules. This makes it essential for free zone businesses to carefully calculate and structure their taxable income.
- How do I file my corporate tax return once I’ve calculated the tax?
Once the taxable income and corporate tax liability are calculated, companies must file their corporate tax return electronically through the FTA portal by the set corporate tax filing deadline. Having accurate calculations ensures smooth filing and avoids penalties.
